Reputation Management Questionnaire

Read chapter 10 and chapter 11 of the attached document and then answer 4 questions for each chapter, there are 8 questions in total. Questions for chapter 10 are on page 440, questions for chapter 11 are on page 488.

2
REPUTATION MANAGEMENT
Reputation Management is a how-to guide for students and professionals, as well as CEOs
and other business leaders. It rests on the premise that reputation can be measured,
monitored, and managed. Organized by corporate communication units including media
relations, employee communication, government relations, and investor relations, the book
provides a field-tested guide to corporate reputation problems such as leaked memos, unfair
treatment by the press, and negative rumors, and focuses on practical solutions. Each chapter
is fleshed out with the real-world experience of the authors and contributors, who come from
a wide range of professional corporate communication backgrounds.
Updates to the third edition include:

Global content has been incorporated and expanded throughout the book, rather than
being restricted to only one chapter.

Opening vignettes, examples, and case studies in each chapter have been updated.

Additional case studies and examples with an international focus have been added.
John Doorley, head of corporate communications for Merck & Co. Inc. until 2000, most
recently built and directed for ten years the Master of Science Degree Program in Public
Relations and Corporate Communication at the New York University School of Professional
Studies. He is now with the London-based company Mindful Reputation.
Helio Fred Garcia is president of Logos Consulting Group. He is an adjunct professor in the
Executive MBA program of New York University’s Stern School of Business, and teaches
courses in NYU’s MS in Public Relations and Corporate Communication program at the
university’s School of Professional Studies. He is the author of The Power of Communication:
Skills to Build Trust, Inspire Loyalty, and Lead Effectively (FT Press, 2012) and of Crisis
Communications (AAAA Publications, 1999).
3
4
REPUTATION
MANAGEMENT
3RD EDITION
The Key to Successful Public
Relations and Corporate
Communication
John Doorley
and
Helio Fred Garcia
5
First published 2015
by Routledge
711 Third Avenue, New York, NY 10017
and by Routledge
2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN
Routledge is an imprint of the Taylor & Francis Group, an informa business
© 2015 Taylor & Francis
The right of John Doorley and Helio Fred Garcia to be identified as authors of this work has been asserted by them in
accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988.
All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic,
mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information
storage or retrieval system, without permission in writing from the publishers.
Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for
identification and explanation without intent to infringe.
First edition published by Routledge 2006
Second edition published by Routledge 2010
Library of Congress Cataloging in Publication Data
Doorley, John.
Reputation management: the key to successful public relations and corporate communication / John Doorley, Helio Fred
Garcia. —
Third edition.
pages cm
1. Public relations. 2. Communication in organizations.
I. Garcia, Helio Fred. II. Title.
HD59.D66 2015
659.2—dc23
2014029488
ISBN: 978-0-415-71627-7 (hbk)
ISBN: 978-0-415-71628-4 (pbk)
ISBN: 978-1-315-87998-7 (ebk)
Typeset in Aldine and Zurich
by Keystroke, Station Road, Codsall, Wolverhampton
6
TABLE OF CONTENTS
Preface
Acknowledgments
About the authors
About the contributors
1
Reputation Management
Squandering the Reputation Asset: Days of Reckoning Draw Near
Reputational Capital
Expert Perspectives: Corporate Character and General Electric
Identity
“Intangible Asset”—The Wrong Perspective
Can Reputation be Measured?
Expert Perspectives: The Economic Case for Corporate Reputation Management
Can Reputation be Managed?
Comprehensive Reputation Management
Confusing Communication with Performance and Behavior
Reputation Mismanagement: Lessons from the Financial Crisis
Case Study: Reputation be Damned
The Ten Precepts of Reputation Management
Reputation Management: The Best Corporate Communication Strategy
Brand (Not Reputation) Management
The Expanded Reputation Formula
Expert Perspectives: Everybody’s Got Brand
Expert Perspectives: Systems Theory
Best Practices
Resources for Further Study
Questions for Further Discussion
2
Ethics and Communication
7
Truth or Consequences
Introduction: Why Ethics Matters
What is Ethics?
Ethics and Professional Communication
Expert Perspectives: Ethics and Social Media
Ethics of Communicating
Case Study: Nuclear Meltdown and Credibility
Case Study: China’s High-speed Train Crash
Ethics of Running an Organization
Ethics of Representation
Helping Companies Behave Ethically
Case Study: Citizens for a Free Kuwait
Sidebar: Historical Perspectives on Ethics in Communications
Best Practices
Resources for Further Study
Questions for Further Discussion
3
Media Relations
By the authors and Jennifer Hauser
Enhancing Global Reputation
News Media
The Case for a Centralized Media Relations Function
Organizing the Media Relations Function
Media Relations as a Lightning Rod
Sidebar: Five Models of Public Relations
Moderating Expectations
The Journalist and the Spokesperson
Case Study: Relationships Matter
Fear of the Press
Expert Perspectives: Launching a Product through Effective Story-telling
The Press’ Right to Know
The Press’ Penchant for Bad News
The Good News About the Press
Press Relations: A Collaborative Relationship
8
Expert Perspectives: The Art of the Pitch
Success in Media Relations
Sidebar: Content Development
Expert Perspectives: All Content is Not Equal
Best Practices
Qualities of a Good Media Relations Person
Resources for Further Study
Questions for Further Discussion
4
Social Media
By Laurel Hart
Social Media in Politics
What is Social Media?
Organizational Participation in Social Media
Social Media Challenges for Organizations
Expert Perspectives: Social Media, Ethics and Reputation Management
Sidebar: Air Force Web Posting Assessment Response Diagram
Case Study: #SochiProblems: The Winter Olympics
Best Practices
Resources for Further Study
Questions for Further Discussion
5
Organizational Communication
By Jeff Grimshaw, Tanya Mann, and Lynne Viscio
Aligning Hands, Minds, Hearts… and Souls
Aligning Employees Is Essential to Reputation Management
The Best Internal Communicators Don’t Just Focus on Producing Great, Creative
Output; They Focus on Helping Leaders Create Outcomes
The Best Internal Communicators Successfully Position Themselves as Trusted
Advisors to the Leaders they Serve
Sidebar: How Leaders Create Meaning in Organizations
Expert Perspectives: Running Communications as a Business
The Best Internal Communicators Recognize that they are Competing for Employees’
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Attention in an Increasingly Crowded Information Marketplace
Sidebar: What Can Employees Expect?
The Best Internal Communicators Help Leaders Tell a Consistent Story and Connect
the Dots
Case Study: Sticking Together in a Quest for Survival
The Best Internal Communicators Equip Employees for “Moments of Truth and
Trade-off”
Sidebar: The Return of “Long-term Greedy” at Goldman Sachs?
Best Practices
Resources for Further Study
Questions for Further Discussion
6
Government Relations
By Ed Ingle
You Snooze, You Lose
What is Government Relations?
Case for a Centralized Government Relations Function
Organizing the Government Relations Function
Understanding the Key Audiences
Case Study: Reputation and Integrity-A Bryce Harlow Profile
Setting the Company’s Government Relations Agenda
Success and Expectations Management
Role of Third-party Advocacy
Role of the Lobbying Consultant
Role of Political Contributions
State and International Government Relations
Expert Perspectives: An Interview with Karan Bhatia
Ethics in Lobbying
Best Practices
Resources for Further Study
Questions for Further Discussion
7
Community Relations
10
Revitalizing a Community
Hardy’s Relationship-building Principles: Principle #1: Be Involved; Be Committed
Principle #2: Building Reputation, One Relationship at a Time, is Good Business
Principle #3: Choose the Right Projects; Be Strategic
Principle #4: Keep Moving Ahead
Case study: A Developing-world Community
Principle #5: Embrace Diversity
Expert Perspectives: Wake Forest University: The Path to Becoming a National
University
Principle #6: When Things Go Wrong, Make them Right as Fast as You Can
Best Practices
Resources for Further Study
Questions for Further Discussion
8
Investor Relations
By the authors with Eugene L. Donati
Overcoming Barriers and Outperforming the Market? Priceless!
What is Investor Relations?
The Goals and Roles of Investor Relations
A Brief Introduction to the Financial Markets and Investment
Case Study: Starbucks Annual Meeting
Disclosure and Materiality
Information Intermediaries: Securities Analysts
Information Intermediaries: The Financial Media
Best Practices
Resources for Further Study
Questions for Further Discussion
9
Integrated Communication: Everything Communicates
By Tim P. McMahon
Communication Lessons from the Buffett Beach Party
Overview: The Multidisciplinary Challenge
The Convergence of Brand and Reputation
11
Strategy in the Brave New World
The Role of Marketing: Get and Keep Customers
The Role of Communication: Move People to Desired Action
The Integrated Communication Hook® Model
Communication Toolbox
Case Study: Switzerland’s MS Tûranor PlanetSolar, the Largest Solar Boat in the
World, and the Deepwater Expedition Showcase the Practical Applications of Solar
in Cities Around the World
Best Practices
Resources for Further Study
Questions for Further Discussion
10 Issues Management
Neutralizing Challenges Before they Become Crises
Issue Management Overview
Case Study: Establishing an Issues Management Function
Developing an Issue Management Plan
What the Elements of the Issue Management Analysis and Planning Template Mean
Sidebar: Sample Threat Assessment: An Embezzlement
The Issue Management Plan
Sidebar: The Difference Between Issue Management Strategies and Tactics (Actions
to Take)
Sidebar: Ultimate Audience/Influencer Audience
Best Practices
Resources for Further Study
Questions for Further Discussion
11 Crisis Communication
Crisis Response on Idle
Introduction
What is a Crisis?
Sidebar: Quick Choices and the Least Bad Outcome
Decision Criteria: What to Do and Say
12
Sidebar: What Happens When You Don’t Show You Care? BP Deepwater Horizon
Sidebar: What Happens When You Don’t Show You Care? Costa Concordia Shipwreck
Sidebar: Showing You Care—China’s Premier Wen Jiabao and the Sichuan
Earthquake
Sidebar: Social Media—“United Breaks Guitars”
Sidebar: Social Media and the Change in Power Dynamics
Timeliness of Response: The Need for Speed
Case Study: JC Penney
Sidebar: Ten Avoidable Mis-steps
Control the Communication Agenda
Sidebar: Checklist for Crisis Response Preparedness
Dealing with Rumors
Best Practices
Resources for Further Study
Questions for Further Discussion
12 Corporate Responsibility
By Anthony P. Ewing
Nike’s Journey, Part
Corporate Responsibility
Communicating Corporate Responsibility
Sidebar: The Corporate Responsibility to Respect Human Rights
Case Study: Nike’s Journey, Part
Best Practices
Resources for Further Study
Questions for Further Discussion
13 Public Relations Consulting: Consulting and Corporate Communication—
The Nexus
By Louis Capozzi
Management Lesson from Consultants
Overview: The Public Relations Consulting Business
The History of Public Relations Consulting Firms
Agency Structure and Areas of Practice
13
Financial Management
Managing Consultants and Consultancies
Expert Perspectives: The Deming System of Profound Knowledge
Client Service: A Creative Collaboration
Case Study: Stay True to Who You Are
Pitching and Winning New Business
Ethics in Public Relations Consulting
Sidebar: The ICCO Stockholm Charter
Resources for Further Study
Questions for Further Discussion
14 Challenges and Opportunities in Corporate and Organizational
Communication
Earning a Seat at the Table: Defining the Professional Communicator’s Role
Historical Perspective: Edward L. Bernays and the Roots of Applied Anthropology
The Future of Corporate and Organizational Communication and Public Relations
Expert Perspectives: Six Challenges Facing the Public Relations Practitioner Today
What is Strategy?
Index
14
PREFACE
15
“GOOD BOOK, DUMB TITLE”
We heard that more than a few times when the first edition of Reputation Management was
published in 2006. This despite the fact that the text was peer-reviewed and published by one
of the world’s leading academic publishers.
On the surface, the logic of the detractors was irrefutable: reputation is an intangible asset;
therefore, it cannot be managed. That logic, more pervasive than not at the time,
presupposed that intangible things, say interpersonal relationships, cannot be managed. We
would argue that if intangible things are not managed their value will go south, just as will
always be the case with unmanaged tangible assets. Do we need a case study to prove that if
an individual does not care for and cultivate his or her personal relationships, the sum of how
that individual is perceived and regarded—something called reputation—will deteriorate?
In fact, the authors believed then and more so now that one reason so many organizations
—from corporations, to governments, religions, universities, and non-profits—continue to set
records for destroying their own reputations is that they think of reputation as unmanageable.
Nonsense!
One reason we like the Abraham Lincoln quote on page 1 is that the tree’s shadow can be
shaped, by fertilizing and pruning the tree for instance. The shadow (reputation) can be
shaped and even controlled, at least to some degree, despite the wind, the sun, pestilence and
so on. It is hard to argue with the proposition that the continued existence of the shadow is
more likely with cultivation of the tree than without.
The other reason we and communicators of substance love the Lincoln quote is its
emphasis on substance: “Character is like a tree…the tree is the real thing.”
The lesson we take from Lincoln is that if an organization takes care of the important
things—performance, behavior, communication and identity—then reputation will flourish,
at least over the long term. Reputation may get blown around and even distorted from time
to time, but the alternative to care and nurturing of the things that matter most is scandal,
failure, unemployment, poverty, a loss of faith in government and religions, and on and on. A
kind of reputational anarchy.
Here’s an update on the emerging field of reputation management and why we predict it
will, eventually, become its eponymous self:

