rules of the game

A corporate
reputation

08.02.2013 | By Peter Dutczyn

A reputation in business, whether for a company or a brand, is something that takes a lot of time and effort to nurture but, as we sometimes see in commerce, can be damaged or even lost very quickly

Clearly a companys good reputation is a vital advantage. As an employer it helps to attract and retain top notch, loyal expertise. But it is formed by ideas about a set of events received from many channels of communication. Lets see what factors are relevant

Based on the results of the Most Respected Employers of 2012 survey, factors fall into three groups. The most influential group is tied to a companys operational experience: high quality products; system of incentive that describes fair pay and possibility of career growth. This group also includes reviews of current employees.

The next group is determined by the leading position of the company and labour conditions. And finally, a companys efforts to promote recognition as an employer have a comparatively lower influence on reputation.

And yet the factors outlined do not always reflect the advantages or drawbacks of a company at any given time. Reputation consists of a set of ideas about a firm. But how are these ideas formed? Despite the popular Soviet and post-Soviet culture of using personal connections to land a job, in the modern world the so-called power of weak connections is winning over the stereotypes of protectionism and recommendations. Accordingly, modern firms need to develop strategies aimed at being attractive to potential employees. Job search is still built on signals from the labour market. Any spreading information covers a much bigger audience if it goes through weak connections. The effect of fading plays a role. An idea held by potential employees about a company is formed by such information signals.

These answers indicated the following trends:

Firstly, respondents believe that a companys reputation on the market is the most influential factor forming their idea of the company.

Secondly, communication channels reflecting experience of direct interaction with a firm (personal use, past or present employees) have a determining effect on forming its image among potential employees.

Thirdly, a different rate of significance is given by job seekers to mass media: from most respected traditional mass media (print media, TV) to less significant (corporate publications, radio).

The distribution of significance of sources confirms that people rarely act on information from mass media until such information is supported by personal direct or indirect experience.

Most information about the reasons capable of creating a negative influence on reputation among job seekers spreads via personal communication channels and Internet resources. The top five reasons are: 1) information about groundless/unethical dismissal (55%); 2) low quality goods and services (49.9%); 3) salary cuts (44.1%); 4) negative reviews by a firms employees (43.2%); and 5) absence of career prospects (38.2%). Four of the five are linked with employee expectations as to personal position. The prestige of being employed by a firm making quality goods also plays a vital role. Recommendations by ex-employees and colleagues have less influence, though comments on the Web have the lowest significance for job seekers.

An employers reputation is often linked by job seekers to the image created by a firms chief executive. Over half (57%) of respondents said the role of the companys chief executive in forming their opinion is important as it provides an emotional background to interpreting events tied to the firm and its reputation.

Most respected companies and industries

The most respected employers representing the top 10 leaders among Ukrainian and international companies are placed in alphabetical order. The difference in their ranking is not significant in terms of their arrangement. Ukrainian companies are mainly represented by media and FMCG sectors, international by IT vendors and FMCG.

IT vendors have the highest level of trust among job seekers, followed by media. FMCG sectors tobacco products, low-alcohol beverages and pharmaceuticals are slightly behind. The retail sector, financial sector (banks and FMCG) alcohol have the lowest values in the average reputation index. Interestingly, export-oriented industries lag behind those oriented towards the Ukrainian market.

Theory 1. Reputation is primarily expectation of stability in the quality of manufactured products and economic success. Crisis expectations mean that employee mobility is on the rise. Qualified employees tend to choose reliable companies and so reputation will become an important strategic resource of effective change in distributing the most talented professionals.

Theory 2. A good reputation lays the foundation of trust. For historical reasons, Ukrainians are least inclined to use legal arguments to resolve violations of consumer rights, just as labour conflicts, since institutional mechanisms have been ineffective. The advantage held by consumers of goods/services or potential employees is automatically granted to companies that Ukrainians trust.

Stiff competition in any sector forces efforts to be made to maintain a high reputation. The positive experience of past interaction with a company, whether as a consumer or employee, determines the advantages of tested partners over potentially new ones. Indeed, some of the findings are supported by local experts.

Oleh Kershys, head of the Reputation Capital Group says that the most important thing for a company is not what is produced but what it represents. While Maryna Makoviy, general director of Headhunter Ukraine, says an employers reputation is made up of the view of employees past, present and potential. She added that the survey showed the attractiveness of international firms which, she says, reap benefit from the way they are seen through a bigger inflow of responses for vacancies, the cost of finding a worker and period for this.

This survey was conducted among job seekers from the database of the employment website hh.ua at the end of 2012.

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