Business is one of those areas where the institution of reputation is very significant or even vital.
Business is one of those areas where the institution of reputation is very significant or even vital. Competent specialists are more willing to work for a good company, while many employees will not go to a dubious employer even for a higher salary. And 21% of online sales occur precisely because of the company’s good reputation, that was shown in a recent study. Evgeniy Renge, an entrepreneur in the coal industry and mining engineering, spoke about the importance of reputation management.
The price of a word
It is extremely important for a businessman that his words do not differ from his actions, otherwise no one will simply work with him. And this ratio of promises made to promises fulfilled is precisely his reputation. Of course, situations are different, and some of them are completely beyond our control – various force majeure events happen to everyone all the time. However, if you have made an obligation, you simply must fulfill it – even if this reduces the profit from the transaction to a minimum, or even brings losses.
After all, even if something went wrong and force majeure circumstances intervened, this does not cancel the agreements. This is your area of responsibility as a businessman. If actual financial indicators diverge from the calculated ones, it means that you did not take something into account, or made a mistake somewhere. But one way or another, you need to fulfill the agreed conditions, because you have taken on certain obligations.
But what happens if you don’t keep your word? To find legal loopholes in the contract, to justify yourself with absolutely compelling reasons? Partners and contractors in the future will either set less favorable conditions or turn their backs on you altogether. Employees usually value a good employer, but valuable specialists will quickly leave a company with a bad reputation.
In other words, business reputation is an intangible asset of your company. And it is quite valuable, because it takes years to develop a good name, it could be lost quite easily, and then it is not always possible to restore it. Therefore, sometimes it makes sense to work on reputation, and not on the financial components of the business.
Let me give you an example from personal practice. We were providing mining contracting services, and a technological force majeure occurred at the entity. A man-made disaster led to the collapse of the side of a coal mine, which resulted in additional volumes of work that were already beyond the perimeter we initially calculated. The entity was geologically complex, and the chance of such an incident was one in a hundred, nothing more. Even experienced companies could miscalculate in such a situation, and at that time we did not have enough experience at all.
Nevertheless, although the cost of work increased sharply and the production deadlines moved forward, we had to complete the entire volume. Because, even though the situation that occurred is quite rare, we did not calculate this probability – this is a flaw in our geological exploration.
Of course, we looked for compromises with our partner and explored various options. And as a result, we received additional volumes of coal production at a reduced cost, which allowed us to partially compensate for the losses. But the most important thing is that in this situation we showed that we are ready to work in difficult conditions, fulfill agreements and find solutions to any problems that arise. This improved our reputation and allowed us to maintain our position in the market.