Workforce challenge, brand society and the age of scandal. The relevance of reputation management is easy to spot, but strategic management of an organization's reputation also brings a number of benefits. We present four of the most important ones.
We live in "a brand-society" and in the "age of scandals". This is what the research sometimes says when asked to explain why reputation management is as important to Danish leaders as it is at the moment. Another obvious explanation is the workforce challenge, which stems from the fact that Denmark will have a shortage of 90,000 people in the labor market by 2030. However, the shortage is already palpable today, which is why public organizations and private companies are interested in strengthening their reputation so they can attract and retain employees.
Traditionally, reputation management has focused on the reactive. The organization experiences a media storm or scandal and through crisis communication tries to manage the problem without causing irreparable reputational damage. Today, the reactive approach is insufficient, which is why more organizations are taking a proactive approach. It could be the organization that wants to cement its credibility and the trust of its citizens, attract talented applicants or retain existing employees.
Reputation management often focuses on the outside world: the media, citizens, experts, newcomers, politicians, voters and other external stakeholders. But reputation management also has an internal impact on employees and their desire to stay at work. For example, when a bad case hits the media, many employees will consider whether it's time to move on.
Reputation management, as the word suggests, is about managing the organization's reputation. More specifically, it means portraying the organization in a positive (but still realistic and accurate) way to create a good impression, both externally and internally.
As a stakeholder, you form your impression of the organization based on direct contact (it could be the school your children attend or when you visit the Citizen Service Center), indirect contact (such as information and communication from the organization itself or from companies that rank jobs) and media contact (positive or critical stories in the press about the organization). Reputation management is about influencing all three. It can be complex and time-consuming. On the other hand, it brings a number of benefits.
1. Attracts employees
The most common reason managers want to work with reputation management is to attract and retain employees. The workforce challenge affects both the public sector, where the healthcare sector is particularly affected, and private companies, which are missing out on triple-digit billions annually because they have to turn down new customers and assignments. The Danish Chamber of Commerce therefore calls the labor challenge an acute problem that should be seen as "the absolute biggest challenge facing Danish business and Denmark as a society."
Fortunately, research shows that there is a clear correlation between organizational reputation and the number of qualified applicants and employees' desire to stay with the organization. In other words, reputation is linked to both attraction and retention.
There are several explanations for this. If we start with the correlation between reputation and the number of qualified applicants, the so-called signaling theory shows that when we apply for a job, we do so under imperfect conditions. This means that we don't have access to all the information we would like to have about the workplace. Instead, we have to make do with observable signals that can paint a picture of it. An example is the educator looking at a job in a daycare center. What do the parent satisfaction surveys look like? What does the daycare center write about its mission, vision and values on its website? What do online articles say about the daycare center? And what do current and former employees say about working there? If the answers are positive, they reflect a good reputation and make her more likely to apply for the job.
Another explanation comes from social identity theory. It argues that our self-perception is primarily based on belonging to certain groups, such as belonging to the workplace and colleagues. The social status and characteristics associated with the workplace reflect back on the employees. The logic is that organizations with a good reputation are more likely to attract applicants because the reputation can help improve their self-perception.
2. connects employees
Reputation also has a big impact on whether employees stay in their jobs. High-performing employees and managers are particularly aware of the organization's reputation and how it changes over time. In short, they don't want to be associated with a workplace that could damage their career.
More generally, employee reputation and affiliation is linked to how employees believe outsiders view them. It affects how they see themselves. Being part of an organization with a strong reputation leads to pride and self-esteem, and strengthens the connection between employee and organization. The positive reputation leads to employees identifying more with the organization, and the reputation acts as a mirror where they can see themselves and the work they do in a positive light. Employees see themselves reflected in the positive reactions they receive from parents, patients, managers, local council and the media. The "mirroring effect" is a technical term. Conversely, a negative reputation can lead to shame, anger, discomfort and embarrassment, which affects the connection.
3. provides autonomy and legitimacy
The quality of a reputation can help determine how much autonomy public leaders have to realize the organization's mission and vision. When public organizations have a good reputation, political leaders are less likely to interfere. In other words, reputation legitimizes leaders and organizations. It shows that the leaders know what they are doing and that the organization is trustworthy.
A certain degree of autonomy can help managers achieve their goals by giving them the freedom to act. This doesn't mean that managers need to be given a free rein, but if the rein is too narrow, the management task becomes difficult. If the organization has a bad reputation, the political focus will often be on intervening and taking over some of the management space.
4. breaking negativity bias
As we mention in the article "Reputation management in the public sector: Between differentiation and imitation", reputation management in the public sector differs from the private sector in a number of ways. The negativity bias that characterizes the public sector is particularly worth mentioning here. The media, opposition and citizens tend to pay more attention to the negative than the positive things organizations do. They also tend to punish failure more harshly than they celebrate and reward success. Research also suggests that criticism in the media is self-reinforcing, so one critical story easily leads to more - even over time.
A strong reputation can make an organization less likely to be criticized in the first place and more resilient to the criticism that may come. This is particularly relevant in the public sector, which is often associated with rigidity, bureaucracy, slowness and inefficiency - simply because it's the public sector. A clear reputation can position and portray the organization in a more flattering way.
You can read more about how to do this in the article "How do you practice reputation management?"
