Corporate reputation matters in business

For years, Public Relations practitioners have advised that building a positive corporate reputation brings many benefits to the bottom line.

Whether it is impact on the share price or brand sales, the received wisdom is that a positive corporate brand creates a glow that enhances the entire business and creates measurable impact on financial performance.

Conversely, a poor corporate reputation undermines the performance of the business.

Turns out this is all wrong. Or at least for some companies, these rules do not seem to apply.

Just so I do not do get myself and my fellow practitioners out of a job, let me be more specific.

Corporate reputation still matters. Every day we see the damage done to businesses from corporate reputation flesh wounds.

We know from numerous research studies that people choose to work for, invest in, give contracts to or buy products from companies they trust and believe in. However, there has emerged a new group of firms who seem to be able to thrive even when their corporate reputations are under attack.

Surveys of the most admired companies bring up the same top list across the world. Consumer technology, retail brands and financing companies tend to be always up there.

But while the public and analysts are full of praise, the media is often full of criticism for the corporations behind these popular brands and it doesn’t seem to make any difference. Sales keep booming and stock prices remain bullish. So what is going on?

Is the media a declining influence on the public? This seems unlikely.

Virtually every day the media savages a business, often for relatively minor issues and the impact is seen at the cash registers and on trading screens.

Might it be the public do not care that much about the issues with which these untouchable companies are associated? Would the story be different if we were looking at emotionally charged issues such as the treatment of animals?

Or is it to do with the sector in which a company operates? Could a tobacco producer ever be admired as a company no matter how ethically and efficiently it ran its business?

In my opinion, it is what a company sells that is the key to understanding this new phenomenon occurring in the world of reputation management.

I have not seen any research that shows which factor has the most substantive impact on people’s view of a company.

However, I would be confident that reputation is largely shaped by what a company makes and sells.

If we love what a company produces, we cut it some slack. And if it sells, the investors are happy.

Corporations with products and services that people delight in have more body fat to protect them from any corporate malaise.

Perhaps we are more inclined to turn a blind eye and choose not think about the companies behind a brand we enjoy or that pays such great dividends.

Emotional considerations, often neglected when building corporate reputation, clearly play a role in shaping perceptions of corporate brands as much as they do with consumer brands.

But these firms should not be complacent. Public opinion can change suddenly.

It may be that the straws are piling up and it is difficult to predict which straw will mean a trip to the osteopath.

Brand love can end in divorce very quickly if a company gets on the wrong side of an issue people care about or if a more attractive brand comes along and steals people’s hearts.