The term reputation management, seldom used in 2006 without derision, now produces
16
millions of search engine hits.

There are thousands of firms that bill themselves as reputation managers yet most by far
stop at measurement or analysis.

Many of the “reputation management” firms monitor on-line mentions of a company or
brand, and many do that very well. But they monitor—not manage.

Over the last nine years the number of public relations firms that list reputation
management among their capabilities has increased exponentially.

Some of the large management consulting firms have entered the field.

The field has been moving from measurement to analysis to management. Most
companies in the field are stuck at measurement or analysis.

Since the first edition of Reputation Management, researchers have done great work to
validate the benefits of a good reputation (see Chapter 1). That argument is settled.

If the parts of reputation can be managed so too can the whole. We think this book,
with special thanks to our many contributors, will help solidify that argument.
There are still leading executives and academics who say reputation cannot be managed.
Some of them are successful and highly regarded in the reputation field, marketing academic
offerings or their services to students and companies. And so, before we set the foundation
for this edition, we would ask them this question:
If one cannot do anything about reputation, what the heck are you selling?
17
DEFINITIONS AND BASIC PREMISE
Public Relations:
The management of communication and relationships between an organization and its publics. It is also the selling
of ideas, policies, products and services through often uncontrolled media and two-way communication that
complement or replace the controlled media and often one-way communication of advertising.
– Doorley/Garcia
The above definition is built on the seminal, ten-word definition by Grunig and Hunt
—“the management of communication between an organization and its publics.”
Corporate and Organizational Communication:
The centralized management of communication on behalf of the organization; the function is a critical contributor
to an organization’s reputation—and thereby its competitiveness, productivity, and financial success. It is a subset
of public relations.
– Doorley/Garcia
Corporate Reputation:
How the corporation is perceived.
– Doorley/Garcia
Product Brand:
How the (marketing) organization wants the product to be perceived.
– Doorley/Garcia
Corporate Brand:
How the corporation wants to be perceived. Success, at least from the perspective of those who lead the company,
would have corporate reputation equal to corporate brand.
– Doorley/Garcia
This book on public relations and corporate and organizational communication is
grounded on the simple premise that everything communicators do should be respectful of, if
not geared toward, the long-term interests of the organization. Organizations that manage
their reputations well benefit not just in so-called soft, feel-good ways, but in quantifiable,
bottom-line ways as well. Organizations that ignore the reputational effects of their actions
pay the consequences over the long term, as the rash of business scandals has shown. And the
18
consequences range from soft, embarrassing ones to dissolution of the organization.
This book is unique because:

It covers each of the major disciplines in the field of corporate and organizational
communication, bridging real-world practice with communication theory and history.

It covers the field from the perspective of reputation management, and provides a new
framework for managing reputation into the future.

Every chapter and sidebar article is written by someone who has practiced the craft
successfully at a high level.

The authors cite personal experiences, including both successes and failures.

Each of the chapters include some history and theory, real-world how-to information,
and the perspective of a practitioner other than the chapter’s author.

