In business, reputation is everything. Simon Thomas argues the growing importance of L&D's role in managing corporate reputation.
As Warren Buffett, the U.S. investor, businessman and philanthropist stated, "It takes 20 years to build a reputation and only five minutes to ruin it. If you think about that then you'll do things differently". Fitting it is therefore, that never has this quote been more appropriate than in recent times with the near collapse of the banking system and the subsequent onset of the global financial crisis.
You only need to skim through the newspapers or browse the internet to read of the damage to corporate reputation that is befalling some of our most recognised companies almost on a daily basis: Royal Mail and the ongoing dispute over modernisation; British Airways shedding 1,700 jobs and the threat of industrial action during the festive period; British Telecom announcing a u-turn on their decision to scrap their graduate scheme and insisting they are committed to investment in future talent.
Cause and effect
So, why is corporate reputation management important and what impact should this have for learning and development practitioners? Staying with the example of Royal Mail, its customers such as Amazon are already starting to take preventative action to secure service delivery and changing mail distribution provider. Royal Mail’s reputation is taking a battering and it’s costing them money now and probably a long way into the future.
"Everyone in the organisation has a responsibility for corporate reputation and that makes its management difficult."According to the Reputation Institute, Corporate Reputation is the perception people have of an organisation - perception formed as a result of the personal experiences that people have, the messaging they see and hear, and the third party conversations they are exposed to. It differs from brand in the sense that brand is a promise and making a relevant and distinctive promise helps to build a brand. Corporate reputation is built by fulfilling that promise to stakeholders. A company therefore owns its brand, but stakeholders own its reputation. The difficulty this poses is that if someone else owns your reputation, how do you manage it?
The number of stakeholders for any organisation is likely to be multiple and diverse whether in the private or public sector. Take a moment to think about all of the different people you come into contact with; customers, suppliers, candidates, employees, shareholders, government representatives and influence groups to name but a few. The touch point with each may be formal or informal, planned or unplanned, frequent or infrequent yet the interaction has a bearing on how someone perceives you and the company you represent. It affects your corporate reputation.
With so many stakeholders to consider, it’s not that surprising that the responsibility for CRM in most organisations is segmented into key elements broadly speaking under the headings of consumer, investor, employee, supplier and general public reputation, with the individual functions owning each e.g. sales and marketing managing consumer reputation and finance (and the board) managing investor reputation with the assistance of PR and communications. What we really learn from this is that everyone in the organisation has a responsibility for corporate reputation and that makes its management difficult.
L&D's pivotal role
However, whilst the functional approach is correct, in my opinion it is employer reputation where most of the focus of attention should be applied which is good news for the influence that HR and L&D need to have in the corporate hierarchy. The Corporate Reputation Chain, developed by Professor Gary Davies and his team at Manchester Business School builds on the mid-eighties SERVQUAL framework. Essentially, the chain highlights the causal relationship between satisfied, motivated and engaged employees (the internal identity) and its positive impact (the external image) on customer satisfaction, loyalty, sales and therefore profit. This relationship isn’t mutually exclusive to customers as stakeholders but to investors, suppliers and the general public as well. The significance is the importance of the employee(s) in the chain and the need to establish, manage and enhance reputation as an employer.
This requires the organisation to: identify, communicate and live its employer brand; to focus its attention on the engagement factors that will help motivate and retain key talent; train and develop the leadership team and the wider employee population and communicate what makes the company a great place to work.
L&D plays a critical role in achieving this whether it’s teaching the importance of CRM to leadership and management, cascading it throughout the business, championing the company story or being ambassadors at all times. The induction and on-boarding process needs to have employer reputation as a key theme and customer service training should be delivered in the context of its direct impact on corporate reputation. I’m sure that BT, BA and Royal Mail are doing many of these things and doing some of them very well. The evidence of this will be how resilient they are to the damage that has been caused to their corporate reputation, how well they recover and how quickly.
Simon Thomas is Managing Director of The Employer Reputation Company. His blog can be found at www.employerreputation.blogspot.com and TERC’s website is www.employerreputation.co.uk
