Rising reliance on online ratings of companies could result in revenue loss if companies don't pay more attention to building trust with workforce and customers, survey finds
Employees and customers are more powerful than ever. The exponential growth of e-commerce and social sharing has given rise to 'Rateocracy' – the very public way that employees and customers opine -- both positively and negatively -- about the companies they work for or do business with.
According to Sodexo’s 2015 Workplace Trends Report, employees and customers expanding ability to directly affect corporate reputations has not gone unnoticed by companies that are under pressure to become more transparent in disclosing their policies and practices.
‘The growing trend [toward] rateocracy blends the increasing importance of ratings and reviews with the democratization brought about by sites like Glassdoor and Yelp. Studies show that people trust online ratings much more than they trust what a company says about itself,’ Michael Norris, chief operating officer of Sodexo North America, said in an email interview.
Sodexo’s report highlights that through the emergence of big data tools and their use in aggregating social media content, real-time ratings shared by employees and customers will increasingly determine how companies are perceived.
The impact is huge. ‘Nothing trumps authenticity, and in an era of extreme transparency, which is what we are talking about with rateocracy, there is no way around it,’ says Norris. ‘Businesses need to align the way the brand speaks about itself externally with the way it acts internally. Corporations that do not align their brand with their internal and external policies will be discovered and punished by consumers.’
According to Norris, the objective every company must have in mind is to build trust with key stakeholders who can carry the company’s message and advocate on its behalf.
The playbook can begin from the inside out, starting with employees who can become a company’s most influential brand ambassadors. “It’s about building trusting relationships with every stakeholder,” said Norris.
Corporate reputation management is far more important than it was a decade ago in large part because of changes in technology – the Internet. As soon as 2017, 60 percent of all US retail sales will involve the Internet, says Norris. This means that a company’s ratings will often be one click away from where customers purchase their products, he points out.
‘One study found that 90 percent of consumers say they first look to online reviews before making a purchase decision. The level of detail available through real-time reviews, and the trust many consumers place in those reviews, dramatically increases the significance of online reputations,’ Norris says.
How fairly employees feel they are treated at work and how satisfied customers are with the products and service they receive from companies have bottom line implications. According to the report, $3.6 trillion in retail sales are directly influenced by online reviews and social media.
The report concludes that there will be a need for constant real-time reputation management and a new mandate for the CEO -- to communicate an honest and aspirational vision that connects with employees and consumers.
Top executives can close their eyes and wish all the chatter would go away if they want to, but rateocracy isn’t a passing fad. ‘We see this trend growing, especially as big data tools are incorporated into ratings systems to make them more sophisticated,’ says Norris.
Whether it’s in predicting consumer behavior or predicting the performance of a baseball player, data analysis is becoming integral to all kinds of businesses. Norris believes it won’t be long until the public will have complete access to aggregated ratings and reviews, and until that access starts to have substantive impact on corporate reputations.
What’s most surprising, Norris says, is how widely the impact of rateocracy will be felt. ‘When you really dive into it, it’s difficult to imagine a type or size of business that will not be affected in one way or another. Companies need to take a closer look at how their brand is aligning with’ policies regarding internal and external matters.