Each chapter concludes with best practices, resources for further study, and questions for
further discussion.
It is our hope that this book will help advance the practice of public relations and corporate
and organizational communication by helping practitioners and students become more
knowledgeable about the history, theory, and practice of their craft. Ours is not a primer—for
example, we do not show readers how to write a press release. Our book presumes a basic
knowledge of communication theory and practice appropriate to professional communicators,
executives, and students at the advanced undergraduate or graduate levels. There are good
basic public relations and communication texts on the market. What we have tried to produce
is a how-to book, based on solid academic principles and written by leaders from the
communication professions—a book that addresses communication problems and
opportunities in a thoughtful, thoroughgoing, practical way.
What we have tried to produce is a how-to book, based on solid academic principles and written by leaders from the
communication professions.
This book is a team project. John and Fred have collaborated on the entire book, and have
shared responsibility for drafting individual chapters. John has taken the lead in drafting the
chapters on “Reputation Management,” “Media Relations,” and “Community Relations,” and
has done much of the liaison and editing work with outside authors. Fred has taken the lead
in drafting the chapters on “Communication Ethics,” “Investor Relations,” “Issue
Management,” “Crisis Management,” and “Challenges and Opportunities.” John wrote the
proposal for the book and secured the agreement with the publisher.
19
We have also sought the help of many prominent practitioners whose perspectives and
experiences complement ours. These contributions come in two forms: authorship or
coauthorship of individual chapters, and contributions of sidebars or case studies within
chapters.
To keep clear who wrote what, the chapters written by John and Fred have no author attribution
at the beginning of the chapter; each chapter written by a contributor begins with the contributor’s
byline.
20
ILLUSTRATIONS
Back in 2006 when we were beginning to wrap up the first edition, we approached an
illustrator who had done many of the wonderful New Yorker cartoons. Fred and John asked
for his fee and were about to budget for it when we thought it would be nice to retain one of
our students. Long story short, we found Julie Osborn, a graduate student in the Center for
Advanced Digital Applications Program in New York University’s School of Continuing and
Professional Studies. Lucky us! Julie’s work, though Jules Pfeiffer-like, is original, sometimes
humorous, always engaging. Since our first edition was published, Julie has earned her
graduate degree and landed a job with George Lucas (the Star Wars Lucas). Lucky George! It
was Julie who conceived Mr. ProCom and Ms. ProCom shown in the book’s chapter
openers. But then the question for John and Fred became: Which person to use with which
chapter? Being quite the serious professional communicators ourselves, we pondered the
media relations challenges, the looming issues to manage. Should we prepare a crisis
communication contingency plan? In the end, we decided to have Ms. ProCom adorn the
cover of each of the chapters of editions 1, 2, and 3. Why? Perhaps because we have a few
more male contributors in our book than female; perhaps because women communicators
now have a population edge in the PR profession; or perhaps because Fred and John found
Ms. ProCom to be better company. And if any of this is upsetting to anyone anywhere—well,
even after three editions, we still have, excuse the expression, no comment!
21
STRUCTURE OF THE BOOK
Chapter 1 includes “The Ten Precepts of Reputation Management,” with the tenth
stipulating that reputation should be managed like any other asset—that is, in a strategic way.
The rest of the chapter includes a copyrighted framework for implementing Comprehensive
Reputation Management. It is remarkable, but very few organizations approach reputation
management in a comprehensive way, as they would any other asset; in fact, most
organizations do not know what their reputations are worth. Corporate communication
professionals should make it their business to understand the value of reputation, and ways to
support, enhance, and measure it. Chapter 1 also includes a discussion of the Pushmi-Pullyu
syndrome, whose schizophrenic tug has been felt by every communication professional.
Chapter 2 focuses on ethics. The subject is up front in the book, right where it belongs.
The ethical practice of communication is neither an oxymoron nor an afterthought, but
should be an integral part of practicing the craft. And it has a tangible effect on reputation.
Failure to keep ethical issues always in mind can cause predictable, negative consequences. At
New York University’s Center for Marketing, whose students are working professionals, Fred
used to teach communication ethics in the fall semester and crisis communication in the
spring semester. Students invariably wanted to discuss the same case studies in both
semesters; they noticed a meaningful overlap in companies with ethical challenges and crises.
That led some students to note: “Better pay attention during fall or you’ll be quite busy in the
spring.” This chapter includes general principles of communication ethics, the normative
standards of behavior embodied in the codes of ethics of major professional organizations,
accounts of recent scandals in communication ethics, and two historical sidebars showing that
such ethical issues have been part of professional communication for many, many years.
Chapters 3–13 are organized according to the corporate and organizational communication
disciplines (for example, media relations, organizational communication, and government
relations), or around issues or functions that protect reputation (such as corporate
responsibility, issue management, and crisis communication).
Each of the chapters begins with a true anecdote that reflects the essence of the chapter.
Chapter 14 looks ahead, and frames criteria for the successful practice of public relations
and corporate and organizational communication in the future. It also describes ways to
enhance the credibility of the communication function among senior leaders. It provides a
framework for thinking strategically about the impact of communication, and on assuring
22
that all the organizational communication functions are aligned not only with each other but
also with the bigger enterprise.
For those who wish to compare this third edition with editions 1 and 2, you will notice
that the chapter entitled Global Corporate Communication is gone. That isn’t because global
is no longer relevant. Rather, the practice of public relations is so global that we’ve
incorporated international case studies and techniques throughout the book, in each chapter.
We hope that students and professional communicators will find the personal, anecdotal
approach an interesting and informative complement to other books in the field, most of
which take a third-person, definitional approach. This book should also be helpful to people
—from managers to CEOs—who supervise or work with professional communicators.
Communication is not rocket science, but it is not easy either, and it can make or break an
organization, perhaps faster than any other function.
Today, those who communicate on behalf of institutions have greater power than ever
before, because communication media are both more powerful and more widespread than
ever. And professional communicators are under greater pressure to use their power in the
right and responsible way to meet the pressing requirements of laws and regulations,
corporate and organizational governance, and a more vigilant society. Paradoxically, pressures
to compromise the forthrightness standard are also becoming greater in this increasingly
competitive and fast-paced world.
In order for organizations to build solid, sustainable reputations and avoid the kinds of
scandals that have recently affected so many of them, organizational communication, like
organizational performance, must be proficient and ethical, because communication and
performance are major components of reputation. An organization must speak with all its
constituencies with one voice that is highly trained and true; and although more people
within the organization are joining many “conversations,” thanks to social media, the need for
the organization to speak with one voice remains critical, if only to meet regulatory and legal
obligations, not to mention the ethical ones. It is our hope that those with a stake in
corporate and organizational communication, as well as students and aspiring
communicators, will find in this book sound, ethical communication principles and practices
that they can believe in and adhere to over the long term.
23
YOU SAY COMMUNICATIONS…WE STILL SAY
COMMUNICATION
This is a stylistic point, of course, but some logic can be brought to the discussion. Most
academics label their disciplines and their courses as singular. They are professors of
communication, and they teach organizational communication, intercultural communication,
and so on. On the other hand, practitioners most often use the plural, and they work in
departments of corporate communications, employee communications, and so on. We’re
afraid the academics have it. Communication covers the entire spectrum. It is a discipline,
like art or language, and is therefore singular. And to label it and think of it as singular is to
help elevate what is too often perceived as tactical—for example, issuing press releases and
publishing newsletters. Most unabridged dictionaries make only a few exceptions to the use
of communication. They refer to the various means of sending messages as plural, so that
radio, television, telephones, and the Internet are communications media. And they refer to
multiple messages as communications. In the 1980s, when Fred headed “communications”
for a large investment bank, he was often approached by bankers who wanted to add a phone
extension or install a computer. “Communications” sounds like the phone company.
This book will go with logic, and the unabridged dictionaries, and use communication. We
will use the plural only in referring to the media, and to the titles of practitioners and the
names of their departments, because that is how practitioners usually refer to themselves.
Everywhere else, it will be communication.
John Doorley and Helio Fred Garcia
24
ACKNOWLEDGMENTS
This book would not have been possible without the active support and encouragement of
many people in addition to the two primary authors and all of the contributors. We wish to
thank all those who have supported us, our work, and the book. We wish in particular to
thank our development editor at the venerable publisher Routledge, Taylor & Francis Group,
Darcy Bullock, for her steady hand in helping us shape this book, offering many suggestions
for improvement along the way.
We wish also to take a moment, individually, to acknowledge and thank those who have
helped each of us in our task.
25
JOHN DOORLEY’S ACKNOWLEDGMENTS
To Carole Doorley, with love and gratitude.
To these executives, former executives, and friends who have done the profession of public
relations proud by communicating strategically, ethically, and very successfully over the years.
I appreciate your reading the various iterations of the manuscript, the fervent discussions, and
the insights Fred and I could not have brought by ourselves.
Albert D. Angel
Mike Atieh
John Baruch (deceased)
Kenneth P. Berkowitz
Rich Coyle
Ernie Grigg
Robert Pellet
Randy Poe
Richard D. Trabert
Paul Verbinnen
To these communication scholars for their encouragement, editing, and scholarly insights:
Boston College:
Edmund M. Burke (deceased)
Boston University:
James Katz
New York University:
William E. Burrows
Lou Capozzi
Helen Ostrowski
Fraser Seitel
Purdue University:
Stacey Connaughton
Rutgers University:
26
Todd Hunt
Brent D. Ruben
University of California Santa Barbara:
Ronald Rice
University of Missouri:
Donald Ranly
Western Michigan University:
Maureen Taylor
To Lisa Ryan and Jim Masuga of Heyman Associates for helping to recruit contributors
and co-authors. To Michael Cushny of NYU for sending us Julie Osborn, our illustrator.
To the following family, friends, and colleagues for their logistical, proofreading, editing
and moral support: Carole Doorley, Jonathan Doorley, Nanci Doorley, Clark Landale,
Madeline Najdzin, Nick Kornick, Dr. Charles P. Yezbak, and Sam and Jean Davis.
27
HELIO FRED GARCIA’S ACKNOWLEDGMENTS
Much of the content of the chapters I drafted was honed over thirty-five years of advising
clients and twenty-seven years of teaching students, mostly at NYU. I thank those clients and
students, whose insights and challenges allowed me to grapple with the issues distilled here.
I thank my colleagues at Logos Consulting Group and the Logos Institute for Crisis
Management and Executive Leadership, especially Barbara Greene, Anthony Ewing, Laurel
Hart, Oxana Trush, Raleigh Mayer, Kristin Johnson, Adam Tiouririne, Katie Garcia, and
Evan Chethik. I wish to particularly thank those who helped me with the specific content of
the book. These include Katie Garcia, Adam Tiouririne, and Evan Chethik, who helped
develop case studies, fact checked, and confirmed citations for the footnotes. I extend special
