The18ImmutableLawsofCorporateReputation.pdf

The 18 Immutable Laws of

Creating, Protecting, and Repairing Your Most Valuable Asset

About the Author

Author:

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Wall Street Journal Books

2004

074323670X

320 pages

Ronald J. Alsop

is a news

editor and Senior Writer of

He is the

author the new book,

The Big Idea

Wall Street Journal.

The

The 18

Immutable Laws of

Corporate Reputation:

Creating, Protecting, and

Repairing Your Most

Valuable Asset

Everything an individual or company does or produces contributes

to its reputation. Reputation is an intangible asset, but a very

important one. In some ways it is even better than having money in

the bank, but not as easily quantified.

A good reputation is its own advertising and quality seal. It can

engender loyalty in customers that can cross several generations

and time zones. A good reputation can bring in more customers in

the good times, and be a protective buffer in the bad times.

Wall Street Journal Guide

to the Top Business Schools

and

writes the MBA Track column on

CollegeJournal.com as well as

articles about business

education, corporate reputation

and marketing for the .

He previously served as the

marketing columnist

and as editor of its Marketplace

page, and he has written several

other books, including

Journal

The author has delineated what he calls the, “18 Immutable Laws of

Corporate Reputation.” This book holistically deals with the topic of

reputation management in three parts: establishing a good

reputation, keeping that good reputation and repairing a damaged

reputation

Journal's

The Wall

Street Journal on Marketing

The Wall Street Journal

Almanac

and

. A graduate of the

Indiana University School of

Journalism, he lives with his wife

and son in Summit, New Jersey.

Published by BusinessSummaries, Building 3005 Unit 258, 4440 NW 73rd Ave, Miami, Florida 33166

in any form or by any means, electronic, photocopying, or otherwise, without prior notice of

BusinessSummaries.com

The 18 Immutable Laws of

Corporate Reputation

Ronald J. Alsop

He is also the editor of the

annual

The 18 Immutable Laws of Corporate Reputation by Ronald J. Alsop

Part One: Establishing A Good Reputation

Law One: Maximize Your Most Powerful Asset

Reputation 101

In the course of an individual's or company's or organization's life, each activity or

action or product perceived by the public is counted for or against on the reputation

scorecard. It takes a lifetime to build a good reputation and an instant to ruin it.

Reputation is an intangible asset yet it is arguably the most valuable asset to

manage and maximize. A good reputation can attract and keep customers,

investors, and employees. Because of this, a good reputation is like a reservoir of

good will (towards the company) to help it weather bear markets, scandals, or

natural crises. Conversely, a lost or damaged name can scar a company and

provoke boycotts or drive off new capital.

Fostering a Reputation-Conscious Culture

Because factors affecting reputation are so pervasive, it is necessary to have a

concerted company effort to nurture and guard it. Reputation management can be

handled by single managers or by whole departments. Their goal is to indoctrinate

employees and, in some cases, suppliers, on the company's image, goals,

philosophy etc.

The Payoffs From A Positive Reputation

Though reputation is an intangible asset some of its effects are not:

A study of 216 companies related higher stock values for companies with

reputations for

A study of 10 portfolios attributed higher prices to investor confidence that

these were less risky.

Customers will buy products known for good service and/or good quality (In

the case of Microsoft, their reputation helped them compete in new markets

like game consoles).

Boosts employee morale and performance.

Attracts top talent (as managers, new graduates, etc.).

strong social responsibility.

Law Two: Know Thyself - Manage Your Reputation

Keep score

Before you can manage your reputation you must first measure it and keep score.

Measuring reputation is easily done through standard public opinion or market

studies; but as each corporation has different stakeholders (target markets,

shareholders, etc.) it is necessary to customize. Less than half of corporations have

custom research programs. There are no clear methodologies so it is important to

identify the stakeholders (from local to global) and the relevant attributes or

quantities to be measured: the same company may rank differently in different

surveys/studies.

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Part One: Establishing A Good Reputation

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The 18 Immutable Laws of Corporate Reputation by Ronald J. Alsop

Three popular examples of reputation surveys and what they measure:

The Reputation Quotient by Harris Interactive

Measures overall American sentiment not limited to opinions of

corporate executives and investment analysis.

Identifies subgroups like investors, employees, and customers.

Rates emotional appeal, products, services, financial performance,

social responsibility, workplace environment, and leadership.

Fortune (Magazine)'s Most Admired Companies

Based on opinions of 10,000 executives, directors, and securities

analysts surveyed by the Hay Group, a HR consulting firm.

Identifies “Top Ten” per industry.

Rates social responsibility, innovation, investment value, corporate

asset management, employees, financial well being, quality of

products and services, and quality of management.

CoreBrand

Focused on opinions of senior executives of large corporations

Rates familiarity and how favorable a company is, its quality of

management, and investment potential.

