How to Use Measurement to Manage Reputation

Type: Articles
Topic: Research and Measurement
By Nicky McHugh
5 December 2018

Actively managing your company’s corporate reputation is no longer optional. Just ask Facebook. The company has suffered reputation setbacks over the past year and a half following a series of allegations and missteps; from proliferating fake news, to data and security breaches, to lags in leadership, Facebook’s reputation is now severely compromised. Our firm’s data shows that Facebook’s reputation took a hit in late 2017 and has been in free fall for much of 2018. This has resulted in Facebook lagging behind in the U.S. technology sector by around 10 reputation points (on a RepTrak® scale out of 100) for much of the past year, while also seeing higher levels of market devaluation relative to peer companies and U.S. markets: In the first three months of 2018, Facebook’s valuation decreased by 14 percent, compared to a four percent drop for the S&P 500 overall.

While the reputational impact of a crisis is clear, what is less obvious are the reputation gains that can be achieved by companies that choose to proactively protect and manage their corporate reputations. Companies with strong reputations outperform their competitors, seeing a 2.5 times better stock performance compared to the overall market. They are employers of choice: 57 percent of the general public would choose to work for a company with an excellent reputation. And they are in demand with consumers, as purchase intent and willingness to recommend increase.

With such clear advantages to reputation gains, it is no surprise that reputation measurement rates are increasing. Sixty-three percent of companies we surveyed in Reputation Institute’s Leadership Survey measured their corporate reputations in 2017, more than double when compared to the prior year. Reputation however, is not the only metric that companies track: employee perception, customer satisfaction, brand metrics, and online conversation analysis round out the key types of measurements many companies conduct.

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Nicky McHugh

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