thanks to two of my graduate students who helped me with case studies on events that took
place in Asia: Yvonne Xiaoqian Du and Iris Wenting Xue (Iris also prepared the index).
Elizabeth Jacques did much of the fact checking and research for the first edition, some part
of which remains reflected in this edition. And the late Lisa Wagner designed the graphics
for the ethics, issues, crisis, and challenges section.
I also thank colleagues who contributed to this volume in their own rights as chapter
author, chapter coauthor, or sidebar author. These include my Logos colleagues and friends
Anthony Ewing (Chapter 12, Corporate Responsibility), Laurel Hart (Chapter 4, Social
Media), and Raleigh Mayer (Sidebar, Chapter 3, The Art of the Pitch); my friends Jeff
Grimshaw and Tanya Mann (Chapter 5, Organizational Communication); my friend and
colleague Gene Donati (coauthor with me of Chapter 8, Investor Relations), and Judy Voss
(Sidebar, Chapter 14, Challenges Facing the Public Relations Practitioner Today).
And finally I wish to thank my family: my wife, Laurel Garcia Colvin, and our daughters,
Katie and Juliana. They are the loves of my life and I count my blessings every day. And my
mom, Anezia MC Garcia, and my brothers, Tom Garcia and Chuck Garcia.
28
ABOUT THE AUTHORS
29
JOHN DOORLEY
John Doorley joined the new London-based company Mindful
Reputation in 2013 after almost ten years at New York University as
founding academic director and clinical assistant professor of the master
of science degree program in Public Relations and Corporate
Communication. Under his leadership the NYU program became the
world’s largest graduate program in its field and the one named
America’s Best Public Relations Education Program in 2009 and 2010. Before joining NYU
he was a full-time faculty member in the School of Communication at Rutgers University.
Previously, until 2000, John was head of corporate communication at Merck & Co., Inc.,
which was named America’s Most Admired Company seven of his 12 years there (annual
Fortune Magazine survey). Before joining Merck, he was a director of public relations and a
speechwriter at Hoffmann-LaRoche Inc.
At NYU in 2012, he developed and taught the world’s first graduate course in reputation
management. He coauthored with Helio Fred Garcia the first text on reputation
management (Reputation Management, from Routledge, Taylor & Francis), the third edition
of which will be released in 2015, and copyrighted a process, Comprehensive Reputation
Management, to help organizations measure, analyze, monitor, and manage their reputations.
John’s most recent book, Rethinking Reputation, from St. Martin’s Press, written with Fraser
Seitel, premiered at number 12 on the Amazon list of best-selling business management
books.
While at Merck, John designed and directed reputation management initiatives that
cultivated solid relationships with internal and external stakeholders, especially the press. He
helped lead many policy initiatives for Merck and the healthcare industry, most notably in
AIDS, healthcare reform and managed care, and directed the company’s communication
programs for each of its business development initiatives, including acquisitions and joint
ventures. John wrote the proposal for the Merck Manual Home Edition, the first edition of
which sold two million copies. He won the Merck Chairman’s Award, the company’s coveted
top honor.
In 2009 he worked with the communication leadership at Johnson & Johnson to found the
Academy for Communication Excellence & Leadership (ACCEL), now one of industry’s
most successful career development initiatives for communicators.
30
John earned a bachelor’s degree in Biology from St. Vincent College in Latrobe, PA., a
master’s degree in Journalism from New York University, and he completed the HarvardMerck Executive Business Program. He has won numerous writing awards, and been
recognized by the New Jersey Governor’s Office for his pro bono work with pediatric cancer
patients.
He and his wife, Carole, have two grown children, Nanci and Jonathan.
John can be reached at johnd@mindfulreputation.com
31
HELIO FRED GARCIA
For 35 years Helio Fred Garcia has helped leaders build trust, inspire
loyalty, and lead effectively. He is a coach, counselor, teacher, writer, and
speaker whose clients include some of the largest and best-known
companies and organizations in the world. Fred is the president of Logos
Consulting Group and the executive director of The Logos Institute for
Crisis Management & Executive Leadership.
Fred has been on the New York University faculty since 1988 and has received his school’s
awards for teaching excellence, for outstanding service, and for twenty-five years service in
teaching. He is an adjunct professor of management in NYU’s Stern School of Business
Executive MBA program, where he teaches crisis management. He is an adjunct associate
professor of management and communication in NYU’s master’s in Corporate
Communication program in the School of Professional Studies. In that program he teaches
courses in communication strategy; in communication ethics, law, and regulation; and in
crisis communication.
Fred is also on the adjunct faculty of the Starr King School for the Ministry—Graduate
Theological Union in Berkeley, CA, where he teaches a seminar on religious leadership for
social change. And he is on the leadership faculty of the Center for Security Studies of the
Swiss Federal Institute of Technology, Zurich, Switzerland. In that program he teaches an
intensive seminar in the master’s in Advanced Studies in Crisis Management and Security
Policy.
In 2011 Fred was designated an International Distinguished Scholar at Tsinghua
University in Beijing, where he gave a series of lectures and workshops on effective crisis
response for graduate students and senior government, corporate, and NGO leaders. He is a
frequent guest lecturer at the Wharton School of Business of the University of Pennsylvania,
the U.S. Defense Information School, U.S. Marine Corps Command and Staff College, U.S.
Marine Corps Officer Candidate School, Universidad de San Martin de Porres (Lima), and
other universities.
In addition to working with John on Reputation Management, Fred is the author, most
recently, of The Power of Communication: Skills to Build Trust, Inspire Loyalty, and Lead
Effectively, FT Press, 2012. That book was named to the United States Marine Corps
Commandant’s Professional Reading List for 2013 and 2014. A Chinese language edition of
32
The Power of Communication was published jointly in 2014 by Pearson Education Asia Ltd. in
Hong Kong and by Publishing House of Electronics Industry in Beijing. His two-volume
book Crisis Communications was published by AAAA Publications in 1999.
Fred is accredited by the Public Relations Society of America, and received the Society’s
New York Chapter’s Philip Dorf Award for mentoring.
Fred has master of arts in Philosophy from Columbia University and two graduate
certificates in classical Greek language and literature from the Latin/Greek Institute of the
City University of New York Graduate Center. He has a BA with honors in politics and
philosophy from New York University, where he was elected to Phi Beta Kappa. He received
an honorary doctorate in Humane Letters from Mount Saint Mary College.
Fred can be reached at HFGarcia@logosconsulting.net
33
ABOUT THE CONTRIBUTORS
Chapter Contributor Biographies
Chapter 3, Media Relations, by the authors with significant input and writing from Jennifer
Hauser of Edelman, the world’s largest public relations agency.
Jennifer Hauser is an executive vice president at Edelman. Through her twenty-three-year
career in the public relations industry, she’s worked with leading global brands and
organizations across multiple sectors including health, food/nutrition and consumer goods,
and technology. She actively represents clients including Merck Consumer Healthcare, Glaxo
SmithKline, Pfizer, Johnson & Johnson, The Dannon Company, Microsoft, and the
American Heart Association. Jennifer is also on the faculty at New York University in the
School of Continuing & Professional Studies. Prior to joining Edelman, Ms. Hauser owned
a public relations agency she started in 1993. She sold her agency in 2002 to Havas/Euro
RSCG Magnet.
Chapter 4, Social Media, by Laurel Hart, Logos Consulting Group
Laurel Hart is a senior advisor at Logos Consulting Group, where she counsels clients on
social media, crisis communication and strategic communication. She has over 15 years of
communication experience, at Logos and for companies and nonprofits in Seattle and New
York City. Laurel was also an adjunct instructor at NYU until 2013, where she helped
develop and taught a course on social media in the MS in Public Relations and Corporate
Communication program. In addition, she has been a regular guest lecturer at the Wharton
School of Business of the University of Pennsylvania. She has a BA in English from Colby
College and an MS in Public Relations and Corporate Communication from NYU.
Chapter 5, Organizational Communication, by Jeff Grimshaw, Tanya Mann and Lynne
Viscio of MG Strategy
34
Jeff Grimshaw, a partner at MGStrategy, is an expert on accountability, alignment, and
leadership effectiveness. Over two decades, he’s helped hundreds of executives deliver the
results on which they’ve staked their reputations. His clients include senior leaders in dozens
of Fortune 500 companies. In March 2010, McGraw-Hill published Jeff’s book, Leadership
Without Excuses: How to Create Accountability and High Performance (Instead of Just Talking
about It), now in second printing.
Tanya Mann, a partner at MGStrategy, helps leaders elevate their effectiveness, especially
when it comes to aligning and engaging employees in pursuit of important outcomes. Across
engagements, she has built a consistent track record of helping clients address their
immediate needs—while leaving behind stronger teams, greatly improved communication
processes, and increased leadership capability. She has a bachelor’s degree in Communication
Studies and a master’s degree in Interpersonal Communication, both with honors from the
University of Texas at Austin.
Lynne Viscio, a principal at MGStrategy, consults with clients on organizational
effectiveness, organizational design, internal communication strategy, and leadership
development. Lynne brings focused problem-solving skills, facilitation expertise, and deep
organizational experience to a broad range of situations and challenges. She works to drive
business results by removing barriers, strengthening processes, and developing leaders and
team members. She has a bachelor’s degree in Education from the University of Connecticut
and graduate degrees from the University of New Hampshire (MS), New York Medical
College (MPH), and Temple University (M.Ed.).
Chapter 6, Government Relations, by Ed Ingle, managing director of government affairs,
Microsoft Corporation
Ed Ingle joined Microsoft Corporation in 2003 as managing director of government affairs,
and has over twenty-five years of public policy and political experience. He previously served
in the White House as a senior aide to President George W. Bush. Ed was a consultant for
twelve years with the Wexler & Walker government relations firm (owned by WPP Group
plc), where he lobbied Congress and the Executive Branch on behalf of corporate clients. He
served in the Reagan White House Office of Management and Budget from 1985–1989. Ed
has a bachelor’s degree in Journalism and Public Relations from the University of Tennessee,
and a master’s in Public Administration and Policy from Indiana University.
35
Chapter 8, Investor Relations, by the authors and Eugene Donati of Lycoming College
Eugene L. Donati is an assistant professor and director of the corporate communication
program at Lycoming College, Williamsport, PA. His research interests include the
communication of financial information and the role of public relations in public policy
formulation and political campaign management. He is also an adjunct professor at New
York University, where he teaches investor relations. Gene is a graduate of the Universities of
Toronto and Pittsburgh and the American University, Washington. He began his thirty-year
public relations career as a press secretary on Capitol Hill and, later, was managing director at
the consulting firm Clark & Weinstock, New York.
Chapter 9, Integrated Communication, by Tim McMahon of Creighton University
Tim P. McMahon is a member of the full-time faculty in the Business School of Creighton
University as well as a management consultant at McMahon Marketing LLC. He has been
on the full-time faculty at New York University, St Joseph University and Elon University.
Previously, he headed corporate marketing and communication at ConAgra Foods, Inc., then
a Fortune 100 company. Before that, he founded and managed an award-winning advertising
and public relations firm for twelve years. Also, he has headed national advertising for Pizza
Hut, Inc. and was the founding marketing director for Godfather’s Pizza, Inc., then one of
the country’s fastest-growing restaurant chains. He holds a Ph.D. from Gonzaga University, a
master of arts from Seton Hall University and a bachelor of arts from the University of
Nebraska. He is an expert in a number of communication areas including organizational
communication, integrated communication and social media.
Chapter 12, Corporate Responsibility, by Anthony P. Ewing of Columbia University and
Logos Consulting
Anthony P. Ewing is a lawyer, consultant, and teacher. As a senior advisor at Logos
