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By Melodie Veldhuizen

A good reputation is extremely important for any organisation. Negative customer feedback, as well as what is said by the organisation’s employees can make the business flourish or falter. Dr Rachel Maritz, Dean of the Faculty of Economic and Management Sciences at Akademia, sheds light on this subject.

  1. What effect does gossip among employees have on the business’s reputation?

Gossip and gossipers are everywhere within the social environment and in the workplace. It is evident on social media that people are quick to expose other people’s personal information and share opinions about that (Emler, 1994 & Dunbar, 2004)[1].

“Gossip” as an academic concept is associated with corporate culture and reputation. The fundamental function of gossiping is to shed light, to entertain and to influence. It includes a way of engaging where employees communicate emotions, opinions, beliefs as well as their attitude towards the workplace and work life. Within the bigger picture of management, gossip is seen as a way to confirm or enforce norms and values between employees. Social and group norms influence the degree to which gossip is accepted as a form of business communication or regarded as stigmatised conversations that should be restricted.

When the values of employees, as expressed in gossip communication, are aligned with the organisation’s vision, it creates a supportive corporate culture for the execution of business objectives. This happens when employees encourage each other to obtain greater participation, achieve more or confirm certain positive values. Gossip that leads to social comparison and exclusion or discrediting of an individual can have serious negative implications. It can lead to a breakdown of morale, damaged reputations as well as lower productivity.

Some management experts refer to gossip as a type of storytelling discourse found in the “unmanaged spaces” of the organisation (Gabriel, 1995: 2000)[2]. This happens within small groups of confidants and is difficult to manage. As such gossip plays a role in maintaining relationships between individuals and groups.

How then can gossip be managed within businesses? There are predominantly two categories of relationships in organisations. One is known as instrumental ties and the other as expressive ties[3]. The former develops during the execution of certain tasks and functions in the business while the latter is built around the socio-emotional component of relationships. Instrumental ties are mostly associated with more positive informal conversations while the mutual trust between employees within expressive relationships tend to lead to gossiping that can exclude others in the business. Organisations should therefore emphasise the instrumental ties, for example workgroups, departments or project teams. Participation in instrumental teams that work together towards the execution of the organisation’s goals should be encouraged. Instrumental teams cover a more diverse group of employees and discourage exclusion that can happen as a result of expressive relationships. A more supportive corporate culture can develop from instrumental ties which can transform the workplace into a positive working environment.

  1. What role does social media play in corporate reputation?

Experts agree that employees’ use of social media for communication is critical for the reputation of the business and should be managed accordingly. This applies to clients’ communication on social media regarding the organisation or clients’ communication on the social media platforms belonging to the organisation (including its website).

When referring to the reputation of a business we have to clearly distinguish between two well-known concepts namely the “corporate/ organisational identity” and the “corporate image” (this includes the brand name). Reputation stems from the combination of corporate image and corporate identity of the business. The distinction between corporate image and corporate identity lies with the stakeholders from whose perspective the organisation is being judged.  Corporate identity comprises how the internal stakeholders (management and employees) conceptualise and experience their organisation. Corporate image is how key external stakeholders perceive the business. Reputation is the overall perception of the organisation based on the corporate identity and the corporate image. Reputation is therefore the observers’ collective judgement of an organisation stemming from the financial, physical environmental and social impact of the business over time. These observers include stakeholders, namely the public, clients, investors, community, employees, and management.

Reputation is so important that the strategic decision-makers in an organisation attach a financial value to it namely, reputation capital. Reputation capital is regarded as an intangible economic asset that is quantified since it attracts clients and investors and can lead to a competitive advantage. However, reputation also has a critical social value that is measured by its outcomes, such as building trust, improving customer satisfaction, and promoting loyalty to the business.

Employees and social media

What employees say about a business on social media can influence the reputation of the business. Their communication concerning the business or personal opinions that are expressed on social media are important. Employees can act as brand ambassadors since they are credible representatives of their organisation. Coversely, negative comments about the business could also be construed as true and will have negative consequences. When key employees express values which are contradicting the organisational values it can cause damage to the business’s reputation. Guidelines regarding the use of social media are therefore imperative. Employees’ interaction on social media can lead to message and brand inconsistency, consequent regulatory audits or fines, public relationships that are damaged and confidential business secrets that are exposed.

