reputation managementCorporate reputation is everything. Loss of reputation can destroy companies.

Warren Buffett once stated: “We can afford to lose money — even a lot of money. But we can’t afford to lose reputation–even a shred of reputation.”

The 2016 US Reputation Dividend Report noted that in March 2015 reputations accounted for an average of 18.2 percent of market capitalization across the S&P 500. A year later in March 2016, they delivered 20.7 percent, or $3,977 billion worth of shareholder value. In other words, corporate reputations are more valuable than ever. It’s one of the family jewels.

“Reputation contribution – the proportion of corporate value accounted for by reputation – was up by an average of 2.5% points, mitigating the downward pressure on stock prices and leaving shareholders across the index $584 billion better off,” points out Sandra Macleod, CEO of Mindful Reputation and director Reputation Dividend.

“These findings are, on the one hand a testament to the ability of corporate communicators in managing their intangible assets, while on the other, a sign that there can be no let-up if the gains are to be secured into 2017 and beyond, Macleaod writes for the Institute for Public Relations.

Corporate Reputations Require Constant Maintenance

Reputations are not something than can be obtained or discarded as the economy swings from good to bad. They require constant maintenance and protection. And the impact of reputation varies greatly between companies. Strong reputations create shareholder value; weak reputations decrease it.

To reach its findings, the report analyzed financial metrics, including shareholder equity, return on assets, dividends and earnings and reputation measures such as Management Today’s “Britain’s Most Admired Companies” and Fortune’s “World’s Most Admired Companies.”

How can businesses protect their reputations? The report recommends that PR:

  • Focus on proactively managing corporate reputation. Spell out to executive leadership how much shareholder value depends on reputation and how much is at risk.
  • Pay attention to how stakeholders view competitors and peers. Show exactly how they are perceived and point to your relative strengths, vulnerabilities and how they can be addressed through improved operational performance and messaging.
  • Understand what matters most to your stakeholders. Identify what has the greatest impact on reputation value and how communications messages can move the needle.
  • In addition, don’t do stupid stuff. Consider the effect on corporate reputation of every management decision – and how it can be perceived.

How to be Proactive – and Other Reputation Management Recommendations

Being proactive entails regularly monitoring your public reputation — not just when a specific incident requires your attention. “How do you do this? The magic tools invented to solve this problem fall under the name of “social media monitoring,’” states the Kissmetrics Definitive Guide to Online Reputation Management. Through social media listening services, companies can collect online content, including blog posts, online reviews and social media comments. Some services, such as, can measure the overall sentiment by grading social media posts with automated software and human analysts.

Respond quickly to negative customer feedback. Start friendly conversations, instead of confronting critics, and solve customer problems to help stop negative comments from spreading. Responding quickly can prevent negative comments from disgruntled customers or malicious competitors from spreading on social media. A media monitoring service can alert you when your company or its products are mentioned.

Consider an online reputation management company. Although competent, trustworthy reputation management services abound, some employ disreputable tactics such as black hat SEO tricks that can prompt lower search results rankings, warns search engine marketing expert Marcela De Vivo. Unethical outfits often use spam bots to post fake comments, overuse keywords, censor or block all complaints, and create fake user profiles to provide favorable comments.

Appoint a reputation manager. Larger organizations may wish to appoint a single person to oversee reputational risk, offline as well as online, recommends Michael Volkov at the Volkov Law Group. That senior risk manager assesses the company’s reputation, monitors the beliefs and expectations of stakeholders, and measures and monitors the company’s reputation on an ongoing basis. Often, a member of the company’s PR department fulfills that role of reputation manager.

Bottom Line: Corporate reputations have become more valuable. A damaged reputation can destroy an organization more surely than loss of income. Corporate PR teams can protect and improve their organization’s reputation through constant social media monitoring and swift, proactive management.