Consulting Group, Anthony counsels senior executives on corporate responsibility, crisis
management, and communication strategy. Anthony has helped companies to engage
stakeholders, conduct due diligence, and implement policies to understand and manage the
risk of adverse human rights impacts. Anthony teaches a graduate seminar on corporate
responsibility at Columbia Law School. He has served as an independent expert for the
International Labour Organization and is a member of the United Nations Global Compact
36
Human Rights and Labour Working Group. Anthony holds a BA in political science from
Yale University and a law degree from Columbia University.
Chapter 13, Public Relations Consulting, By Louis Capozzi, President PRSA Foundation
Louis Capozzi has a broad background in issues and crisis management and communications,
working at major public relations firms, with large multinational companies and as an
educator.
As Chairman of the MSL Group, Lou managed all of the $4 billion Group’s PR and
corporate communications businesses. His responsibilities encompassed firms in forty cities
around the world, with a total of 2000 employees and more than $200 million in revenues.
Before joining MSL, Lou was vice president of corporate communications for Aetna Life &
Casualty where he managed a 150-person corporate communications department with a
budget of more than $80 million. Today, he is a widely respected educator and the president
of the PRSA Foundation, working to drive ethnic and racial diversity in the public relations
profession.
Expert Perspectives and Case Study Contributor Biographies
Karan Bhatia serves as Vice President of Global Government Affairs and Policy for General
Electric overseeing GE’s engagement on commercial and public policy issues with
governments around the world.
Before joining GE, he was Deputy U.S. Trade Representative, Assistant Secretary of
Transportation for Aviation and International Affairs, and Deputy Under Secretary of
Commerce for the Bureau of Industry and Security. Prior to his government service, he was a
partner at Wilmer Cutler & Pickering.
Bhatia holds a bachelor’s degree from Princeton University, a master’s from the London
School of Economics, and a law degree from Columbia University.
Sandra Combs Boyette is senior advisor to the president at Wake Forest University. Prior to
that appointment, she was Wake Forest’s vice president for public affairs and then vice
president for university advancement. A graduate of the University of North Carolina at
Charlotte, she holds a master’s degree in Education from Converse College and earned her
MBA at Wake Forest. She has more than thirty-one years of experience in higher education
public relations and fundraising.
37
Simon Cole’s career in brand, advertising and communications consultancy has spanned
nearly thirty years. Originally a mathematician he has held senior positions in Saatchi &
Saatchi, the brand consultancy Interbrand and corporate communications consultancy
Financial Dynamics (now FTI). In 2009 he founded Reputation Dividend, the corporate
reputation and branding firm specializing in applying quantitative analytics to reputation
management (see www.reputationdividend.com). His working life has taken in some of the
disciplines of the communications industry and he has advised many of the world’s largest
and best known brand owners. He has both published and spoken widely on the management
and economics of brands and branding.
Bob DeFillippo is chief communications officer for Prudential Financial, a global financial
institution with operations in the United States, Asia, Europe, and Latin America, where he
directs the company’s public relations, crisis communications, event planning, internet and
social media editorial content, video production, and company-wide employee engagement
communications. DeFillippo is also an adjunct professor at NYU’s School of Professional
Studies, and has previously served as director of public affairs for the American Association of
Retired Persons (AARP), press secretary to U.S. Rep. Hamilton Fish Jr., and as a newspaper
reporter and editor. He graduated from Long Island University’s Brooklyn Center with a
bachelor’s degree in Journalism.
Paul Gennaro is the senior vice president and chief communications officer for AECOM
Technology Corp., an $8 billion global provider of professional services, with 45,000
employees operating 140 countries. He leads all aspects of the company’s global corporate
communication efforts, including: corporate brand and reputation management, public and
media relations, internal communications, crisis and issue management, investor relations,
philanthropy and community relations, and government relations. Mr. Gennaro was named
one of the “100 Most Influential in Business Ethics” by the Ethisphere Institute and one of
the “50 Most Powerful People in PR” by PRWeek.
Phil Gomes’ career in the communications field is characterized by his passionate interest in
technology, media, and emerging forms of communication. As a senior vice president with
Edelman Digital, Phil challenges teams and companies to engage with online communities in
ways that are compelling, persuasive, and parallel with “digital citizenship” expectations.
These instincts for online community mores have also made Phil a consistent go-to resource
at the firm for online crisis communications. Phil co-founded Corporate Representatives for
38
Ethical Wikipedia Engagement (CREWE), a group of PR professionals and Wikipedians
who seek to cooperate in the public interest of accurate articles about corporations and
organizations. He earned a bachelor of arts in Communications from Saint Mary’s College of
California and an MBA from Purdue University.
Sandra Macleod, CEO of Mindful Reputation, has provided evidence-based counsel and
worked to build the professionalism of communications and reputation management for over
25 years. She is one of the founders of the International Association of Measurement and
Evaluation Companies (AMEC), a Companion of the Chartered Institute of Management, a
member of the McKinsey Women as Leaders’ Forum and has been is cited as “among the
100 most influential people in PR” by PRWeek. From an early career at Edelman Public
Relations in London and Information et Enterprise in Paris, Sandra went on to become head
of communications at PA Management Consulting before setting up the first international
franchise for media analysis company, CARMA International, in 1989. Ten years later, she
founded Echo Research as a full-service research firm with offices in the London, Paris, New
York, and Singapore. Winning a record-breaking eighty-nine industry awards for innovation
and excellence in research, the Echo group was acquired by Ebiquity PLC in 2011 and
rebranded under the same name in 2013. She founded Mindful Reputation in 2013.
Raleigh Mayer, the “Gravitas Guru” and principal of Raleigh Mayer Consulting, helps senior
executives elevate presence, speak persuasively, and become more sophisticated at managing
their relationships and reputations. A senior fellow at the Logos Institute for Crisis
Management and Executive Leadership, Raleigh is an instructor at Barnard College’s Athena
Center for Women’s Leadership, lecturer at Harvard Business School, presenter at Columbia
University’s MBA programs, coach for New York University’s Stern School of Business, and
adjunct professor of marketing and management at NYU for over twenty years. Raleigh is
executive presence correspondent for The Glass Hammer, an online community for women
executives in financial services, law, and business.
Michael Neuwirth is senior director of PR for Dannon, the U.S. subsidiary of global food
maker Danone. Michael joined Dannon in 2005 and directs corporate communications,
including crisis communications. Michael began his career at Porter Novelli (1990–1994) and
then established the corporate communications role within Danone’s North American
bottled water and specialty food businesses (1994–2001). Michael returned to Danone and
Dannon in 2005 after working for two years (2003–2005) as senior vice president of Ruder
39
Finn, and prior to this for an organic food company (2001–2003). Michael is an honors
graduate of Vassar College and lives in New York City with his wife and children.
Julie M. Osborn is currently working at Mattel on Playground Productions’ animated Barbie
feature films in Los Angeles, where she moved after spending four years in northern
California at Lucasfilm. She had the great pleasure there to work on the two-time Emmywinning children’s animated television series Star Wars: The Clone Wars under the tutelage of
George Lucas himself. She earlier received her bachelor of arts in Studio Art with a minor in
Japanese Language from the University of California, San Diego, after which she moved to
New York for a change of pace at New York University where she received an MS in Digital
Imaging and Design. While earning her degree, she met one of the authors of this book, John
Doorley, and happily accepted the challenge of becoming the illustrator.
Katja Schroeder is the president of Expedition PR and an adjunct professor for Marketing at
St. Francis College. She has led award-winning communication programs for global brands
across regions and created local programs onsite in Germany, China, France, and North
America. Before founding Expedition PR, Katja serviced global brands at Burson-Marsteller
and Ruder Finn in New York and China. She holds a master of arts in Communications and
Business Administration from the FU Berlin, Germany, and a master of arts in
Communications and Information Sciences from CELSA, Sorbonne, Paris, France. She sits
on the board of the Center for Entrepreneurship of St. Francis College.
Gary Sheffer oversees external and internal communications and provides strategic
communications advice to GE executives on issues related to culture, reputation, and strategy.
He also works with external groups and individuals to foster understanding of GE policies
and businesses. Sheffer joined GE in 1999 after seventeen years in journalism and
government communications, including serving as a press aide to two New York governors.
Before working in government, Sheffer was a reporter and editor at several newspapers
winning many awards for his reporting. Sheffer is chairman of the board of the Arthur W.
Page Society, a membership organization for senior public relations and corporate
communications executives. He also serves on the board of the Institute for Public Relations
and is a member of the boards of the GE Foundation and the GE-Reagan Scholarship
Program. He earned a bachelor of arts degree in English from Siena College in Loudonville,
New York.
40
Claude Singer is a brand strategist known for his creative flair in brand positioning, naming
and narratives. He has worked for the big agencies Siegel+Gale and Lippincott, and has
served clients as an independent consultant known as Brandsinger. Claude began his career
writing speeches for the chairman of Chase. He did stints as vice president of corporate
communications at Chemical Bank and Aetna. Today, he is EVP at Siegelvision. Claude is
an active teacher. Out of graduate school he taught history at Boise State. Later he taught a
graduate course in brand strategy at University of Hartford. Today he is Adjunct Faculty at
NYU teaching advanced writing. Claude has a bachelor of arts from Reed College and a PhD
in History from University of Washington.
Judy Voss is director of professional development for the Public Relations Society of
America, the world’s largest organization for public relations professionals. She provides
direction and support for PRSA’s seminars and more than fifty training webinars annually.
She is heavily involved in developing, managing, and evaluating the annual PRSA
International Conference sessions. Previously she held communications positions with both
for-profit and non-profit organizations including the American Hospital Association,
Perkin-Elmer and Woodhead Industries, Inc. Her titles have ranged from marketing
communications specialist, to advertising manager, to manager of corporate communications.
Previous responsibilities have also included branding and corporate identity work with
subsidiaries through her position at a corporate headquarters. She earned her bachelor’s
degree from Northwestern University in Chicago, majoring in communications, and earned
her Accreditation in Public Relations designation in spring 2003.
Thanks to Katherine for her input and support:
Katherine Pitney holds a master’s of science in public relations and corporate communication
from New York University. Prior to obtaining her master’s degree, she graduated magna cum
laude from Binghamton University with an advanced honor’s degree in English. At only 23years-old, she is working as a communications specialist for a manhattan staffing firm, where
she manages both internal and external communication.
A very special thank you to Jeanne for preparing the accompanying electronic materials and
Instructor’s Manual.
Jeanne Templeton is an Account Executive in the Technology Practice at Weber Shandwick.
She supports strategic public relations programs and media relations outreach across
consumer technology accounts. She holds a M.S. in Public Relations and Corporate
41
Communication from New York University’s School of Continuing and Professional Studies.
42
CHAPTER
1
43
REPUTATION
MANAGEMENT
Character is like a tree and reputation like its shadow. The
shadow is what we think of it; the tree is the real thing.
– Abraham Lincoln

