Corporate reputation
The sum of the judgements that different stakeholder groups make about a company based on what it actually does, not just what it says.
Reputation is neither image nor brand. Image is what a company says about itself. A brand is a promise made to customers. Reputation is the judgement made by customers, employees, banks, regulators and the local community on the basis of experience and fact. It therefore cannot be built through communication alone, although it can very easily be lost without it.
Reputation works as a store of trust. When it is strong, dealings with the bank, negotiations with counterparties and recruitment go more smoothly, and people are more forgiving of mistakes. When it is weak, each of these processes becomes slower and more costly. Rebuilding trust usually takes far longer than losing it.
For the board, this calls for discipline: a named owner, regular measurement among the key stakeholder groups and consideration of reputational consequences in strategic decisions.
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