Leaders should focus on the processes leading to good or poor performance on reputation rankings, not merely on the rankings.
BI RESEARCH: Reputation Management
Reputation remains one of the most important assets of modern organizations. It assists in building competitive advantage because it is difficult to imitate, acquire, or replace. Reputation builds legitimacy, making organizations more resilient to crises; and it increases their room to maneuver in organizational change and innovation.
Is there a quick fix to reputation?
There is evidence today that many leaders may believe there is a quick fix to reputation. The Internet is rife with tips on how to do it. However, a quick look at the list of drivers of reputation puts the lie to this assumption. Drivers normally include seven common primary dimensions: leadership, products and services, financial performance, innovation, workplace environment, governance, and citizenship.
These are proxy variables directly associated with measurements of quality. Reputation management basically consists of making sure the organization performs in a superior way on each one. For example, high profits and earnings, high quality products and services, a great place to work, and a leader in social responsibility initiatives.
Further complicating the situation is that an organization’s various stakeholders often have different meanings and expectations for what constitutes good performance for the various drivers of reputation. Quality after all can be subjective.
Reputation is a complex wicked problem
The notion of reputation and reputation management bears many of the characteristics of a class of problems called wicked problems.
Wicked problems are not evil or “cool” problems, but rather problems that are resistant to long-lasting solutions, that are hard to grasp and change when efforts are made to deal with them, and that have complex roots and diverse stakeholders.
Reputation has many interpretations; it is a judgment held by a diversity of stakeholders, all of whom have diverse and often conflicting views and priorities; it is something that in the long-run will never be perfect; and it can be influenced positively or negatively at any time by both internal and external actors.
The “wickedness” of the reputation problem illustrates the need for a systems thinking approach to building reputation, which means focusing on process as opposed to outcome. In other words, organizations must realize they should not focus on reputation rankings to make decisions, they must concentrate on what occurs within the organization that leads to their poor or good performance on those rankings.
Changing the focus of reputation research
Advancing the systems thinking approach to reputation, with its emphasis on process, requires research in two areas.
- Exploring and evaluating the role of management in fostering a learning environment.
- Studying the overall learning orientation of the organizations, which is important because learning organizations are more effective in dealing with wicked problems.
Together, an assessment of managerial practices across functions and of organizational culture with respect to learning can identify opportunities for improving organizational learning capabilities, thereby supporting reputation management activities.
For example, firms that score high on the RepTrak survey tend to score high on all of the seven drivers of reputation. It would be an important contribution to analyze these firms to see to what extent their learning characteristics are consistent with the challenges associated with managing their reputation.
This would help organizations understand the basis of their particular reputation and provide specific guidance on how to manage their behavior more effectively and, consequently, its impact on their reputations.
These insights would be invaluable not only for the private sector, but for all organizations, and even countries.
References:
- Brønn, P. S. and C. Brønn (2017). Systems Thinking: A Method for Reducing Reputation Risk. International Studies of Management and Organisation 2017; Volume 47 (3).
- Brønn, P. and Buhmann, A. (2018). Building and Managing Reputation: Current Debates and Future Directions. In: At the Forefront, Looking Ahead: Research-Based Answers to Contemporary Uncertainties of Management. Universitetsforlaget, pp. 59-72.
- This article was first published in Communication for Leaders 2019. Communication for Leaders is a Science Communication Magazine published by the Centre for Corporate Communication and the Department of Communication and Culture at BI Norwegian Business School.
Text: Professor Peggy Simcic Brønn and Assistant Professor Alexander Buhmann, Department of Communication and Culture at BI Norwegian Business School.