Squandering the Reputation Asset: Days of Reckoning Draw Near

Reputational Capital

Expert Perspectives: Corporate Character and General Electric

Identity

Intangible Asset”—The Wrong Perspective

Can Reputation be Measured?

Expert Perspectives: The Economic Case for Corporate Reputation Management

Can Reputation be Managed?

Comprehensive Reputation Management

Confusing Communication with Performance and Behavior

Reputation Mismanagement: Lessons from the Financial Crisis

Case Study: Reputation be Damned

The Ten Precepts of Reputation Management
44

Reputation Management: The Best Corporate Communication Strategy

Brand (Not Reputation) Management

The Expanded Reputation Formula

Expert Perspectives: Everybody’s Got Brand

Sidebar: Systems Theory

Best Practices

Resources for Further Study

Questions for Further Discussion
■■■
45
SQUANDERING THE REPUTATION ASSET: DAYS OF
RECKONING DRAW NEAR
Warren Buffett famously said to new employees: “If you lose dollars for the firm by bad
decisions I will be very understanding. If you lose reputation for the firm, I will be ruthless.”1
It seems the oracle of Omaha was paraphrasing the bard of the ages, whose Othello said: “He
who steals my purse steals trash…but he that filches from me my good name…makes me
poor indeed.”
For many years CEOs and other leaders have echoed a similar mantra: “Reputation is our
most important asset.” So why is it that so many have let the asset be “trashed”? It will surely
take years of cascading scandal and investigation to determine which and how many General
Motors (GM) employees reacted negligently or worse to the ignition switch defect. While
that is a stark illustration, others occur with shocking frequency and in the extreme—almost
as if negligent management of the reputation asset does not really matter to those in charge.
That is about to change.
An unmanaged asset will decline in value over time, inevitably moving to the liability
column, and this is one reason for the decline in corporate reputation. Whereas most large
companies today have a risk and crisis management framework in place, few have a process to
manage the overall reputation asset, both the upside as well as the potential downside.
And of the companies that have risk management frameworks in place, few, as the GM
recall demonstrates, coordinate and communicate the various risks residing in various parts of
the organization. In her Congressional testimony of April 3, 2014 GM CEO Mary Barra
acknowledged that, over the years of the ignition switch problem, internal communication
was poor, with engineering and legal, for instance, not sharing information that might have
saved lives.2 (Whether that was an illustration of the George Bernard Shaw principle—“The
greatest challenge of communication is the illusion that it has taken place”—or of something
more sinister is a matter for the investigators.)
Is poor stewardship of reputation the result of senior executives not really believing in the
importance of reputation? Or is it because they think there is no way to measure or manage
reputation?
Reputation is a corporate asset of substantial and measurable value. The view that it is an
intangible asset is not a constructive perspective, and it helps explain why so many senior
executives who achieved success through smart management of company assets have no idea
46
what their company’s reputation is worth or how to manage it.
Over recent years the intuitive has been proven true: Companies with better reputations
attract more and better employees, pay less for goods and services, accrue measurable
competitive advantages, and can charge more for their own products. The argument over
whether or not reputation has tangible worth is settled.
How much? Since the early 1980s the “Most Admired Companies” surveys have been
providing what is generally seen as reliable benchmark data for comparing how one company
is viewed versus others. Measurement analytics continue to improve. The 2014 Reputation
Dividend Report indicated that the reputations of the Standard and Poor’s (S&P) 500
companies accounted for 21 percent of the combined market cap of those companies.
Over the last several years, the growing desire to measure, analyze, and manage reputation
has spawned numerous firms that claim to do those three things—an internet search of
“reputation management” now yields over two million results—but most do little more than
monitor for what is being reported and opined. The major public relations agencies and some
of the large consultancies also list “reputation management” in their portfolios of offerings but
they usually stop short at measurement or analysis.
The good news is that the growing market is also producing thoughtful ways of helping to
build and protect reputation. Reputation can be managed, not perfectly but well. Research
indicates that in companies with a process in place for managing reputation, reputation
rankings are higher.
The fact is that some companies are undervalued on certain drivers of reputation—for
instance, long-term investment value or corporate social responsibility—and such a problem
can often be addressed through a targeted communication strategy. In other cases companies
are overvalued on such drivers, which then presents a performance or a behavior challenge.
To manage the components of reputation—performance, behavior, communication and
intrinsic identity (what the organization stands for)—is to manage the whole. To manage
relationships with groups and individuals that have a stake in the company is to manage the
sum of those relationships, something called reputation.
If there had been in place at GM a rigorous, audited, reputation management, and
reporting process—including objectives and strategies for accentuating the company’s
tremendous accomplishments in engineering and safety, as well as dealing with its problems
and vulnerabilities—the chances of admitting and addressing the ignition switch problem
early would have been enhanced.
This year, and more so the coming years, senior executives will succeed or fail on their
47
ability to build and guard reputation. In the latest annual survey by the Conference Board,
chief executives included reputation among their top five strategies for “driving enterprise
growth and achieving better performance.”
Now that there are validated ways to measure and manage the reputation asset,
accountability will follow. Company leaders who are negligent in their management of
reputation will meet “ruthless” consequences. Companies headed by good reputation stewards
will reap the benefits of a good reputation, the greatest of which is trust, the future equity
that conveys a competitive advantage of enormous value.
■■■
The business scandals of the first years of the twenty-first century demonstrated how
important it is to build and guard reputation. The scandals spread to nonprofits, government,
universities, and sports, and the public seemed to tire of the news reports. But fatigue did not
convey immunity, so people demanded change: tougher laws, more governance, and greater
accountability. At the same time, academic researchers and public relations professionals
intensified efforts to quantify and manage reputation, often thought of in the past as an
intangible asset.
Reputation scholar Charles Fombrun, professor emeritus, Stern School of Business, New
York University, an editor-in-chief of the journal Corporate Reputation Review, defines
reputation as the sum of the images the various constituencies have of an organization.3
John Doorley and Fred Garcia (this book’s coauthors) accept that definition but also like
their own—which leads us to:
Reputation = Sum of Images = Performance + Behavior + Communication
This definition helps make it clear that performance and behavior, as well as
communication, are critical components of reputation.
48
REPUTATIONAL CAPITAL
Just as people develop social capital that helps them build relationships and careers,
corporations and other organizations develop reputational capital that helps them build
relationships and grow their organizations.
A good reputation has both intangible and tangible benefits. It is important for
stakeholders, from customers to employees to consumer advocates, to feel good about an
organization, and it is important to build a good reputation to sustain an organization
through the tough times. But a reputation is worth much more than that. Companies with
the better reputations attract more and better candidates for employment, pay less for
supplies, gain essentially free press and social media coverage that can be worth much more
than advertising, and accrue other benefits that actually contribute to profits. Reputation adds
value to the actual worth of a company—that is, market capitalization (the number of shares
outstanding times the price per share) is often greater than just the book value or liquidation
value of assets. The reputation component of market capitalization, reputational capital, is a
concept closely related to “goodwill,” and it is worth many billions of dollars in many large
corporations. It has a value in not-for-profits, government, and universities as well. For
instance, a good reputation helps a university attract students and donors.
Although CEOs agree that reputation has a value—is an asset—few firms actually treat it
as such. Few companies or nonprofits take a rigorous, quantifiable approach to reputation
management—measuring, monitoring and managing reputation assets and liabilities—yet
such an approach is intrinsic to the concept of asset management. Most organizations have
no idea what their reputations are worth, yet reasonable measurement can be agreed upon and
taken. Most companies do not have a system in place for regular, periodic accountability on
variations in reputation, yet without such a system opportunities will be missed and problems
will become magnified. Measurement, acknowledgment, and planning make possible
proactive behaviors and communications to take advantage of reputational opportunities and
minimize problems—thereby building reputational capital.
At the same time, in other countries, developed and emerging, leaders of business,
government, non-profits, universities and religions continued to demonstrate that
inappropriate, even vile behavior seems to have no limits.
The formula—R = P + B + C—applies to the reputations of individuals as well as
49
organizations. Within a period of weeks in the late summer of 2009, for example, four
Americans behaved badly in an extraordinary way in public: tennis great Serena Williams
threatened and verbally assailed a judge at the U.S. Open; Kanye West jumped on stage at
the MTV Video Music Awards to wrest the microphone from one artist because he thought
another deserved the VMA; Michael Jordan retraced decades-old interpersonal squabbles at
his induction into the Basketball Hall of Fame; and Congressman Joe Wilson of North
Carolina yelled, “You lie” when U.S. President Obama was addressing a joint session of
Congress in what is usually a reverential forum. At the same time, in other countries,
developed and emerging, leaders of business, government, non-profits, universities and
religions continued to demonstrate that inappropriate, even vile behavior seems to have no
limits.
The formula demonstrates that reputation is cumulative. So when a famous individual
behaves badly, he or she cannot generally make up for it with a press conference, tweet or
blog, no matter how sincere or eloquent the apology. Similarly with organizations,
communication is not enough to right a wrong. A reputation is built on performance,
behavior and communication and it can generally be repaired only by working on all three
aspects.
EXPERT PERSPECTIVES: CORPORATE
CHARACTER:
THE HEART OF A DYNAMIC APPROACH TO
COMMUNICATION AND REPUTATION
MANAGEMENT
Leading a Transparent, Engaged General Electric
By Gary Sheffer
The world has changed quickly and significantly for corporate communicators in the past
decade: The global population is on the rise; natural disasters are wreaking havoc at
unprecedented rates; and the global economy is still recovering from the Great Recession.
At the same time, digital technologies have democratized thought leadership and
reputation, giving millions of people a voice in your reputation and brand. As a result, the
communications landscape has been forced to respond to align with these new realities.
50
Figure 1.1 Page Society New Model for Enterprise Communications
Reprinted with permission from the Arthur W. Page Society
Communicators now play a more critical role in ensuring the reputation of their
organization is protected and enhanced amidst a global landscape that is defined by high
risk, low trust and little patience for nuance.
To succeed in developing a sustainable corporate reputation in this environment, a
company must define and know itself. No matter how volatile the environment becomes, a
strong sense of self—or “corporate character”—will help build value inside an enterprise as
well as trust and good will externally. This thesis is the heart of a dynamic approach to
communications and reputation management, the Corporate Communications Model,
released in 2012 by the Arthur W. Page Society.
Defining Corporate Character
Corporate character is defined as the unique purpose, beliefs, mission and values that are at
the center of your company culture. Critical to the strength of any corporate
communications function is the ability to understand the values of the company, to clearly
define it and to engage employees as authentic advocates for the brand.
The Page Society introduced the New Model for Enterprise Communications as a new
framework for how communicators can define and activate their companies’ unique
51
corporate character and build “advocacy at scale.”
At GE a few years ago we realized the world we once knew had shifted. A decade of
significant growth and change across GE’s portfolio, lingering fallout from a deep
recession and loss of trust in Corporate America, a challenging and skeptical media with a
keen eye on taxes and business outside the U.S., and a natural disaster in Japan created a
volatile and challenging communications environment for us.
We were being defined by narrow issues that ignored the GE we knew—a company that
is committed to taking on tough challenges, to invent and build what the world needs and
to do so with an enduring commitment to integrity. While our highly successful tagline,
“imagination at work,” spoke to the hard work and wonder of our company, we knew it
was time to change the emphasis to reflect the seriousness of the times.
We hung on to “imagination at work” but focused more emphasis on “work.” We
reframed and restated our identity, purpose, and value by first listening to our employees
around the world. They told us that they came to work every day to try to make things
better in energy, transportation, healthcare, aviation, and finance. That they were
committed to delivering results for their customers, society and our shareowners—that
they wanted to do nothing less than move, power, build and cure the world.
These passionate contributions from our colleagues defined the strong foundation for a
new communications platform—GE Works. We liked it because it authentically reflected
the company culture, its people and the impact of their work. In developing GE Works,
we were often guided by the Page model, which puts corporate character at its center.
Putting Corporate Character into Practice
Once corporate character is defined and there is internal buy-in, it is important to
communicate externally with transparency. In other words, we decided to take our culture
beyond the GE “fire wall.” By defining a set of strategic imperatives that align with our
corporate character, we could determine what kinds of engagement would authentically
and persuasively deliver the company message.
To reach all target audiences with GE Works, we knew we needed to activate around
these strategic imperatives:

