I first heard about the concept of reputation capital in my professional life in 1999 at the Lucern Communication Summit in Switzerland organized by ICCO (International Association of Consulting Companies). we threw it away. This congress had the following feature; A year ago, the ICCO board of directors, including myself, had asked the CEOs of the world’s largest communications consulting companies to come to the congress to present a paper-based paper based on research.
As a matter of fact, during the 3-day congress, we watched the effective presentations of the CEOs of the world’s largest communication consultancy companies. One of them was Prof. Charles Fombrun, who spoke on behalf of Weber Shandvick. Fombrun, the founder of the Reputation Institute, whose name we have not heard of until then and whose name we will hear frequently in the months following this congress, was the subject of his speech “reputation capital”.
. Charles Fombrun said that the real effective area of communications management is reputation, and that companies are not aware that they are “enriched by their reputation.” The brand value of the companies; that they had come from their reputation along with their possible future earnings and intellectual capital, as well as the outputs of a research he had done. As PRCI, we invited Charles Fombrun to Istanbul in 2001 and informed both our colleagues and the business world about his work in the field of reputation capital.
“Intangible Values”
If we remember that social responsibility or corporate citizenship was not yet on the agenda even among professionals in those days, Fombrun in the process leading to reputation capital; Along with “brand equity,” he conveyed with a mathematical model that stakeholder management and corporate citizenship were counted among the main inputs of reputation capital. As a matter of fact, the Reputation Quodient model of the Reputation Institute, of which he is the President, and the RepTrak models developed from it are shown as research-based studies focused entirely on reputation capital.
After this introduction, we need to emphasize that reputation capital is a matter of close concern to public or public companies, bosses who will marry or sell their companies, or institutions that have credit relations with the financial world. In our financial affairs world, reputation capital, which is also claimed to be the equivalent of “loincloth” in a sense, is essentially the value attributed to the company’s reputation. it is an output of how it manages. For example, what kind of leadership there is, what is the quality of management, is there an innovation culture, customer satisfaction policies, qualifications and commitments of employees, long-lasting collaborations with qualified suppliers, solidarity with non-governmental organizations, ecological environmental sensitivity, within the scope of human rights; violence against women, racial discrimination, issues related to child and animal rights, fair and ethical decision processes and many other topics constitute the intangible values of companies. In the 1970s, these issues were 20% of company valuations, but today this rate has exceeded 80%. Therefore, reputation capital is not a “decorative” object in the presence of companies.
“What kind of Company Culture?”
Now let’s come to the “backbone” of reputation capital… For this, we need to look at the vision, mission and corporate values of companies and look at what kind of “company culture” they create with them. Whether the statements we see on every company’s web page really have a counterpart in daily life is among the topics of discussion of reputation capital. The basic expectation is that the staff managing the companies exhibit a management in accordance with their vision, mission and values definition. However, in practice, this is not the case. Two main problems stand out here. One of them, and I think the most important one, is the methodology for determining corporate values. Although there are different models followed in this regard, the fact that corporate values correspond to the following mix illuminates our way in the process leading to reputation capital: it is preferable that employees, the geographical region in which they operate and global values are defined in the corporate culture. What we commonly witness in practice is that companies determine their corporate values only with methodological studies carried out by their own employees. That is, we see that local people or global values are not taken into account. The second problem is that after defining vision, mission and values, policies are forgotten by jumping directly into processes. However, the company; finance, human resources, production, quality, purchasing, procurement, communication, customer satisfaction, employee loyalty, ethics and compliance issues are expected to have policies that have taken their wind from corporate values so that processes are designed accordingly.
How does the inadequacy of these two issues adversely affect reputation capital? When managers make a critical decision, sign an important contract, or speak in front of an important public on a topic on the public agenda, what will be their basic basis for content? Logically, we have to answer that there should be visions, missions and values, but if these have not come out “as they should”, we can only move the ball around in the midfield with the existing ones, and even cause crises and damage to reputation. In other words, the “how” decisions and behaviors should be is the raw material of our reputation capital.
“One Hundred Years of Delay”
In 2019, the Business Roundtable, one of the largest lobbies in the international business world, announced that they had changed the “definition of the raison d’être of companies” by issuing a statement as we all know . The Business Roundtable, which includes the CEOs of the world’s 200 most important companies among its members, has changed the asset value of companies that they have defined as “creating shareholder value” to “creating value for their stakeholders” for more than a hundred years . Because they met with the fact that reputation is actually the real “value” that determines the future of investors and entrepreneurs. Of course, since the Business Roundtable says so, the next day there will be no rosy. Time will tell how sincere they are in their statements.
But we have entered a world where companies compete not with their products and services but with their “reputations”. In fact, they state at every opportunity that they “have no more important job than managing their reputation.”
(*)Written for the March 2022 issue of Marketing Türkiye
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