In the corporate world, “reputation” and “trust” are often seen as separate concepts, with companies subscribing to the power of one or the other. However, these two concepts are intricately linked and both play a role in building stronger relationships with stakeholders. In the age-old debate of chicken and egg, I would argue that reputation is the foundation upon which trust is built. Without a strong and solid reputation, companies can’t earn trust with their stakeholders.
But what exactly do we mean by reputation and trust?
Corporate reputation is the collective perception of a company held by all its stakeholders. It’s shaped by past performance, current actions, and anticipated future behavior.
Trust, on the other hand, is more specific. It’s the confidence stakeholders have in a company’s reliability, honesty and intentions. Trust is earned through concrete actions that consistently align with the company’s stated mission and values. It emerges when a company demonstrates unwavering ethics and character over time.
Building trust is critical, but it can’t happen without a solid reputation.
Based upon our more than 20+ years of research at APCO, we know that a strong corporate reputation is an intangible asset for the business. Along the way, we’ve gained some key insight into the distinctions and relationship between reputation and trust.
1. A company’s reputation is multi-faceted. A company’s reputation encompasses all of the expectations that stakeholders based upon past, current and future behavior. Stakeholders evaluate a company’s reputation based upon the external landscape but also internal culture, values and track record. Reputation grows when a company is meeting stakeholder expectations, and this consistency demonstrates that the company’s actions are trustworthy.
2. Reputation and trust are fluid—what shapes reputation today may evolve, impacting trust tomorrow. Since the creation of our research division, we’ve closely observed what people expect from companies and how they expect companies to engage with them. Companies now face sharper, deeper and more specific demands. For instance, the pandemic work experience that ignited the “Great Resignation” or “Great Realignment” continues to magnify expectations around a company’s culture. Proactive reputation management efforts must remain agile to reflect this ever-changing landscape.
3. Reputation precedes and builds trust. Trust is an outcome of a strong reputation – reputation helps companies earn trust. Think of reputation as the foundation: it’s the sum of experiences and perceptions stakeholders have of the company. Reputation sets the expectations people have for a company, while trust is the expectation that the company will do the right thing.
In conclusion, while both reputation and trust are crucial for a company’s success, reputation serves as the groundwork upon which trust can be built. By focusing on building and maintaining a strong reputation, companies create the necessary conditions for stakeholders to develop trust in their operations, intentions and overall character.