Put employees at the heart of storytelling to demystify the work that GE does and
underscore its impact

Micro-target those we want to reach—employees, investors, science geeks,
52
entrepreneurs—and resist the big company urge to target everyone

Illustrate GE’s role as a leading technology company and leverage our heritage in
manufacturing to drive perception of innovation and increase favorability

Align GE’s message with public debate by focusing on America’s economic future
and to drive meaningful and honest dialogue about American competitiveness

Engage at a hyper-local level through thought leadership events, factory tours, and
employee town halls, for example bringing Chairman Jeffrey Immelt and senior
executives to dozens of communities to highlight the powerful combination of
employees, technology and community that make GE work

Develop new advertising to humanize the company and show GE at work through
the lens of its employees, demonstrating the value and impact of their work

Drive online engagement through GE-owned channels and external platforms, often
in a humorous and unexpected way
We introduced GE Works externally through a robust campaign tying together
advertising, digital/social, public affairs, communications, executive positioning, and
employee engagement in order to align with our strategic imperatives and reach our target
audiences.
Results
Two years later, our reputation and brand are stronger, our employees are proud and,
frankly, the communications team is having a lot more fun. Sitting down with our
colleagues to define a clear corporate character was quite satisfying. Creating our own
content—storytelling every day—energized a team weary of talking points and superficial
debate. Today, you will find GE weighing in on tough public issues but also inviting the
world’s innovators to share ideas through campaigns like “Six Second Science.”
At GE, we used the external environment to discuss who we are and to connect our
people to a broader mission—we are advocating at scale and leading a transparent, engaged
enterprise. Ironically, the volatile environment has strengthened our culture, as GE people
have coalesced around our challenges, re-examined our values and clarified our purpose.
Keys to success:
1.
Define your company’s corporate character.
2.
Engage internal stakeholders as authentic advocates.
3.
Determine how you communicate your corporate character externally and micro
53
target your audiences.
4.
Activate the appropriate elements of engagement that reach your core audiences in an
authentic way.
5.
Remain open, transparent and true to your corporate character through all your
communications.
54
IDENTITY
To academics in communication, “identity” is the raison d’etre of an organization. It is,
simply, what the organization stands for above all else. To distinguish this concept from other
uses of the term (such as corporate identity programs that try to position the company in a
particular way through all its communications and graphic vehicles), Paul Verbinnen of Sard
Verbinnen coined the term “intrinsic identity.” (We use that term in this book.)
“Identity” is the raison d’etre of an organization. It is, simply, what the organization stands for above all else.
Of course organizations, like individuals, have multiple identities. Research by George
Cheney of the University of Colorado, in Rhetoric in an Organizational Society: Managing
Multiple Identities, is consistent with the proposition that multiple identities need not pose
any conflicts, as long as there is a clear, dominant identity.4 Companies such as the venerable
General Electric and the relative upstart Starbucks, have each stayed true to a dominant
identity: respectively developing and marketing consumer and technology products of the
highest quality, and employing the best people to obtain, market, and sell quality coffee and
collateral products in a warm and welcoming venue. Starbucks is not at all embarrassed to
proclaim the ideals of mutually beneficial and profitable relationships with employees and
communities.
Other organizations and industries, sadly and notably, have recently failed to stay true to
the dominant identities that made them successful. Some learned from their failings; the
verdict is not yet in on others.
Dairy Scandals in India and China. The problems were similar in both countries and
occurred at about the same time, circa 2008–2013. In India, where cows have been thought of
with reverence, the problem was impurities in almost three-fourths of the milk tested by the
Indian Food Safety and Standards Authority, impurities that included urea and
formaldehyde. In China, dairy products from major providers were found to contain
chemicals that can cause kidney stones and liver cancer. Observers in both countries
attributed the abysmal failures to ensure quality to overzealous dedication to market growth
and profiteering. Quickly, though, at least one major producer in each country took a
leadership role, with excellent results.
The Indian company, Pride of Cows, stepped up its quality control, and then marked its
milk as a premium product that costs more but is of better quality. This company’s cows are
now treated humanely, almost with reverence, and other Indian manufacturers are following.
55
Already, it seems clear that Indians are willing to pay more for pure milk.
But when subprime mortgages presented the opportunity to earn large amounts of money quickly, the Lehman executives
ignored those values and lost in the end.
Mengniu Dairy Group was China’s largest dairy company in 2011 when its milk was found
to be contaminated with melamine, a toxin that can cause liver cancer. Quickly, Mengniu
invested huge resources in addressing the quality control failures in a comprehensive way that
touched all parts of the company. The accompanying communication campaign that stressed
employee engagement and buy-in helped bring the company back to its core values—
remedying the quality problems within months.
Lehman Brothers was one of the oldest and most respected investment banks in the United
States. After posting record high earnings in 2007, the bank firmly entrenched itself in the
following year’s subprime mortgage crisis caused by bad mortgage loans and borrowers
defaulting on payments. Lehman folded resulting in the largest bankruptcy filing in U.S.
history. An exchange of emails disclosed by the House Oversight Committee reveals one
major cause of the collapse. A memo from managers suggested that top executives forgo their
2008 multimillion dollar bonuses. The email said, “It would send a strong message to both
employees and investors that management is not shirking accountability for recent
performance.”5 The Lehman executive committee dismissed the memo as a joke, and CEO
Dick Fuld even told his top people not to “worry.” Throughout its history, Lehman had a
reputation for making values-driven decisions. But when subprime mortgages presented the
opportunity to earn large amounts of money quickly, the Lehman executives ignored those
values and lost in the end.
The Catholic Church. The scandals over the sexual abuse of young children by some priests,
which came to light starting in the Boston Archdiocese in 2002, were shocking and horrible
enough. Catholics and non-Catholics recognized that evil could exist anywhere. But what
drove many Catholics away from the church was the cover-up by the church hierarchy, from
bishops to cardinals. In numerous instances, they knowingly sent offending priests to other
parishes without telling the legal authorities or the people in the new parish, leaving the
priests free to commit the same crimes over and over. The average priest believes he exists to
give spiritual and emotional guidance to the people in his parish, but many of the bishops and
cardinals chose to ignore that intrinsic identity, trying to protect the church’s image at all
cost.
In 2003, in his first public statement as Boston’s new archbishop, Sean P. O’Malley made
explicit reference to the need to return to the Church’s intrinsic identity:
56
We can only hope that the bitter medicine we have had to take to remedy our mismanagement of the problem of
sexual abuse will prove beneficial, making all of us more aware of the dreadful consequences of this crime and more
vigilant and effective in eradicating this evil from our midst. How we ultimately deal with the present crisis in our
Church will do much to define us as Catholics of the future. If we do not flee from the cross of pain and
humiliation, if we stand firm in who we are and what we stand for, if we work together, hierarchy, priests, religious
and laity, to live our faith and fulfill our mission, then we will be a stronger and a holier Church.6
Many believe that the pope at that time, John Paul II, did not do enough to recognize the
victims of these crimes; from a public relations standpoint, he did not. He attempted to
minimize the issue with general statements and expected his American bishops to manage the
problem.
His successor, Pope Benedict XVI, understood that this strategy was not working. In
almost every public appearance during his first papal trip to the U.S. in 2008, he
acknowledged the horror and encouraged victims and others alienated by the scandals to find
comfort in their faith. He publicly apologized. In Washington, DC, Pope Benedict met
privately with victims from the Archdiocese of Boston where the public exposure of the
scandal began. He assured the victims that he understood the problem on an emotional level
and promised to stop the abuse.
By 2013 when Francis became pope, stories of abuse by priests had come from every corner
of the world. The Church had instilled numerous safeguards and provided financial
compensation to thousands of victims. And while Pope Francis reached out to people from
many countries and all walks of society, abandoning the trappings of the office, he was slow
to address the pedophilia scandal. On July 7, 2014, he met in private with six victims, two
each from Ireland, Germany and Britain. He acknowledged that the scandal had harmed the
Church to its core—producing a “toxic effect on faith and hope in God.” He begged
forgiveness and pledged to ensure that Church hierarchy no longer would protect abusers.7
The New York Times. To its credit, The New York Times broke the story itself in a frontpage exposé on May 11, 2003. Reporter Jayson Blair had plagiarized content from other
newspapers, had fabricated whole stories, and had invented scenes for stories that appeared in
the paper, including major front-page ones over a period of years. There were warning signs
bold and numerous enough to have stopped him early on, but the top editors ignored them.
Why did the people charged with seeing that the country’s “newspaper of record,” the one
that exists to report “all the news that’s fit to print,” publish the unfit? An explanation that
makes sense is that one of the paper’s other identities—including its commitment to
affirmative action (Blair is African American) and a desire not to rock the boat about a
reporter thought to be a favorite of the executive editor—superseded, in this case, its
57
commitment to quality. So while the paper can be proud of its various identities, it cannot be
anything but humbled by its failure to live up to its commitment to quality journalism, above
