Corporate reputations have only been measured in earnest since the 1990s, and within the nascent management discipline of reputation management, there continues to be a healthy debate about how to use stakeholder perception scores and insights from the boardroom to the mailroom. By the 2010s, the most advanced companies answered the question of “reputation to what end?” as the INPUT for strategy development and not just an OUTPUT for how well the company is doing.
One of the reasons why companies like Allstate, Novo Nordisk and Telefonica, who have been actively managing their corporate reputations for years, have been able to reach this conclusion is the strong relationship and association between reputation and a basket of traditional business metrics.
Statisticians get excited when the correlation coefficient between unrelated variables is greater than 0.5 (on a 0.0 to 1.0 scale where 1.0 is a perfect correlation), and we have found six metrics where reputation is more highly correlated to all six of them than any of the individual metrics are with each other:
One of the reasons why companies like Allstate, Novo Nordisk and Telefonica, who have been actively managing their corporate reputations for years, have been able to reach this conclusion is the strong relationship and association between reputation and a basket of traditional business metrics.
Statisticians get excited when the correlation coefficient between unrelated variables is greater than 0.5 (on a 0.0 to 1.0 scale where 1.0 is a perfect correlation), and we have found six metrics where reputation is more highly correlated to all six of them than any of the individual metrics are with each other:
- RepTrak® Pulse – Employee Satisfaction: >0.6
- RepTrak® Pulse – Brand Goal (Equity): >0.6
- RepTrak® Pulse – Bottom Line ROI: >0.7
- RepTrak® Pulse – Net Promoter Score: >0.7
- RepTrak® Pulse – Stakeholder Support/Advocacy: >0.7
- RepTrak® Pulse – Customer Satisfaction: >0.8
The most intuitive link to reputation measurement usually comes from stakeholder support/advocacy, with measures such as purchase, recommendation, trust to do the right thing, work for, invest in, welcome to the neighborhood, included in most quantitative and qualitative stakeholder perception research in 2014. However, even stakeholder-specific measures, like customer satisfaction and employee satisfaction, have associations with reputation that when analyzed together in proper context, can lead to illuminating results that drive better business decisions and financial outcomes for the organization.
"The two primary indicators of internal alignment–does the employee GET the mission, strategy and their personal role to play–are familiarity and understanding."
How does knowledge management (KM) factor into this reputation value equation? On one hand, KM is a foundational enabler to how your organization’s business strategy gets translated “inside-out,” and on the other, it is a critical success factor in helping you meet and exceed the heightened expectations of all external stakeholders, “outside-in,” through a combination of people, process and technology investments and improvements.
The biggest determining factor in an individual’s perceptions about an organization is their direct experience–regardless if they are an employee (think captive audience), customer (think engaged audience) or supplier (think incentived audience). This is where world-class knowledge management pays the bills: document delivery, design and management to customer service management and payment processing can either put reputation points on the board, or they can create frustration and negative word-of-mouth.
For most industries, the second most important determinant in an individual’s perceptions about an organization is their exposure to what the company says and does, which includes marketing, communications, community outreach and the like. This is where knowledge management that helps shine a light on the organization’s mission, purpose and values in areas like compliance, disaster recovery and the personalization of opt-in marketing can be the difference between support and skepticism throughout your stakeholder ecosystem.
The third channel where individuals form perceptions about organizations is what others say about you–third-party conversations about your company, including formal (media and analysts) and informal (friends and family). These perceptions are malleable and impossible to control from an organizational standpoint, but if these conversations become too one-sided and do not include the company’s voice or point of view from your ambassadors or advocates, reputation free fall can occur. This can end up calling into question a stakeholder’s experience from the other two channels (direct experience and what the company says/does)–which means that your knowledge management strategy must fortify your ability to respond in real-time through social networks and mobile technology in addition to more traditional channels, which are usually longer lead.
Let’s take a closer look at employee engagement (internal) and workplace reputation (external) and how organizations can use knowledge management tools and tactics to gain greater alignment (internal) and preference (external) over time. Research shows that improving employee alignment by 10% increases financial performance by two percent–which can only happen at the intersection of knowledge management and reputation management.
MORE: The Top Knowledge Management Drivers for Your Organization's Reputation
Employees who are fully aligned with the organization’s mission and strategy display an abundance of the following four behaviors (in no particular order): they are fully committed, take initiative, help others and promote the organization. The drivers of alignment come from five factors across three areas: Informing (Messaging/Media + Cascading), Motivating (Dialogue + Rewards/Recognition) and Developing Capabilities (Capability Development), plus a sixth factor we call, “What’s in it for me?” The two primary indicators of internal alignment–does the employee GET the mission, strategy and their personal role to play–are familiarity and understanding.
Executives and managers can only drive top-down change and organizational alignment if enough knowledge management capability exists to connect the corporate strategy to what employees care about. This means business intelligence, enterprise content management and change management become key enablers that “rally the troops” around a shared vision and purpose, which, in turn, translates to better external stakeholder engagement.
In future months, this column will come back to the association between reputation and traditional business metrics as we look at how executive scorecards and dashboards that are powered by KM stand up to the pressures of the reputation economy, where what you stand for matters more than what you sell.
John Patterson is a NY-based senior advisor at Reputation Institute where he has been responsible for thought leadership and global account strategies for the consulting firm since 2010. Follow Reputation Institute on Twitter @Reputation_Inst.
