The Financial Benefits Of Corporate Reputation

15/12/2009

By Andrew Lester

This is the tricky bit. There is the often quoted famous principle of advertising: 50% of advertising works, the trouble is which 50%? Defining the financial benefits of corporate reputation is also difficult, but not impossible.

For quoted companies a lot of highly skilled and clever people have devised methods of identifying the shareholder value improvements by amongst other things comparing share price trends over time between competing companies.

For Small to Medium Sized Enterprises, (SMEs) however it is not possible in most cases to compare share prices - the businesses are mostly privately...

...owned. Consequently we need to find simple measures to show that managing your company's reputation is financially good news. The principle in managing your company reputation is that your company values and processes should help the company meet the expectations of employees, customers, and shareholders in the most effective and efficient way.

Increasing your reputation, increases your efficiency and effectiveness. If this is the case then the financial management reports in the company should show it. There are some key metrics that can be used over time to prove it: some are financial others operational.


Employee and operational metrics:

Companies with strong corporate reputations are by definition good places to work. They attract and retain better employees and as a result they have lower costs through less employee churn. They have lower recruitment and training needs, lower absenteeism, and increased productivity. Employee satisfaction is higher and issues & opportunities are tacked more positively than in their competitors. Metrics such as sales per employee and employee satisfaction scores will all improve in line with increasing corporate reputation.

Relevant operational metrics include sales and marketing ratios (revenue gained per activity), productivity ratios, downtime... continued on page two >

 

 

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