A company’s reputation is a collective snapshot of how others perceive it. Customers, shareholders, partners, suppliers, employees, and even the general aware public hold certain ideas and impressions about your company. These stem from either personal experience or from the media messages they consume. Third-party commentary, social media sentiment, online reviews, and search results are some of the main building blocks of your reputation. In a world with 60% of its population comprised of active internet users, much of this reputation-building takes place online.
Today we have instantaneous news cycles and real-time interactions between companies and customers. Naturally, reputation-building is not a one-way street anymore, and business reputations are now being built from the inside out. A large chunk of this happens through the individual reputation of employees and associates. According to a recent study, 74% of executives believe their customers tie brand perception to executive perception.
This link between individual reputation and company reputation is even stronger in the case of top executives. A Weber Shandwick report on the role of corporate reputation found that 49% of the reputation of a company can be attributed to its CEO’s reputation. What makes this even more relevant to businesses is that there is a strong correlation between company reputation and financial success. In fact, according to the same report, 60% of a company’s market value is derived from its reputation.
How an individual’s reputation can impact a company
Companies with strong positive reputations attract better people – be it employees, suppliers, or shareholders. They inspire customer loyalty and trust. Their market value is high because they are thought to deliver sustained earnings and future growth. In an economy where more than 70% of market value comes from intangible assets like brand equity and goodwill, this immense value attached to reputation makes companies especially vulnerable to reputational risks
The impact of an individual’s reputation on the company wasn’t as strong in the past when business decisions were played out in boardrooms and business leaders weren’t public figures. Now the actions and statements of these individuals are accessible on countless platforms in the public domain, and their brands and businesses are only a click away.
There are countless incidents of an individual’s reputation majorly impacting a company. Only a year ago, Matt Duckor, Condé Nast’s head of video programming, faced allegations of discriminatory behaviour. When his online reputation was found to show evidence of similar actions, the company attracted wide criticism for its careless hiring and poor culture. Duckor had to resign, and Condé Nast announced that they would be working on their talent selection and recruitment processes.
An instance of a different kind of individual reputation impacting the company is of John Legere and T-Mobile. When he was CEO of the telecom network, his reputation as a colourful, rebellious “shock jock of corporate America” helped boost the image of a rebel brand that T-Mobile was trying to create for itself. The CEO’s reputation played a big part in establishing the company’s reputation as a market disruptor and challenger.
A company’s reputational vulnerability is not limited to its employees; it extends to all those people it associates with on close terms. Each individual carry with them a certain level of risk. So, to safeguard themselves, companies conduct reputation checks on clients, suppliers, and employees. Since traditional methods of reputation checks are neither scalable nor very efficient, many companies opt for new technologies like AI-driven reputation checks to save time and money.
Safeguard your business from these reputational risks
Research shows that an alarming number of people exhibit offensive or discriminatory behaviour online. This kind of behaviour can repeat itself at the individual’s workplace or in their professional relationships, disrupting a culture of inclusion and diversity. It can reflect negatively on the company they work for, attracting public ire, reputation loss, and even lawsuits. A negligent-hiring lawsuit, for example, is a common-law claim that says a company ought to have known if an employee posed a risk.
This makes it crucial for companies to have effective reputation check systems in place. An automated smart search service like Yoono can be used to do the heavy lifting, as it can run detailed checks within minutes against large volumes of online information and public records. Because reputations change and evolve all the time, Yoono can also be used for ongoing monitoring of individual reputations. Its robust algorithm can produce real-time insights to help mitigate the reputational risks that can impact your company.
Reputation metrics will continue to evolve, but with the correct technology for the age, companies can keep pace with the shifting requirements of online reputation management without breaking a sweat.