Reputation as a Currency of a Crisis



Reputation is important in crisis management. It requires us to ask, What is Reputation? At a personal level, reputation is something we are all familiar with. Are you nice? Are you generous, mean, selfish? Your reputation is beliefs about your habits or characteristics that are widely held. Having a good reputation is valuable in life, at home, among friends, and at work.


Corporate reputation follows the same logic. And surprisingly, the sources of corporate reputation parallel closely to those of personal reputation. People think of businesses as, in a sense, people. They ascribe to corporations’ reputations in the same way they assign reputations to people. Just as someone might think a person is reliable, or trustworthy, or cool, they can also think of businesses in the same way.


This tells us that when thinking about corporate reputation, we should not limit ourselves to hard, tangible, impersonal characteristics. Just as a person can be considered warm, the public can think of a business as being warm. And just as a reputation for friendliness can help in your personal life, a reputation for friendliness can add value to the bottom line of your business.


So, what makes up corporate reputation? Reputation can relate to many characteristics, both tangible and intangible. In studies of reputation, it turns out that much of this can be collapsed into two distinct dimensions. These dimensions are Competence, and what can best be described as Empathy.

Competence measures the quality of your output. Are your products high quality? Are they reliable? Can you be relied upon to not screw it up? The empathy dimension measures how warm an organisation is, how much can they be trusted, how much do they care about people, their staff, customers, and all stakeholders. Every organisation has a reputation, and every organisation can be placed on these axes.


This framework works as well for non-profits. In general, non-profits have reputations that are more to the upper left, relative to for-profit firms. Non-profits have a warmer connection to the public. People believe that they care that they are trying to do the right thing. However, they also believe, in general, that they are less competent and of lower quality. The sweet spot is to be in the upper right, high on competence and high on empathy.


Of course, this is hard to attain, but it is very valuable if you do. Take a moment now to place your own organisation on the chart, as well as a few other businesses or non-profits that you are familiar with. The reputation of your organisation will play an important role in a crisis.


It will determine the scale of your crisis. It will determine the options you have available to solve the crisis. And in turn, the crisis itself will shape your reputation. The stronger your reputation, the easier managing a crisis will be. Indeed, whether you even have a crisis may be determined by your reputation.


Building a strong reputation is always valuable to your organisation. Building a strong reputation is also valuable as a strategic tool for crisis management.


#reputation #crises #leadership #empathy #management #visionactiv

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