IMPORTANCE OF CORPORATE COMMUNICATION IN AN ORGANIZATION

Many organizations put the importance of a good reputation to the back of their minds while they attend to more hard-edged, day-to-day urgencies.

On the other hand, many organizations consider their greatest asset to be their good name or reputation. This is especially true in knowledge-based organizations such as professional services firms in the consulting, legal, medical, and financial sectors and in universities. They work actively to build their good reputation, to build the ‘bank of goodwill’ towards them.

The main benefits of a good corporate reputation can be found in:

• Customer preference in doing business with you when other companies’ products and services are available at a similar cost and quality;
• Your ability to charge a premium for products and services;
• Stakeholder support for your organization in times of controversy;
• Your organization’s value in the financial marketplace.

Although reputation is an intangible concept, research universally shows that a good reputation demonstrably increases corporate worth and provides sustained competitive advantage. A business can achieve its objectives more easily if it has a good reputation among its stakeholders, especially key stakeholders such as its largest customers, opinion leaders in the business community, suppliers and current and potential employees.

If your organization is well regarded by your main customers, they will prefer to deal with you ahead of others. And these people will influence other potential customers by word of mouth. Suppliers will be more inclined to trust in your organization’s ability to pay and to provide fair trading terms. If any problems occur in their trading relationship with you, your suppliers will be more inclined to give you the benefit of the doubt when you have a reputation for fair dealing. Likewise, government regulators will trust you more if you have a good reputation, and they will be less inclined to punish you if you trip up along the way. And clearly, a potential employee will be more likely to sign up with you if you have a good reputation for your treatment of staff compared with an employer who may have an equivocal reputation.

• Reputation is an intangible and complex concept, which takes time to change.
• The dollar value of improvements to a growing reputation is difficult to quantify.
• Senior managers are obliged to deal with more immediate and demanding operational priorities – reputation is a long-term concept.
• Reputation ranges over such a broad area of the organization’s activities that it is difficult to allocate specific responsibility for work on enhancing the corporate reputation to individual functional areas.
• Cost – the typical cost of applying a conceptual model to consumers, individual investors and community leaders in one major US city is about150,000 dollars. However, a study of companies in one industry might cost as little as $50,000, depending on the size of the industry.

One thing is certain, there is a high cost to pay for losing reputation, the good standing among stakeholders. Past experience has shown that a badly handled crisis can strip big chunks off a company’s share price.

Corporate reputation also is important to the career of your CEO. As part of the process of evaluating the performance of the chief executive, there has been a growing trend for boards of directors to measure changes in their organization’s reputation.

BY MUSA LILIAN BAPRM 42631