• Effective reputation management hinges on measurement

    Corporate communications has traditionally been difficult to measure. However, new measurement techniques have made it more possible for companies to track people's perception of the company on a scale that wasn't previously possible.

    As well as having a commercial value in terms of demonstrating return on investment, companies that are tracking their reputational performance are also seeing better results from these efforts, at least according to new research from the Reputation Institute.

    Measuring success boosts long-term performance

    Released earlier this month, the Reputation Leaders study tracked what the ingredients are for successful reputational risk management. The research found those firms that are excelling in this space are building campaigns on a "foundation of measurement" that is used to understand the business's public image.

    The companies that are doing this well are also getting broader buy-in from across the C-Suite, with the report suggesting that CMOs in particular are well-placed to provide the analytical tools needed to fully understand the success of new communication strategies.

    While businesses that are mastering this process are performing well, the report emphasised that many firms are currently unable to generate the insights they need. Less than half of respondents reported they had the personnel and resources necessary to make the most of these new tools.

    A major part of this problem also has to do with the very basic communication strategies that a company has in place. For example, only 59 per cent of respondents stated they had a very strong narrative for their business that stakeholders could engage with.

    The composition of reputation

    While many companies are now measuring their reputation, studies are also better understanding, in dollar terms, how reputation is contributing to a company's overall value. The results from the 2015 US Reputation Dividend Report, found that $1 in every $6 of share price could be attributed to the brand's reputation.

    However, the report also cited that 'reputation' is multifaceted and built up over a number of different components. For example, the study found that perceptions of a company's people management strategies were responsible for 16.4 per cent of total value of reputation. Other major components were the perceived quality of the management team (14.5 per cent) and the company's long-term investment potential (13.5 per cent).

    It's this multi-faceted model that makes it harder to accurately measure a single company's reputation. However, those organisations that can accurately calculate their public perception and understand where it is strongest and where it can improve, will be the ones that delivering value through their reputational risk management efforts.

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