When assuming reputation leadership, an organization (company or institution) chooses to build the most favorable reputation in its market with an eye to increasing its operating profit. The concept of reputation refers to how widely an organization is known, and how well it is known among the different stakeholders.  The latter valuation mainly depends on whether and how an organization meets its stakeholders’ expectations.

Reputation management has both an offensive and a defensive side, where the offensive side actively seeks to realize a competitive advantage and differentiate the organization from others. Reputation management’s defensive side focuses on maintaining trust levels. In day-to-day business practice, this latter aim draws on the techniques of investor relations, public affairs, and issues management. Contrary to brand management, reputation management does not tailor to the need(s) of a specific target group, but rather to relations with wide-ranging stakeholders, both within the organization and externally. The focus is on being a stock-market success (i.e. creating investment leeway), being considered an attractive employer on the labor market (with an eye to safeguarding human capital), and on being a success on the commercial market (aimed at creating value for customers).

An organization can only build a strong reputation on all these fronts when management and staff manage to marry a strong sense of self-knowledge (awareness of own role and values) to relevant social themes. Reputation management is not merely an exercise in cosmetics, but departs from a clear definition of a company’s identity (inside out), and takes socially relevant themes and stakeholder expectations into account in its management structures (outside in).

The fact that an organization’s viability depends on the extent to which it meets the expectations of its environment explains why reputation management is attracting so much attention. Reputation management distinguishes between communication (advertising) and behavior in the creation and fulfilment of public expectations. That means reputation management goes a lot further than communication: it concerns the degree to which an organization fulfils its public’s expectations with the right exemplary behavior (i.e. reputation leadership).