It often begins with a crisis – a company struggling for funding, or perhaps caught in a media relations nightmare.

The firm’s reputation, if not its fortunes, is taking a pounding and the black eye it’s getting isn’t terribly becoming.

Typically, that’s when Larry Clausen gets a call.

His first priority is to counterpunch and diffuse the crisis. Once accomplished, it’s time to examine the damage, assess the company’s reputation and consider a makeover.

David Lazarowych, Business Edge
Larry Clausen, whose company recently spearheaded the Alberta Beef campaign, says a firm's reputation can make advocates of customers, employees and the community.

“We all have reputations as individuals and businesses, but whether we like those reputations is another thing,” says Clausen, president and CEO of Communication Incorporated in Calgary.

In the past few years, building, maintaining and measuring company reputations has become a growing concern of businesses around the world.

According to the third annual Corporate Reputation Watch Survey, a September 2000 poll of more than 600 chief executives and other top-tier managers, 42 per cent of respondents said that their companies have a formal system in place to measure corporate reputation.

The number represents a 220-per-cent increase over 1998 figures. “As more companies implement these measurement systems, it has become apparent that they recognize the increasing significance of corporate reputation to their bottom line,” said Tom Hoog, president and CEO of Hill & Knowlton USA, co-sponsor of the poll with Chief Executive magazine.

Clausen, a communications consultant for 12 years, says reputation management is quickly becoming the core part of his business. It’s not a fleeting trend, he says, nor should it be confused with brand management.

Reputation, says Clausen, is what a company stands for, its core values. It can be about being trustworthy, efficient, generous or even aggressive. “If you are going to behave less than admirably, then say so,” says Clausen. “Say: ‘That’s my style and what I want to be known for.’ ”

Why is reputation important? Because it builds advocates, whether they are employees, customers, media or analysts.

These advocates support and promote your business, he says, and build a reputation outside of what you do on your own.

A good reputation in turn allows companies to attract quality employees, charge premium prices, attain favourable media coverage, create good employee morale, customer retention, competitive advantage and helps defend the company in times of crisis.

Clausen adds that history shows companies that have survived for generations have built reputations based on a core value of what they stood for in business. More recently, he points to the core value statements of Nike and Wal-Mart.

Nike’s is: ‘To experience the emotion of competition, winning, and crushing competitors’, and Wal-Mart’s is: ‘To give ordinary folks the chance to buy the same things as rich people’. Both are core purposes its advocates understand, support, and see the companies delivering on.

Core purposes, says Clausen, are not the same as branding, which is usually aimed at customers and is driven by advertising with slogans such as ‘Out of the Blue’ (Labatt’s) and ‘Spend like Santa, Save like Scrooge’ (Canadian Tire). While important, branding is just one of the components that build a company reputation.

Clausen is working with nearly 15 local companies which are assessing their reputations, most after using his firm for crisis control.

“We’ll say, ‘based on this crisis, here’s what we heard from the community,’ ” says Clausen. “‘They (the community) didn’t know who you were, they had distrust for your capabilities, and they saw you as being overly financially driven.

“Now that we have resolved the crisis, let’s start thinking of some new programs to build a new reputation for you.’ ”

A common fault of many companies is the time and money they spend on financial performance or investor relations, says Clausen.

Financial performance is just one of six pillars, all equally important, to building a reputation. The other pillars are emotional appeal, vision and leadership, workplace environment, social responsibility and products and services.

“It all has to be in harmony,” says Clausen. “You can’t be going to investors and saying you are highly profitable and a good investment and then tell employees, who may also be investors, that you are not giving raises this year because we’re not as profitable.”

Similarly, if a company wants to be perceived as a generous community supporter, it can’t just give a few dollars to one group, and say, ‘that’s that.’ It just won’t cut it, says Clausen.

“Your employees may have to be involved and they may need time off to get involved. You may have to have some community investment program with criteria around it, and perhaps put a judging system in place.”

When companies decide they want to take steps to change their image, Clausen asks them how they perceive themselves, and where they want to be. Then he talks to company employees, customers and other associates for their assessment.

“The gap is sometimes quite big,” says Clausen. Using a proprietary research tool, the company also shows his client where its reputation stands compared to its peers.

“Often, we are very blunt with them, about what they have to do. If they want to appear more trustworthy, we show them tactics to move them toward that goal.

“One thing has to be understand,” says Clausen. “If you are going to develop a reputation, you have to follow through on it. You can’t fake it, because you will get caught.”

Most companies having just survived a crisis, he says, are willing to listen.