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If You Want a Good Reputation: Start building relationships

04.06.2008
There is ample evidence that focusing on relationships has a payoff for reputation, writes Peggy Simcic Brønn, researcher at BI Norwegian School of Management.

It seems that everyone wants to measure reputation. Countries, cities, companies, the public sector—you name it, they all want to measure their reputation.

The interest in reputation seems to have risen exponentially in the past few years, fueled in part by the proliferation of reputation rankings, including RepTrak, and those done by internationally by Fortune, Forbes and the Financial Times, among others, with their rankings of the best places to work and the world’s most admired firms.

However, some academics in corporate communication and public relations have despaired that all of the focus on reputation and image may detract from the primary responsibility of these functions — building relationships. The value of relationships includes the value of reputation.

The idea of relationships
Yet the idea of relationships and their importance does not seem to have taken root in the public relations/corporate communication consulting and practitioner arenas. Some believe that this is because of the massive attention paid to reputation and the belief that communication functions have abandoned relationships in favor of reputation management.

Marketing, with its attention to customer relationships, has somehow managed to bridge the gap between academia and practice. The volume of literature on relationship marketing and customer relationship management is enormous. The topics of customer satisfaction and barometers for measuring it are easily found in academic literature and research and in practice by firms and consultants alike.

Obviously, a major reason that relationships caught on so successfully in marketing is that customers and their satisfaction and loyalty have direct and sometimes immediate effects on a company’s performance. Additionally, they are relatively accessible, and measurements of their satisfaction and impact on an organization’s performance are pretty straightforward.

Challenges for Communication
Communication managers have much greater challenges than marketers.
For one thing, they are concerned with all the stakeholders of the organization.

Second, some of these stakeholders are people with whom the organization might not want to enter into a relationship at all, much less a long-term one, which is the primary goal of marketing.

The challenge is convincing firms and consultants to shift their focus from reputation to relationships. By concentrating on relationships, reputation will follow. However, proving this to management can be difficult.

Walking into a boardroom and convincing executives focused on bottom-line results that they should invest in relationships that at some time in some indeterminate future will affect their reputation can be career hara-kiri.

But practicing customer relationship management alone is just not sufficient for today’s organizations. All organizations need to engage in stakeholder relationship management. This entails taking a stakeholder approach, recognizing the vast numbers of constituencies of an organization and the mutual impact each has on the other.

Some researchers claim that:

1) establishing and nurturing stakeholder relationships lessen shareholder risk,
2) innovation is often a result of the strong relationships with and between employees, and with supply chain and business alliance partners,
3) resources and information necessary for the development of new markets and opportunities comes from networks of relationships, and

4) a good reputation and enhanced brand value are the result of relationships.

Successful relationships
Four outcomes have been identified as good indicators of successful relationships; trust, control mutuality, commitment and satisfaction. These are defined as:
Trust, one party’s confidence in and willingness to open up to the other party, measured by; Integrity – the belief that an organization is fair and just, Dependability – the belief that an organization will do what it says it will do and Competence – the belief that an organization has the ability to do what it says it will do
Control mutuality, the degree to which parties agree on who has rightful power to influence one another;
Commitment, the degree to which each party believes and feels that the relationship is worth spending time and money on; 1. Continuance commitment – a certain line of action
and 2. Affective commitment – an emotional orientation
Satisfaction, the degree to which each party feels favorably toward the other because positive expectations about the relationship are reinforced.

If measuring relationships is to catch on, it must make the jump from academic research to practical application. There is ample evidence that focusing on relationships has a payoff for reputation. Good relationships don’t happen overnight, and maybe that’s the problem. Firms are just not willing to invest in the effort.

Reference:

This article is based on the article: Brønn, Peggy Simcic (2007): “Relationship outcomes as determinants of reputation”, which received the Emerald Literati 2008 Award as one of three highly commended papers in Corporate Communications: An International Journal.

Audun Farbrot | alfa
Further information:
http://www.bi.no

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