Thursday, November 7, 2013

Role of Image Audit in Reputation Management

Role of Image Audit in Reputation Management - T N Ashok
By T N Ashok *

Most corporates in India and worldwide are giving more importance today  to reputation management as opposed to public relations or image building.    

Is there really a difference, between the two, you might ask. Yes, there is. The big difference is that corporates who have some semblance of a reputation are more interested in preserving it, which is vital to its own future. It's definitely better than starting afresh and embarking on an fresh image-building exercise or a makeover exercise.  

A corporate takes several years to build an strong image for itself either in the public eye or in the market with its customers or vendors.  It is mostly based on the strengths of its financial assets, manpower, technology, quality, reliability and service. The image is externally based on strong internal fundamentals. A corporates strong internal unison and efficiency sustain this external image. 

If cracks begin to appear internally through financial mismanagement or faulty or delayed deliveries, then the corporates image takes a beating in the market. Once reputation suffers, business is hit and the corporates profit begin to dip, thus leading to unsustainable bottomlines. 

Therefore its imperative for a corporate to carefully preserve the reputation it has painfully created in the market over the years. To help achieve this objective, the top management of the company usually works in close cooperation with its communication department, making public healthy information about itself or retrieving a bad situation by explaining through background briefing to the friendly media the actual position and the industry environment in which it works. 

This helps sustain the corporates image. Transparency in communication helps the corporate sustain its image and it necessarily has to be selective in the general interests of the corporate. Hiding behind closed doors or dodging information seekers is not a healthy practice and leads to unnecessary media curiosity, often triggering unfounded or loosely sourced misinformation about the corporate that can adversely affect its image.

If the corporate is a listed entity it can cause considerable havoc in a day's dealings at the stock exchanges, affecting shareholders that have placed immense trust in the corporate. 

Lets see how reputation management serves the various interests in the company. Firstly, let’s look at the shareholders that form the backbone of the company.  

Stakeholders: Internal stakeholders are the employees and shareholders of the corporate. External stakeholders are its customers, suppliers, the media, government authorities and the society. 

Reputation: Perception is the mental impression of internal and external stakeholders of any organisation. The mental impression is formed by any person based on his individual experiences with the said organisation, coupled with the organization’s performance and ethics. Reputation is the commonly held evaluation of the organisation based largely on the perception of various stakeholders. 

What we are in effect saying is that the reputation of any organisation is directly related or proportional to its performance, ethics and experience it provides to the stakeholders. 

Reputation risk: Reputation of the corporate is compromised when an organization’s performance, ethics or experience with stakeholders suffers. Reputation is often enhanced or risked due to the following factors:

* Financial performance
* Corporate governance and quality management
* Social, ethical and environmental performance
* Employees and corporate culture
* Marketing, innovation and customer relations
* Regulatory compliance and litigation
* Communication and crisis management.

Reasons for reputation risk: A corporate is at great risk when its stakeholders' perception turns negative. The corporates reputation consequently takes a dip. Risk factors for any corporate or organization’s reputation could be attributed to the following factors:

*      Poor business performance
*      Lack of business ethics
*      Bad experience by shareholders
*      Lack of communication skills internally and externally
*      Lack of transparency
*      Not being proactive during crisis 

What should one do when a corporates reputation nosedives or suffers

*      Don't panic, be calm and strategise with a cool head
*      Don't pass the buck or blame others
*      Don't find a scape goat
*      Don't indulge in witch hunting
*      Sit and think calmly as to the reasons for the bad reputation
*      Handle the remedial measures proactively
*      Adhoc or homogenous approach is not feasible, if many companies are under one umbrella - each will have its own strength and weakness
*      Take the professional help or the experienced people in the organisation
*      Be transparent in all your transactions - you will win the day 

Proactive: Here is where an image audit will serve your purpose. Periodically study the perception of stakeholders through image audit. Understanding the stakeholders' perceptions and rising up to their expectations would often reduce the risks.

Internal departments - human resource or communications - can conduct image audits. But it is best done by a professional agency outside the corporate as they will be less biased in their approach. Moreover, stakeholders of a corporate will feel more comfortable with outsiders as they will fell freer to face the auditing process, and confidentiality will be guaranteed in respect to the identities of the respondents.

There are very few people trained in conducting image audits. There are some in Chennai and probably in Delhi and Mumbai too. If an internal communications department is to do it for the corporate, it is best done at tandem with the professional agencies involved in this work as they have wide experience, instead of doing it alone.

Conclusion: Effective management of risk will not only go a long way in protecting the corporates reputation but will also enhance it. Every challenge coming the way of the corporate is to be treated as an opportunity to enhance reputation. Ability to manage reputation and its associated risks will effectively become a core competence for a corporate in a fiercely but often murky competitive world.

* The author is a corporate consultant and formerly a Economics Editor of the Premier News Agency (PTI) of India.


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