Just about every communications practitioner has used or heard the metaphor that reputation is a bank account, which you build up in good times and draw from when things go wrong.
But risk Guru Peter Sandman has questioned whether this popular idea really is as valid as it seems.
In a new paper Sandman says it’s a simplistic vision to accept that events which improve your reputation are deposits, events that damage your reputation are withdrawals, and that the objective is to maintain a healthy balance of “reputational capital.”
The problem is that the metaphor assumes everything is linear, and that withdrawals and deposits are in common currency. In other words, if you deposit $1,000 worth of reputational credits and then withdraw the same amount of reputational damage (or in the reverse order) your reputation is somehow back at neutral.
Sandman says he doesn’t buy it, and either do I. It assumes that if a company does a whole lot of bad stuff, then an equal amount of good stuff will restore its reputation.
However it doesn’t work like that. Sandman argues that “good reputation” and “bad reputation” should be seen as separate variables which exist at the same time. He says, if your positives are high and your negatives are low, you have a good reputation. If your positives are low and your negatives are high, you have a bad reputation.
Yet do the public see it like that? I believe the problem here lies in assuming that good actions and bad actions are measured in the same currency. It has been proved over and again that years of positive reputation can be destroyed in weeks by unacceptable or improper behaviour. The bank account metaphor suggests that badly behaved organizations can “buy back” reputation with some high profile good citizenship. But it just aint so.
When failed Australian tycoon Alan Bond was jailed for dishonesty, some of his supporters tried to mitigate his record corporate collapse by emphasising that he helped Australia win the America’s Cup yachting trophy. It made a good story of reputational redemption, but it meant nothing to the investors who had lost millions. They knew the real meaning of an empty bank account. And it was no metaphor.