all else.
In the wake of the Blair scandal, The Times has reaffirmed its commitment to its intrinsic
identity, and has established numerous structures, including a public editor and a standards
editor, to try to assure that it is not distracted from its mission again.
It is important for employees to understand and be committed to the organization’s
dominant intrinsic identity. For example, if the CEO truly believes the organization is
committed above all else to quality products, but the average sales person believes the
dominant identity is the sales quota, there exists a prescription for disaster. For in difficult
times, what the employees believe the organization stands for will determine what they will
do.
Another benefit of a clear identity is that it can drive behavior, performance, and
communication, as it should. Then, internal and external constituencies will all understand
what the organization is about.
58
“INTANGIBLE ASSETT”—THE WRONG PERSPECTIVE
The historical view of reputation as an intangible asset is the wrong approach.
The reason most organizations do not have formal programs to manage reputation is that
they view it as something “soft”—intangible. Yet as nebulous as reputation can seem, it has
real, tangible value (dollars, for example) that can be measured. So the historical view of
reputation as an intangible asset is the wrong approach. Moreover, such a view is analogous
to that of some parents who say they need not be that concerned about their young children’s
character, because “they will be influenced by their peers anyway when they become
teenagers.” Such laissez-faireism—whether in parenting children or organizations—is a
prescription for disaster, as history continues to demonstrate.
Like all other assets—a building or a product, for example—reputation has its liability side.
So any reputation management plan has to measure, monitor, and establish a plan for
managing both the reputation assets and vulnerabilities/liabilities. The important thing is to
have a plan. If the following is not an ancient proverb, it should be: “If you don’t know where
you’re going, any road will take you there.” And you might end up in the wrong place.
59
CAN REPUTATION BE MEASURED?
In the 1990s some reputation scholars defined reputational capital as the difference, averaged
over time, between market capitalization and the liquidation value of assets. Many chief
financial officers disagreed with that formula, believing that the difference overstates the
value of reputational capital. But even those CFOs agree that much of that difference is
reputational capital. Since then, much progress has been made in quantifying the value of
reputation. (See the text box on the opposite page: “The Economic Case for Corporate
Reputation Management.”)
A common approach to measuring reputation is to take comparative measures against
similar organizations. The annual Fortune magazine survey of The World’s Most Admired
Companies is among the most widely known and respected by both industry leaders and
academics. But it surveys only three constituencies: senior executives, (outside) board
members, and securities analysts. A more comprehensive approach would include surveying
all the major constituencies, including employees, customers, and the press.
Another is the Harris-Fombrun Reputation Quotient (by Harris Interactive in association
with Charles Fombrun). It evaluates reputation among “multiple audiences,” according to
twenty attributes that are grouped into what are referred to as “dimensions of reputation”:
products and services; financial performance; workplace environment; social responsibility;
vision and leadership; and emotional appeal. The results of that survey are widely covered by
the press and discussed in social media.
EXPERT PERSPECTIVES: THE ECONOMIC CASE
FOR CORPORATE REPUTATION MANAGEMENT
By Simon Cole and Sandra Macleod
If this business were split up, I would give you the land and bricks and mortar, and I
would take the brands and trademarks, and I would fare better than you.
– John Stuart, CEO, Quaker Oats Co. 1922–1953
Investors tend to think of themselves as objective souls making decisions based on hard
facts and rigorous analysis. They will readily agree that a company’s reputation can have a
considerable bearing on its value, but struggle to put a figure on just how much. The
60
question is often avoided, dismissed under the banner of sentiment or bundled up into an
equally vague box labeled goodwill. As a result, value-based assessments of companies’
reputations have been ignored on the grounds that if you can’t measure it, you can’t
account for it.
Something had to change. The sheer volume of shareholder value tied up under the alltoo-amorphous banner of “intangibles” has soared in recent years to the point where by the
start of 2014, the very tangible book or net asset value of companies in the S&P 500
accounted for just 41 per cent of the market capitalization. Black and Carnes reasoned as
long ago as 2000 that corporate reputation makes up much of the difference because it
must have worth “to the investor since it results in financial benefits to the corporation.”8
They argued that reputation contributes to the firm’s value by reducing the mobility of
rivals, supporting premium prices and enhancing access to capital but stopped short of
identifying “a method for evaluating and measuring, in dollar terms, an individual firm’s
reputation.”
Unlike consumer brands, the primary source of value creation from corporate brands, or,
more accurately, their reputations, derives from investors. Traditional brands are valuable
to their owners because of the influence they exert in guiding and securing customer
transactions. Corporate reputations, however, impact primarily on investors who buy or
hold a company’s stock on the basis of the economic returns they expect from either capital
growth or dividends. This is the key to effective reputation measurement. Understanding
the mechanism by which a company’s reputation returns value to its shareholders not only
provides an objective means to structure communications and messaging, but also, an
instrument to gauge the performance of reputation management and the return on
investment.
Measuring Reputation Value
Reputation value analysis is based upon the notion that a company’s market capitalization
and so stock price can be explained by factors including financial indicators combined with
corporate reputation. It is designed to fulfill a number of criteria; to be logically sound,
transparent and based on empirical evidence; to be sensitive to the constantly changing
interests of investors; and to be capable of withstanding the inevitable scrutiny of the
boardroom.
The process, employing statistical regression, comprises four stages.
61
1. Data definition and capture
Analysis to date has been focused on leading publicly quoted corporations from two
jurisdictions, the US and the UK. The modeling was designed to explain companies’
market capitalizations (the “response” variable) by testing a wide selection of potential
“predictor” variables over a number of years (sourced from Factset and Bloomberg)
including reported and consensus forecasts of:

EBITDA (Earnings before Interest, Tax, Depreciation and Amortization)

EBIT (Earnings before Interest and Tax)

EPS (Earnings per share)

Return on assets

Dividend yield

Beta

Assets

Liabilities

Earnings per share

Stock liquidity
Reputation data are derived from the Most Admired Companies studies published by
Fortune magazine in the U.S. and Management Today in the U.K. Although independent,
the studies are highly comparable insofar as they are conducted among C-suite
professionals (senior and board level executives including chief executive officers, chief
communications officers, and chief financial officers) from many of the largest public
companies in each market along with selected investment analysts. The main difference is
in the companies covered which are by definition oriented to their respective jurisdictions.
Although by no means perfect, the Most Admired studies boast decades-long track
records of consistency and are widely judged to be authoritative. Most importantly, they
are, unlike other syndicated studies of corporate reputation, polling the impressions of
“professional observers”—i.e., people who have a view of the business as a whole not just
from the perspective of its products or services. Those views represent a close proxy for the
investment community and as such can reasonably be judged to reflect investor sentiment.
Other studies tend to focus on the views of consumers and, while possibly relevant to more
traditional brand valuation metrics, have little useful bearing on corporate reputation in its
principle role.
62
The Most Admired studies capture perceptions of nine different factors judged to be
among the main components of corporate reputation. In the U.S. they include:

Quality of management

Innovation

Quality of goods/products and services

Social responsibility

Financial soundness

Long-term investment value

Use of corporate assets

People management

Global competitiveness
Note: “People management” and “global competitiveness” are replaced by “ability to attract
talent” and quality of “marketing” in the UK.
2. Econometric analysis
Technical analysis is structured around cross-sectional step-wise regression. Raw data are
tested for independence using simple correlation analysis. Variables exhibiting signs of any
relationship with market capitalization are designated possible predictor variables and
prioritized. Variables showing high levels of correlation with each other are either
consolidated or removed. Analysis explores the relationships between possible predictors
and the response variable and identifies requirements for further variable transformation
and or compounding.
Once the role of reputation has been established at the overall level it is introduced
though each of its nine component drivers. Modeling uses the general form as the
framework re-running the regression with the individual measures substituted for the
headline rating. This determines which of the nine factors are most influential and, more
importantly, their relative impact.
3. Individual company outputs
“Interrogation” of the model facilitates the creation of a combination of reputation metrics
for each of the companies in the analysis. Predicted values of each company’s market
capitalization can then be calculated and from that a series of leading indicators. These
include the following.
63

Reputation Contribution. The proportion of a company’s market cap attributable to its
reputation. The primary measure of its reputation value.

Reputation Risk Profile. Spelling out how any reputation value is distributed between
the individual component drivers.

Reputation Leverage. The extent of the economic return that can be expected from
specific increases in overall reputation strength (expressed in terms of projected
increases in market cap).
4. Market behavior
Finally, armed with a detailed explanation of the individual reputation assets of a crosssection of leading U.S. and U.K. companies, pictures of the overall state of corporate
reputation can be compiled. These include the scale of the repu…

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