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Reputation is everything

By Peter Verhezen - posted Tuesday, 28 November 2006

Recent surveys reported in The Age and the Australian Financial Review show that trust in the integrity of business leaders has been dramatically eroded over the past few years.

The age-old respect for leaders in business or public life has been tainted; their reputations have nosedived.

In the wake of recent corporate and organisational scandals in Australia and around the world, politicians and lawmakers are demanding more stringent reporting and control mechanisms in an attempt to restore corporate reputation.


A bad corporate reputation hurts, but how can the situation be turned around? The complexity of the business world requires executives and managers to make responsible decisions which benefit the corporation in a socio-economic sense.

People are expecting solid financial results from business, yet they are also expecting these healthy returns are achieved through fair play and socially responsible conduct. Hence, creating a good reputation is about creating certain soft capital and generating value for the firm.

Green Australian corporations for instance are committed to socially responsible behaviour that not only benefits their social reputation but also positively affects their financial long-term strength.

Their socio-economic reputation is built by demonstrating integrity, through a commitment to socio-economic and environmental values and principles, that go beyond public relations tactics.

Integrity creates goodwill and ultimately enhances the reputation of the organisation. When an organisation can convince its key constituencies that its products and services not only match but exceed those increasingly demanding expectations, the organisation has created reputational capital and it can enhance its financial performance.

Indeed, firms creatively gain sustainable competitive advantage by cultivating intangible assets such as reputation.


A positive reputation is like having a healthy immune system or comprehensive insurance. The threats and opportunities in reputation arise from the main drivers behind reputation: corporate governance and leadership, financial performance and long term investment value, regulatory compliance, customer service, workplace talent and culture, corporate social responsibility and communications and crisis management.

By systematically identifying these risks to reputation and nurturing the relationships with its key constituencies or critical stakeholders, an organisation can safeguard and even enhance its reputation.

Continuous reputational risk management should be integrated and embedded into everyday decision-making, strategy development and the organisation's policies, processes and procedures.

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First published in The Age on November 16, 2006.

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About the Author

Dr Peter Verhezen is visiting scholar, co-ordinating governance and international business at Melbourne University's Department of Management & Marketing. He is also an associated partner with IndoConsult/Booz, Allen & Hamilton Management Consulting Group in Jakarta.

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Creative Commons LicenseThis work is licensed under a Creative Commons License.

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