A strong reputation can be a useful defense during a PR crisis. But can we manage reputation? Yes, say ReputationDividend and Signal AI, among others. Yet, as you will see, reputation measurement is not without hurdles.
For example, ReputationDividend focuses on reputation’s dollar value.
Commercial performance, it says, “lays the foundation” for a company’s success, but reputation “channels stakeholder commitment.”
Profits are critical, but so is reputation, or “thoughts, feelings and impressions in the minds of company watchers…[these] underpin investor confidence and secure the stock price,” it says in an August 2021 report.
The report looks at stocks of S&P 500 companies. It’s cagey about how it fixes a dollar figure for what it calls Reputation Contribution (RC), though it’s based on nine factors, including innovation, people management and social responsibility.
It defines RC as the proportion of a firm’s market cap related to the confidence its reputation inspires. Companies with high RCs suffered smaller dings to their market caps during the pandemic’s initial market crash than companies with lower RCs. Their recoveries were swifter too.
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