Ways to quantify reputation
Every organisation’s reputation makes up a fundamental part of their net worth – but how can a value be put on what has long been considered an intangible asset? The first step is to quantify that reputation
For the last 15 years at least, corporate reputation has been recognised as integral to the value of an organisation. Boards are concerned with it, consumers make buying decisions based on it, share prices depend on it. But for most of that time, reputation – and therefore reputational risk – has been considered an intangible. Hard to describe and even harder to quantify. That hasn’t stopped companies trying, of course.
How reputation used to be quantified
Having accepted the challenge of how to measure reputation, a system had to be devised. By siloing stakeholder groups and focusing on individual priorities, it was possible to gain a degree of insight into how each felt about the organisation, and so assess its reputational standing with them. This process necessarily relied on primary research among stakeholders.
For each group, proxies for reputation were established, and a function within the business was given responsibility for applying them. Internally, human resources would track employees’ sentiment towards the company with engagement surveys.
The investors’ perspective, pursued by investor relations, could be gleaned from analyst ratings, share price and targeted surveys. Surveys were also run by marketing departments to garner customer feedback, to combine with Net Promoter Scores. The corporate communication team would do their bit by analysing media reporting to estimate public opinion.
While giving first hand insight into stakeholder perceptions, this process struggled to provide a holistic view, or an easily tracked score for a business’ reputational standing. This manner of primary research is hampered by small sample sizes, the low frequency at which it can be conducted (quite at odds with how quickly stakeholder sentiment can shift) and ongoing concerns about the robustness of its approach, all of which can affect the result and give a skewed image of a company’s reputation.
How the reputational landscape has changed
Reputation is rooted in the perceptions of stakeholders – but what if one stakeholder group influences another’s viewpoint? In today’s interconnected, hyper-transparent world, shareholders don’t just draw a picture of a company based on market reports and the advice of hedge fund managers. They also have direct access to what consumers feel about the business, based on online reviews, social media posts and trending hashtags.
Similarly, the 24-hour, multi-channel news cycle has exponentially expanded the volume of mentions that any organisations can expect to receive. Share prices have become common parlance among consumers of goods and services, reported on in mainstream news as they reflect corporate behaviour as well as financial results. Disgruntled employees can publish their feelings about employers’ failings, while in the post-Covid, socially-conscious mindset, reports that a company is shedding large numbers of staff can damage reputation as consumers empathise with the risks of job insecurity.
Corporate social responsibility is also front of mind for many stakeholders, with investors focusing on ESG factors and NGOs ready to hold to account any business seen to work against the interests of society. Organisations are expected to publish their CSR policies – and visibly act on them. It’s increasingly easy to identify and vilify any company not acting authentically in this arena.
How to quantify corporate reputation today
With the wholesale digitisation of communications, the fixed model of reputation proxies is no longer relevant. Just as technology has broken down the barriers between stakeholders, so it has also simplified – while making vastly more sophisticated – the way in which reputation can be quantified and tracked. Widening the net from primary to secondary research has also provided a far more detailed, comprehensive view of reputational risk.
To get the most accurate reading of a company’s reputation, positive or negative, a multi-channel, multi-stakeholder, real-time, long-term approach is required. Indirect as well as direct stakeholder opinions need to be polled, obscure media mentions correlated, competitor reputations assessed; across traditional print, broadcast, online and social media, industry reports and expert analyses; in all appropriate geographies. This multifaceted approach is the truest way to quantify reputation.
In the world of big data, it’s a massive task, only possible with analysis tools capable of cutting through the noise to identify specified keywords, combined with the use of artificial intelligence to analyse the sentiment of what is being said about an organisation.
Underlying principles to quantify reputation
While methodologies may vary, there are some basic tenets that apply to any reputation quantification programme worthy of the name.
1) Start with Stakeholders
As we’ve long maintained, reputation is in the eye of the stakeholder. Companies have as many reputations as they have stakeholders. Therefore, a quantification of reputation must first and foremost be based on data that emanates from or that has the possibility of impacting these stakeholders
2) Pinpoint sentiment
There are a variety of sentiment algorithms available on the market, but the majority of these lack precision and context. Sentiment analysis needs to assess what is being said about a company from the stakeholder specifically. It can’t simply be a broad-brush quantification that a given article is positive and mentions a company, therefore the company is also viewed positively. Context is king, as is nuance, so look for greater precision than simply positive, negative or neutral.
3) Weighting and prioritising
Not all content or opinions are born equal, so it is imperative that any methodology is able to intelligently differentiate between the value of an individual, a group or a source to accurately reflect the influence they wield on shaping perceptions. There are numerous methods to achieve this, starting with basic visibility metrics and blending in qualitative research to refine. Key to this is the traceability and transparency of any weighting mechanism to ensure that micro adjustments can be made to reflect natural evolutions in influence networks as well as advocates and antagonists.
4) Link to KPIs
While the first part of collating robust, statistically significant reputation intelligence resides in widening the net to include multiple stakeholder perspectives across a comprehensive set of channels, the aforementioned “so what” factor has to be answered when dealing with something as nebulous as reputation.
The best way to do this is by linking reputation to things that the business genuinely cares about, namely its Key Performance Indicators. This can be sales, share price, employee engagement or any other stakeholder-relevant metric.
What matters is being able to correlate both the impact of reputation, and by extension reputation risk, on the company’s KPIs. This is the most effective way of ensuring that reputation is understood and managed as a strategic priority at board level.
In the process of developing a means of measuring reputation, it has been shown to be a tangible asset. And with a heavy-duty reputation intelligence solution, it is finally possible to quantify, compare and monitor corporate reputation.
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