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Friday, 16 September 2011

Building Reputation from the Inside Out: The Power of Employees

By Nuno da Camara

As I listened to Stephen Dorrell’s comments on the failure of the Care Quality Commission to uphold health standards this week, I was reminded once again of the fact that every organisational reputation issue is fundamentally about behaviours inside the organisation.

The Care Quality Commission, said the former Health Secretary, allowed a culture of ‘tick-box’ bureaucracy to develop rather than physically carrying out site visits on a regular basis. The root of the problem is cultural and, therefore, relates to the behaviour of leaders, managers and employees inside the organisation. Similarly, the Deepwater Horizon crisis this year was caused by BP’s inability to establish a proper safety culture on its offshore drilling sites. Culture was also at the root of Toyota’s recall of several of its US models in 2010 due to the ‘sudden unintended acceleration’ problem. As the company Chairman Akio Toyoda explained to the US Congress, the company got its priorities wrong and developed a culture of volume, rather than one of quality and safety. Examples of how culture is at the root of reputation abound. Admittedly, this may seem like a fairly obvious point but the fact still remains that when a reputation crisis hits the headlines much of the focus is on repairing relationships with external stakeholders. Even more worryingly, reputation is rarely considered from an internal organisational point of view. Yet, given the instrumental role of internal culture it is critical to explore how reputation works with employees and how it can be built from the inside out.

Firstly, we should look at why reputation is not always automatically associated with employees. The issue is largely semantic. By definition, reputation is what other people think of your organisation. In this context, we tend to think of employees as part of the ‘organisation’ and not part of the ‘other people’. The reality, of course, is that employees are actually stakeholders of the organisation (i.e. the management team who employs them) and are therefore ‘other people’ too.

Moreover, employees do form reputational judgments about the organisation that they work for and this impacts on their behaviour and commitment at work. Today, there are numerous surveys and rankings of employer reputation which attest to this fact (e.g. http://www.greatplacetowork.com/). Employer reputation or the reputation of an organisation as a "good place to work" is strongly associated with employee engagement; and, employee engagement has been reliably linked to organisational performance . The time has therefore come to properly acknowledge employees as a reputational stakeholder in their own right.

Furthermore, employees are unique in the stakeholder map of any organisation because they come into daily contact with the other stakeholders. As Andrew Moss, the CEO of Aviva, one of the world's largest insurers, noted in a round table discussion on corporate reputation: ‘our reputation is shaped on a daily basis by the many thousands of people who are serving our customers in our call centres’. Beyond the realm of customers, reputation is also being formed by constant employee interactions with suppliers, investors, regulators, NGOs, media and other stakeholders. So, if an organisation has a good reputation with its staff this will have a powerful multiplier effect on its reputation with all stakeholders. Happy staff are keen brand advocates and are worth their weight in gold.

In addition, a highly dynamic feature of employees is that, as well as being the main actors in organisations, they are also an audience and consume the same media as other stakeholders. As such, employees read and hear about their organisation all the time and are highly aware of its reputation externally. Naturally, employees are motivated to work for organisations with a good external image. In many cases, this is exactly what attracts employees to organisations in the first place and, once they join an organisation, it is what makes them proud to be a part of it. This is often referred to as Perceived External Reputation and research shows that it has a positive impact on employee identification, commitment and performance .

There are therefore two types of reputation with employees:

Reputation as a “Good Place to Work” - Employee belief in organisational leadership, goals and strategy and perception of how the organisation manages reward and recognition, career development and work/life balance, which impacts on employee engagement and commitment.

Perceived External Reputation – Employee perception of how the external stakeholders view the organisation, which impacts on employee pride and advocacy.

These two types of reputation are strongly related to each other. Employees of an organisation with a high "good place to work" reputation are more engaged and committed and perform better at work. This has a positive impact on external reputation, which is perceived by employees and adds to their motivation even further. Hence, a positive feedback loop is set off in which a good reputation is sustained for the long term. Conversely, if internal reputation as a “good place to work” is poor, this will demotivate employees and eventually feed into a poor external reputation, which will only serve to demotivate employees further.

Since culture is at the heart of reputation organisations must focus on the development of internal reputation and its impact on employee behaviour. Without doing so, and without being aware of the gaps in internal and external reputation, organisations will not be able to sustain a good reputation over a long period of time. But the prize for those organisations that do understand the critical links between internal and external stakeholders is a reputation that looks after itself and keeps on getting better for years to come.


  1. Excellent article. Reputation is a critical asset that must better managed in this hyper-conversation world.

    In the Relationship Economy, Organization are networks or ecosystems made up of customers, employees, brand advocates, partners, suppliers, management, leadership, and investors.

    Assessing and Managing Reputation with all these stakeholders in "real-time" will be important and best practice.

    Relationship Capital (RC) is an open social interaction that scores kept-commitments and perception.

    You cannot manage your reputation id you do not measure. Reputation is becoming a lot more tangible!

  2. Thanks for the post. There is amble research evidence that there is a strong correlation between employee and customer satisfaction. So, the route to a sustained reputation runs through employees. They are the most important stakeholder for reputation management.

    There continues to be too much focus on the external stakeholders whose perceptions of value determine reputation, but not enough focus on how we influence those perceptions at various touch points, which is via employees.

  3. Superb article that deserves to be discussed in every board room where normally the discussion is largely about numbers and financial results. Engagement surveys do not adequately unearth how employees feel about working for the organisation and the courage to ask "real" questions and deal with the results.