Why reputation is your most important business asset
Professor of Leadership Will Harvey reveals why reputation matters more than ever, how to build and repair it, and identifies the biggest reputation threats for 2025.
Reputation is one of our most valuable assets, yet it’s often not until it’s too late that it becomes a priority.
A positive reputation can open doors, attract investment, and foster consumer trust, while a negative reputation can have the opposite effect.
Understanding how reputation is built, maintained, and repaired during a crisis is essential in today’s fast-paced, interconnected world.
Why reputation matters
At the individual level, reputation plays a pivotal role in our career advancement.
Whether it’s getting accepted into a top university, applying for a job, or making a purchase, individuals use reputation as a shortcut to assess the quality of a person or product.
It’s a socially constructed aggregated perception that, despite being subjective, serves as a crucial decision-making tool.
For organisations, reputation is even more significant.
A strong organisational reputation can attract talent, investors, and customers, all of which are essential for business growth and success.
Companies with positive reputations are more likely to weather market fluctuations, while those with negative reputations may face difficulty securing funding, hiring skilled employees, and maintaining customer loyalty.
Reputation becomes an asset or a liability, depending on how it is managed, especially in a crisis.
Proactive reputation management
Measuring reputation is notoriously difficult, as it is based on subjective perceptions. It is not a singular concept, but a collective understanding shaped by various stakeholders that changes in different contexts.
The best way to build and protect your reputation is by proactively managing it.
This involves regularly connecting with your stakeholders to understand their perceptions, maintaining transparency, and staying true to your organisation's values.
Reputation is constantly evolving, shaped by the actions of leaders, products, and even external factors like politics and social trends.
That is why connecting with your stakeholders—whether customers, employees, regulators, or the media—is crucial when it comes to gauging public sentiment and ensuring your reputation remains aligned with societal expectations.
The role of leaders in shaping reputation
Leaders play a critical role in shaping and maintaining an organisation’s reputation. The behaviour, communication, and actions of leaders influence how their organisations are perceived.
High-profile leaders, such as Elon Musk of Tesla or Jeff Bezos of Amazon, show how deeply personal reputation intertwines with corporate reputation. In these cases, the actions and views of leaders directly affect the public’s perception of the company.
For leaders, the challenge is to balance personal ambitions with the long-term health of the company.
Having a strong personal view on current affairs might get you on the front page – but is it in the best interest of the company?
Leaders must keep their egos in check and focus on the needs of the organisation and the community, both from a social and economic standpoint.
By prioritising the well-being of society, the planet, and their organisation they will build a more enduring and positive reputation - even if they don’t receive all the sound bites in the short-term.
Repairing reputation after a crisis
Reputation is ‘sticky’, meaning once it is tarnished, it can be very difficult to repair.
When a crisis occurs, it’s critical to act quickly and to communicate directly with your stakeholders to minimise the long-term damage to you and your organisation.
With MBS alumnus, Matt Thomas, in the forthcoming Oxford Handbook of Social Purpose we recommend a three-step approach when handling a crisis:
- Apologise: Acknowledge the issue transparently and sincerely and let your stakeholders know you’re working on the problem.
- Fix it: Provide a clear and actionable plan detailing how the issue will be resolved.
- Demonstrate change: Over time, show through concrete actions that the issue has been addressed and won’t occur again.
Rebuilding reputation requires consistent effort, transparency, and a long-term commitment to change.
When done right, even the most serious crises can be overcome.
Threats to reputation in 2025
2025 is going to be a year of rapid change and leaders should be conscious of several major factors which might threaten both individual and organisational reputation.
Firstly, artificial intelligence.
The rapid advancement of AI has created both opportunities and risks to reputation, with misinformation, privacy concerns, and the potential for job displacement becoming increasingly relevant.
With AI becoming a more pervasive part of society, both individuals and organisations must navigate the reputational risks it presents.
As global political climates change, particularly with a new US administration and ongoing tensions around the world, businesses must also be prepared to adapt to align their reputation with the expectations of their stakeholders.
Organisations that fail to stay attuned to these changes risk alienating customers, employees, and investors.
Climate change and biodiversity loss are also key issues likely to influence reputation.
Extreme weather events, migration, and environmental disasters are expected to intensify, forcing companies and governments to respond.
Organisations must be agile, navigating these challenges and taking a responsible stance.
Reputation is not just about managing perception—it’s about aligning actions with values and delivering real, positive impact for people and the planet in the long-term.
Will Harvey is the Director of the Social Purpose Centre and Professor of Leadership at Melbourne Business School. He is the author of Reputations at Stake.
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