Innovated a “Brand Equity Methodology” that quantifies corporate

brand and calculates it as part of the company's market

capitalization.

New players in reputation measurement

Rating Research

Rates a company's reputation based on its ability to weather

controversies, scandals, etc.

Examines two dozen attributes plus specifics per industry.

Corporate Opinion, Reputation and Equity (CORE) Index by NFO

World Group.

Examines twenty factors like customer satisfaction, fair and ethical

business practices, quality of products and services, etc.

Though less structured and regular than the aforementioned; the media is also a

powerful influencer and gauge of reputation.

Law Three: Learn to Play to Many Audiences

The Balancing Act

No company is an island. Everyone has opinion on everything. You can never

please everybody. Stakeholders are everybody involved with the corporation. The

group is as diverse as: customers, employees, investors, market analysts,

shareholders, government, special interest groups, local communities, retirees, etc.

Know who are important and play to them. It is helpful to think of stakeholders in

terms of a hierarchy or, graphically, as a pyramid with the most influential at the peak

and others following in descending order. However, it is important to keep in mind

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The 18 Immutable Laws of Corporate Reputation by Ronald J. Alsop

that stakeholder influence is a dynamic relationship and the same model or model is

not necessarily applicable to other markets/locales.

Getting To Know You

Some companies, like Proctor & Gamble, General Electric, or DuPont, manufacture

products sold under different names or different groups and are not easily identified

with their parent company. This may weaken the product's reputation and affect

sales or acceptance. This becomes a problem especially with products sold

internationally. In fact, many companies are unaware they have weak reputations

with foreign stakeholders.

Law Four: Live Your Values and Ethics

Creating A Culture Of Morality

Studies of America's largest companies show that a strong reputation for moral and

ethical conduct performed better financially in terms of their returns on investment

and equity, and their sales and profit growth. One study cites that on average the

excess value beyond shareholders' investments comes up to $10.6 billion more than

companies without a clear code of ethics and supporting behavior.

Some practices for indoctrinating employees are:

Forming an ethics program with an ethics officer.

Annual refresher courses on ethics.

Posted values statements and ethics codes at the workplace.

Ethics and values indicators integrated into performance appraisals and

compensation packages.

Three R's for building your culture of morality:

Reaffirm

Reinforce

Revise

As a final note, ethics can be a very boring subject. Some companies like General

Electric and Altria Group (formerly Philip Morris) produce programs and entertaining

skits to keep employees engaged.

Law Five: Be a Model Citizen

Heart and soul

At Timberland, social responsibility is an integral part of the company's identity and is

a significant component of its reputation. Aside from activities like monitoring their

contractor's overseas facilities, improving energy efficiency at facilities, and

minimizing chemical wastes; they encourage volunteering for community service by

considering it as paid leave.

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The 18 Immutable Laws of Corporate Reputation by Ronald J. Alsop

Own The Cause

Other companies build their reputation for social responsibility by heavily supporting

their “favorite” causes, to the point that their company becomes synonymous with it.

An example is the cosmetics company, Avon, and their support of breast cancer

research.

Actions Speak Louder Than Money

Get involved. At Ground Zero in the aftermath of the September 11, 2001 terrorist

attacks; McDonald's supplied burgers and chicken nuggets round the clock to rescue

and medical workers. The company's action at a time of crisis carried more weight

than just writing out a check.

The Perils Of Promoting Philanthropy

Many people tend to be cynical about corporate philanthropy. An altruistic gesture

may be seen as just another fancy marketing or publicity ploy. On the other hand, if

there is little or no awareness of the brand and the company's good deeds;

stakeholders and the public may see the corporation as apathetic. Today's

consumers are attracted to companies that promote and support environmental or

social causes.

Law Six: Convey a Compelling Corporate Vision

Vision And Leadership

What is this corporation trying to do? That is the question answered by the Corporate

Vision and the guiding principle of its leaders and personified by the CEO. The vision

and the leaders motivate the stakeholders, who in turn have enormous impact on

reputation.

Practical and Poetic

The corporate vision cannot be something as mundane as “We strive to maximize

profits.” It should be ambitious, challenging, and yet emotional.

As a corporation grows it also evolves. Sometimes, the corporation loses sight of its

mission and its reputation weakens; but change is not essentially bad. Careful

consideration must be made if it is necessary to: return to the original vision OR

refocus the vision.

Law Seven: Create Emotional Appeal

Igniting The Emotional Spark

Emotional appeal is difficult to quantify or define; but it is what engenders passionate

customer loyalty and strengthens reputations. It is mostly shaped by the sum of

people's long-term interactions with the company's employees, products, services,

and even advertisements.

Establishing emotional appeal is more than just satisfying customers. It is also about

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