Clients and social media

The internet and social media are highly emotional, subjective and functional (Smith et al., 2010)[4]Clients who complain and share their opinions on social media cannot be ignored as there is a reputational risk involved. Commentary on social media can have far-reaching consequences and are accessible to everybody including other clients, journalists, regulators and competitors. The scale of influence is enormous and must therefore be managed.

  1. What are the guidelines regarding employees’ social media communication?

Communication guidelines for social media should be included in a social media policy or code of conduct. There are best practice examples available on the internet as well as popular measurement instruments that can guide the development of a code of conduct or policy. Management of an organisation has the responsibility to ensure that interaction and communication on social media should benefit the organisation’s reputation. Regular social media audits should be conducted that provide insight into the activities of employees, customers and other stakeholders on social media concerning the business. The guidelines should address the monitoring and measurement of employee and other stakeholders participation on social media, especially where applicable to the business. Guidelines and policies should address the regulatory requirements, and legal aspects of social media communication. Employees should also be trained to use social media correctly. In this regard a social media team reporting on the marketing function can be used to provide direction and support, to take responsibility for the establishment and implementation of the social media guidelines and policies, as well as to provide best practice examples and provide social media training.

  1. What measuring instruments are available for measuring organizational reputation?

As an intangible financial asset, there are several ways to measure reputation. Sometimes reputation is measured by financial loss due to reputation damage. The positive or negative financial impact of a trigger event (an event that enjoyed a lot of media coverage such as an international award that was won or a court case for or against the organisation) can also be measured.

Other quantifiable measures of reputation can include the following:

  • Growth or loss of clients.
  • Recruitment time for new employees, in other words reputation can determine if there are many applications (and also good applicants) for vacancies, or the opposite may also be true when the organisation is struggling to fill vacancies.
  • Regulatory investigations as well as the costs involved.

The social value of reputation is often measured by popular measurement instruments and questionaires that rank businesses from the best to the worst, for example identifying a top ten. Another example of this is Fortune Magazine’s well-known Most Admired Corporations list. There are also measurement instruments for business image, such as top brands or top employers. Plus 94, for instance, has a Top Companies South Africa (TCSA) index (an annual reputation index study), and Deloitte has developed a measurement instrument for measuring reputation risk.

In general, reputation is measured by certain guidelines such as:

  • Ethical behaviour;
  • employees perceptions about their workplace;
  • financial performance;
  • leadership (based on employees’ or customers’ perceptions of their organisation’s leadership, or perhaps awards won by the leadership);
  • reported social responsibility initiatives;
  • customer focus;
  • quality of services or products;
  • perceptions of reliability and emotional appeal.

 

Sources:

Dr Rachel Maritz. Dean: Faculty of Economic and Management Sciences (Akademia)

[1] Emler, N. 1994. Gossip, reputation, and social adaptation. In R. F. Goodman & A. Ben-Ze’ev (Eds.), Good gossip, 117-138. Lawrence: University of Kansas Press.

Dunbar, R. I. M. 2004. Gossip in evolutionary perspective. Review of General

Psychology, 8, 100-110.

[2] Gabriel, Y. 1995. The unmanaged organization: Stories, fantasies and subjectivity. Organization Studies, 16, 477-501.

Gabriel, Y. 2000. Storytelling in organizations: Facts, fictions and fantasies. Oxford: Oxford University Press.

[3] Grosser, T.J., Lopez-Kidwell, V. and Labianca, G., 2010. A social network analysis of positive and negative gossip in organizational life. Group & Organization Management35(2):177-212.

[4] Smith, N., Wollan, R. and Zhou, C. 2010, Social Media Management Handbook: Everything You Need to Know to Get Social Media Working in Your Business. John Wiley & Sons Inc., Hoboken, NJ

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