The Hindu Business Line : How to do reputation audit

AUDIT has a reputation of its own, we know, but have you ever heard of `reputation audit'? If you're saying, `Uh, what!' let me tell you about Fame & Fortune, written by Charles J. Fombrun and Cees B. M. Van Riel, from Pearson (www.pearsoned.co.in).

The authors identify six dimensions and 20 attributes of company reputation. One, emotional appeal, that is, you like, admire, and trust the company. Two, products and services are of high quality, innovative, provide value for money and are reliable. Three, financial performance shows a record of profitability, with low risk investment; also, you see growth prospects and competitors falling behind. Four, vision and leadership is clear and excellent, and also able to exploit market opportunities. Five, workplace environment is good, and employee reward is fair. Six, socially responsible, by supporting good causes, caring for environment, and taking up community responsibility.

Rate these characteristics on a 1 to 7 scale, add up the points, and what you get is RQ, or reputation quotient. "What drives corporate reputation?" ask the authors and provide some disturbing answers. To increase reputation by 5 per cent, you can work on the emotional appeal and hike it by 7 per cent, because "most consumers ascribe high reputations to companies they like, trust, and admire." Okay, how do you achieve that 7 per cent? You can work on products and services and score better by 10 per cent, and that would create the required emotional appeal.

Instead, you can increase the social responsibility dimension by 24 per cent for the same result, or change perceptions of workplace environment by 26 per cent. Quite sadly for the bean counters, differences in perceived financial performance and leadership have little effect on consumer ratings of corporate reputation, according to the authors' findings. Thus, to achieve the 5 per cent rise in company reputation, perception about financial performance has to go up by a whopping 55 per cent. Reputation-building, therefore, has to go beyond quarterly financial results, write the authors, because "consumers are as sophisticated as investors, but interpret the corporate world in terms of multiple signals that companies broadcast about their non-financial initiatives."

Aren't you curious to know what your RQ is?

Serving an ace

SANJIV Agarwal and Sharad Bhargava are both CAs, and now the editors of a new monthly called Service Tax Journal (mashbra@vsnl.com). Vol 1 Part 1 begins with `deadlines and holidays' indicating a calendar of `to do' for adhering to Excise and service tax obligations, and also government and court holidays during the month. The `statutes' section doesn't stop with merely reproducing the Rules and Notifications; there are `editorial comments' too. Thus, it comes as a relief at the end of a long-winding Circular on `issues pertaining to levy of service tax on goods transport agency', there is a brief comment from the ed: "The circular contains the reasoning for levy of service tax, extracts from the Bhardwaj Committee Report and modalities for levy of service tax." Highlights of the Report are given as concise bullet points, along with a note on the fate of the recommendation, such as: "No registration for goods transport agency not liable to service tax. (This recommendation has been accepted. )"

This is the marriage season, but there may be uninvited guests from the Department if mandap keepers and outdoor caterers are lax. Reason, you'd know from a press release included in the STJ, is that the Ministry of Finance has alerted the Commissioners of Central Excise and Service Tax "to issue notices to service providers who are rendering taxable services relating to marriages and not paying due Service Tax on the full value of services." The Journal's editors advise on the subject is not about choosing the right boy or girl, but counselling "clients rendering taxable services during the busy marriage season to comply with the legal provisions to prevent future complications." Useful service.

BooksOfAccount@TheHindu.co.in

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