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Improve Your Business "RQ" for Improved Profits

How's Your Company "RQ"? (Reputation Quotient)

Phil McCutchen
Marketing Manager, VCG, Inc.

In light of recent corporate scandals, from Enron and Global Crossing to those of once trustworthy mutual funds, is it any wonder that more people are asking, "Can I trust this company enough to do business with them?" But the trust issue isn't just relative to the buyers of your products and services, its vitally important to employees as well. Impacting their retention and performance in very real ways.

According to a survey of 1,200 workers by global consulting firm Watson Wyatt, forty-four percent of American workers say top managers and executives are sometimes dishonest, and 40 percent say the same of co-workers. Meanwhile, 51 percent of workers say companies too often 'spin' the truth when talking to them, according to a separate survey of 1,000 Americans by Towers Perrin, another global consulting firm.

The lack of trust contributes to weaker ties between workers and the companies for which they work, which in turn has a significant impact on corporate profitability. How much, you ask? Well, the three-year total return to shareholders is almost three times lower at companies with low trust levels than at companies with high trust levels, according to Watson Wyatt's WorkUSA 2002 survey.

When you add the loss of employee trust to unethical business practices to the bursting of the 'dot-com' bubble and the recession of the past few years, the response is natural. Shell-shocked consumers and business-buyers alike are taking a measured look at a companies' reputation before making a purchase or investment. That's where RQ comes in.

What is RQ?

RQ is a new term, for 'Reputation Quotient'. The term RQ was coined by Dr. Charles Fombrun, Professor Emeritus of the Stern School at NYU and the founder of the Reputation Institute (www.reputationinstitute.com). Dr. Fombrun has done extensive research with companies around the world to understand the roles that their reputations play in their success.

He has learned that the most successful companies, and those that can endure great challenges, all have one thing in common: Strong reputations, or high RQ.

According to Christopher Foss of the Reputation Institute, "It's common knowledge that a good 50 percent of most companies' market value is made up of what accountants call intangible assets that are not on the balance sheet. Assets like knowledge capital, like the brand itself, relationships with vendors. And reputation is one of those intangible assets. But if you view reputation as a magnet that has the ability to attract resources that are crucial to the bottom line, the degree to which you have a strong reputation or don't is going to definitely affect your ability to attract resources and to do well financially."

The four principals of your company RQ

The research conducted by the Dr. Fombrun indicates that there are four key principals of the reputation quotient:

Distinctiveness: Strong reputations result with a company's distinctive position in the minds of resource-holders or consumers. Much of this attribute is often related to the firm's brand positioning and marketing efforts


but its believability is directly linked to the other principals.
Authenticity: Strong reputations arise when companies are genuine. Companies must 'walk the talk' in their media relations and corporate performance and governance. This is the area where many companies falter and find their reputations and profits flagging as a result.
Transparency: Strong reputations develop when companies are transparent in their business affairs. This means lots of communication, creating highly visible presences across whatever media is available to them, engaging stakeholders in continuing dialogs.
Consistency: Strong reputations result when companies focus their actions and communications around a core theme. This almost single-minded focus, when continued over time, builds a belief presence in the mind of the stakeholder that 'you'll do in the future what you did in the past.'
Building up your RQ: It's all about the 'message'

Knowing then that your reputation is a solid contributor to your staffing or recruiting firms' bottom line, how do you build it up? Your reputation is based on the signals or message you send to your stakeholders. So, building your RQ can be approached as a three-step process to identify, build, and manage your message:

Determine your message. In their landmark book "Positioning", Jack Trout and Al Reis make the unassailable point that success is first and foremost dependent on knowing who you are and what you (want to) do that's different from anybody else. Unearth your unique promise of value. Learn what separates you from your peers and is compelling to those who need to know about you so that you can expand your success.
Construct your message. Build a communications plan to express your brand -- a brand position that everyone within your company and every stakeholder outside your company can and will buy into. Identify the tools that you will use to communicate your unique promise of value so that you will become consistently and constantly visible to those around you.
Orchestrate your message. Manage your brand environment. From your desk to your advertising and public relations to your products and services to your employee benefits and community service programs to the office party if you have one, you must ensure that everything that surrounds you sends the same on-brand message.
As demonstrated by the companies whose sinking fortunes are due to poor ethics and poor reputations, a high RQ is highly desirable -- especially for staffing and recruiting companies whose business is built on relationships with clients, candidates, and employees. It takes serious time and effort to build it, yet it can be trashed quickly due to carelessness. And it is not quickly regained. In short, a good reputation is a profitable one, and should be a key component of your business strategy.

- end -

About the Author

About the Author



Phil McCutchen is Marketing Manager for VCG, Inc., the leading provider of staffing software to the staffing industry. He has been with the firm since 1991, and has more than 25 years of marketing experience. For more information: VCG Staffing Software

 

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