TL;DR: reputation influences capitalization. To enhance it, reputation can and should be actively managed.
Every economic agent functioning in the open market possesses its own capitalization. This can be assessed in various ways: through the stock market, by the size and stability of the received wages, or via the daily volume of incoming calls.
Besides these strictly economic metrics, capitalization is also influenced by the public’s perception of the agent’s conduct.
There have been numerous instances where companies were exposed for inappropriate behavior, which was met with disapproval by the markets and subsequently impacted their stock prices.
Today, a company’s value is not solely determined by the consumer benefits of the products or services they offer in the market. It also depends on the overall impact and contribution of the company’s activities to the well-being of the entire community.
Unlike the evaluation of public companies, which is quantified down to the last cent at any given moment, the appraisal of non-public organizations and individuals’ reputations is always abstract, subjective, and hinges on individual experiences of interaction with the entity in question.
However, through a simple mental exercise, we can pinpoint the key metrics that contribute to the overall reputational image:
- Expertise in a specific area and its depth;
- Business and social behavioral style;
- Behavior during crises or abnormal situations;
- Personal contribution to the public good.
The beauty lies in the fact that each of these parameters can be broken down, digitized, measured, and subsequently manipulated in the desired direction - in other words, managed.
This is precisely what we at WSS do every day.
It’s crucial to remember two things:
- Reputation is a derivative of visibility. A non-existent reputation cannot be managed.
- The expectations formed by observers should align with the agent’s future behavior.
A topic of particular interest is financial reputation, which we’ll delve into in a future discussion.