MANAGEMENT
Just as Rome wasn’t built in a day, so also is reputation; it can’t be built overnight. Reputation is the most fragile concept and trait. As vulnerable as an inflated balloon. A single prick can take away its shape. Your name (read reputation) will outlast your life. A Japanese proverb says, life is for one generation; a good name forever. It is best to remember that a single falsehood destroys a thousand truths.
Reputational risk! Is this another new buzz word in the corporate and government corridors? Is reputation a new discovery or concept? No, it is not. Reputation since times immemorial is a cherished aspect of life. However its applicability has moved from individual perspective towards corporates who now in law are recognised as ‘independent legal person’, hence the attention towards developing and protecting its reputation.
In the context of the importance of personal reputation, let me narrate an incident from Abraham Lincoln’s life, which is a perfect case in point. While practicing law, Abraham was approached by a friend of long years, to take up his legal case. Abraham said, leave the files, I will review and then decide. Some weeks later, the friend asked for its status. Abraham responded, you have a perfect case, you will win hands down; it is an open and shut case? Excitedly the friend asked, “so will you take it up?” Abraham shrugged his shoulders and said, ‘No’! Bewildered, the friend remarked you just said that I will win hands down so why not? Abraham retorted, the files with its papers and annexures will certainly make you win the case before any court but since I know personally that you are a high class rascal and scoundrel, I am afraid I may speak the truth before the judge! So please take the case to some other lawyer. Abraham protected his reputation by his denial to a friend. Oh! Wish our society had some clones and replicas of Abraham Lincoln, the ‘lawyer’ not just the ‘President’ Lincoln!
Measurement of reputational risk is impossible. It is that non-quantitative risk that directly impacts the quantitative results, in terms of low or high profit and loss figures. Employees, market and a whole lot of stakeholders are always keen to know if the company they work or are associated with an organisation that is ethical and honest.
Reputation management doesn’t begin at the top of the hierarchy but at the lowest rung of the corporate ladder. The tea boy in your office or the young girl at the counters of a fast food joint, through their mannerisms and behaviour can rather create or undo the corporate reputation. Employees create reputation, it is everybody’s job and responsibility in any organisation to recognize and make efforts towards its improvements. But it is also essential for the Board and Ceo to keep a vigilant and watchful eye on company’s reputation by monitoring, creating, developing and directly influencing this significant feature.
In a world of fierce competition, the market offers very similar products and services with little or no significant price variation. So what exactly is the distinguishing factor that makes some companies successful, while others fail; it is simply reputation. An organisation through marketing and advertising campaigns can earn the finest image for its products and services but if these are outcome of an unethical or a dishonest process then the market will out rightly reject it. Societal preferences have a major influence on ‘reputation’. If the ‘designer brands of Paris and Milan’ sell shoes and handbags made of crocodile or snakes skin in a society where animal rights and protection are predominant then it would surely be met with disastrous results. Reputation will always outstrip any other feature a company could be proud of.
Unlike image building, reputation is not created by catchy slogans or high sounding enunciations enshrined in any corporates vision/mission statements. Reputation is the result of long years of upright behaviour relating to the minutest of things; it could be as small as how customer complaints are handled to more significant choices relating to choosing the most ethical line of business. The great ‘oil spill’ in Alaska caused a market cap decline of $3 billion for Exxon. The spill was responsible for environmental damage and threat to animal kingdom of Alaska.
How does one manage reputational risk? Is it a perfect science or a pack of do’s and don’ts that any organisation can buy from the management shelf. No, it is built over years and is extremely unique to each and every organisation. Senior management must dedicate time, effort and resources to find out research upon their companies reputation standing. Pharma company’s products are most heavily reliant on reputation; allopurinol a generic name is not the same as Zyloric, the patent of Wellcome Pharma; because Wellcome is globally recognised for its research and development in the field of pharmacology. Paracetamol is the same ingredient but when sold as Ponstan, it has different level of satisfaction for the buyer. There are several companies whose reputation is dependent on product recognition.
Seek the purest treasure mortal times offer a spotless reputation -- Shakespeare in Richard II. Even in the most monopolistic markets (products), reputation is held very close to the heart. But then how much time the Board or the Ceo or the senior management spend on management of reputation or even discuss it as a factor to be recognised and factored in, as a major risk, that seeks management attention.
The concept of ‘lose face’ in the orient and Far East is so critical that many are led to committing suicide, for not having a reputation is okay, but losing it is fatal. A banker in a Monte Carlo Casino at the black jack table is not a good sighting for depositors. His presence there will slowly or gradually damage his and his bank’s reputation. Similarly any corporate executive who cannot hold the forbidden drink at a cocktail and starts to indulge and exhibit base human behaviour will potentially damage his organization’s reputation. Paul Holmes who actually ran a magazine ‘reputation management; went on to the extent to suggest that all organisation must create a new position called, ‘corporate reputation officer.’
Reputation earned needs conscious protection. Shakespeare in Othello says, ‘reputation oft got without merit and lost without deserving.’
Bank Umun Nasional (Indonesia) in its advertising and marketing campaign in the late eighties had this to say, ‘reputation is a word denoting estimation of distinction and repute. The reputation of sun as a reliable partner has been established in its dedicated appearance for millions of years at exactly the same time and position. The excellent reputation of the sun is the unassailable assurance of its rise every morning. For Bank Umun Nasional the success achieved up to the present can be considered as an acknowledgement of reputation.’
Fortunate are organisations that with conscientious practice are recognised for good judgement, fairness is dealings and who stand for truth and rectitude in society. The recognition by the honest and abuse by the coward is a good yardstick to know where your organisation stands on the measuring scale of reputation.
A good name keeps its luster in the dark.’ (English Proverb). Bear in mind.
The writer is a senior banker and freelance columnist
