What's more important -- public or employee trust?


Looking to increase your business’ sales? Don’t spend all your time thinking about how your customers view your company. Instead, do your best to ensure that your employee view of corporate reputation is positive. And not just positive, but better than your customer view of your corporate reputation. Research suggests that sales tend to rise when employees’ views of the company exceed those held by customers, and that they stall when employee views fall below those of customers.

Reputation matters
A good external reputation is a source of competitive advantage. More reputable firms can charge premium prices; attract investors and employees; improve customer attitudes; lower a client’s perceived risk; and create higher credibility. However, reputation is fragile – it can get stronger but also get damaged easily. Samsunghas demonstrated how oneness and collective passion can top Sony, a premium Japanese brand. Samsung is now the industry leader in terms of both brand strength and financial performance. On the other side of the ledger, sudden damage to reputation can adversely affect performance, as happened when Arthur Andersen collapsed following allegations about its involvement in the Enron scandal. These were once regarded as reputable companies in various media rankings.

It’s all about the gap
The key factor when it comes to sustainable reputation, then, is not just either its external or its internal reputation, but the nature and magnitude of the gap between the two. The internal reputation of a company is built on how employees perceive and feel about the company. This is important because these perceptions will in turn affect external stakeholders’ behavior. Our field interviews with 4700 customers and employees from 63 business units shows that when a company’s internal reputation perceived by employees falls below those held by the customers, their sales will fall. Companies with a good internal reputation are commensurately more likely to offer good service, while those with a poor internal reputation have less cheerful staff and lower service levels. Alongside this, customers have higher expectations of companies with positive reputations than they do of other businesses.

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