The Hindu Business Line : Managing reputation

The cola companies may have managed to put the controversy behind them with fire-fighting campaigns but Sunita Narain's crusader reputation will likely endure.

The difference between image and reputation sometimes tends to blur. Yet it is broadly recognised that image-building is a process where communication in all its aspects can be effectively used. A reputation, on the other hand, is defined as the general opinion held by different people based on merits or demerits earned by a country, a corporate or even an individual.

Someone said, image is temporal, it is a perception. Reputation is an enduring character that is quietly understood. Advertising agencies seem to place a great weight on creative awards to build their reputation as successful partners. Last year, agencies in the US spent about $37 million to enter their work in just the Cannes advertising festival, the D&AD, the One Show and the Andy's. We are not even talking about the hundred other advertising awards that are well patronised, nor are we factoring in the value of the man hours that go into preparing a body of work to enter in each of these awards. After all this, does winning enhance their reputation? The six most awarded networks in 2005 were among the ten fastest growing agencies. In a letter addressed to shareholders, WPP, the second largest advertising conglomerate in the world, noted, "If you draw a graph plotting awards against margins, there would be a pretty strong correlation. The more awards, the stronger the margins."

Apart from advertising, every industry and every corporate strives, and sometimes struggles, to build a reputation and then manage it. At a macro level, the IT sector has established India 's reputation worldwide as a country capable of delivering cutting edge software technology at competitive prices. The Indian economy, growing at a consistently crackling pace and holding forth the promise of a mega market for a wide range of products and services, has acted as a magnet for foreign investment. Companies in India sense a huge opportunity and are keen to rapidly expand their operations and grow to meet the huge demand. A good reputation is a critical factor in attracting investment at any level. It is a well-known fact that companies with a good reputation have a relatively easy time raising funds.

As industries go, the pharmaceutical industry in India is an enigma. Perceived as an investors' darling, it is also viewed by consumers as a large, frightening entity that uses patents against patients and profits from the practice. Speaking at a recent meeting, Ranjit Shahani of Novartis acknowledged this perception, and while trying to build a positive case for the industry, admitted that proper communication and systematic public relations in a professional manner was being actively contemplated to project the value proposition the industry offered.

Yet, this task is as onerous as it is urgent. From Thalidomide to Vioxx, the reputation of the pharmaceutical industry has taken a real hammering. What is really needed is not damage control but an honest image makeover. The recent `pesticola' furore proved to be much more than a storm in an aerated water bottle for the cola majors. At the end of the day, while Pepsi and Coke might be smug in the knowledge that their pockets are seriously deep, public memory proverbially short, and government notoriously ineffective, one must admit that any survey would reveal that Sunita Narain's reputation, at the moment, is far higher than that of the cola companies and the Union Minister for Health put together.

As far as managing reputation goes, Cadbury's would have to be a shining example where transparency combined with quick and effective advertising strategy and aggressive public relations pulled the brand out of the `can of worms' it found itself in.

Effective public relations

With reputation management becoming increasingly complex and important, so is the role of professional public relations. Against this backdrop, the Reputation Pyramid Model unveiled by R&PM Edelman recently assumes great significance. The model stresses three main drivers of reputation: product and service quality, management practice and social accountability. Social accountability is carefully defined as not just philanthropic work but as part of the fabric of nearly all corporate practices. In a business environment where most companies still have a knee-jerk response to crises and a typical fire-fighting mentality, this model is based on an ongoing three-year study in Asia-Pacific markets and underlines the need for business leaders to adopt a proactive approach to manage not just brands but also stakeholder relationships that ultimately build reputations. Edelman started off with identifying seven key stakeholders whose relationship to every corporation is critical in maintaining and building a strong corporate reputation. Intensive interviews were then conducted to learn how these stakeholders form opinions about companies doing business in their market. Interestingly, in Asia, stakeholders on average rate quality of products and services as the top factor. Yet, over the three years of survey, it has remained flat. Social accountability scored the lowest, but has been steadily climbing over the survey period. Sound management too has shown a smart climb. This is an eye opener that beyond quality management, labour and employee practices, monitoring corruption in supply chain and business partners and having good environment practices all contribute to the reputation of a company. Today's stakeholders take product quality as a given. They then want to know if the company is an equal opportunity employer, energy-conscious, sincere about being not just a good corporate citizen but also a good neighbour and many other such aspects. As business environments and consumer needs change, companies would be well advised to communicate to every stakeholder transparently, and in a sustained manner. Herein lies the key to a good reputation.

(Ramesh Narayan is a communications consultant.)

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