On corporate reputation and Nigerian firms

Good reputation in business is, no doubt, prosperity sustaining. The perception that a service provider or the producer of a commodity will act with integrity as well as keep the promises made often attract customers. Business organisations that live up to the expectations of these customer perceptions usually receive good business patronage. The demand-supports become even more sustainable and infectious; the more prolonged the business organisation can continue to act with integrity and keep the promises that it has made. Reputation, therefore, is the lifeblood of every organisation, particularly those with profit-making focus. Unfortunately, many Nigerian organisations suffer severe reputational challenges arising majorly from the somewhat incorrect umbrella profiling of Nigerians as dubious. The questionable activities of some organisations, unfortunately, rub-off negatively on many others that are honestly pursuing their profit goals. And because of our inefficient justice system, it has been easy for many firms to break their promises and walk away unchallenged. And sometimes even when challenged, justice rarely takes place.

The fraudulent activities of some Nigerian pharmaceutical product importers, who debase the constitution of some drugs in other to make lots of money provide pertinent examples. This criminality became so entrenched within the industry for a long time because these importers constituted themselves into a robust network that could utilise the power of fraudulently acquired wealth to undermine the system of justice that could come after them. The preponderance of cases like these before the establishment of NAFDAC also point to the landmines often created because of the gap between reality and perception. Ideally, one would expect that those operating in the pharmaceutical industry should be ethically conscious and display such in their actions. However, the fact that the reality of fraud supplanted the expectation and perception of ethical conduct of their business operations shows how risky misjudged perception of reputation can be.

Therefore even for existing and would-be clients, as well as the business organisations, reputational concerns should be prioritised. To the client, the risk is that a company that a buyer is interested in patronising may not be precisely the kind of value creator it is perceived to be. Let us consider, for example, what has become rife with the promises made by our local airlines. Without mentioning any names, in recent times we have come to think that a few of them now possess a reasonably good reputation in keeping the contractual promises made to passengers. In the past four months, an airline that came up with a strong reputation seemingly to redefine the standards in Nigeria’s aviation industry has consistently cancelled its scheduled Friday evening flights and shifted the same to the next day. These cancellations have occurred with impunity and gone unchallenged even with the disruption of passengers programmes by such impudent breaches of contract. Again, in this case, it is becoming clear that this airline cannot keep the promises that it made to the passengers to lift them to the agreed destinations at the agreed time and day for which it has collected money. Actions of this nature, therefore, further unveils the gap between the perception of the passenger to receive treatment in line with the contract that they have with the airline. In any case, it satisfies to know that there is a profit or loss reward for behaviours that attract bad reputation for another position.

The beauty of reputation as a pillar upon which the success of a business hinges is the two-way feedback that attends to it. On the one hand, the capacity of a business to consistently deliver on promises made to the customer and to act with integrity will always lead to a solid positive reputation. The reverse is the case. On the other hand, a solid positive reputation will always attract new and enduring customers that lead to continuous business growth. In effect, therefore, the behaviours that create a robust positive reputation should be mainstreamed as core to the life of the business. That is, to a considerable extent, the dividing line between successful companies and those that are not. Unfortunately, as truthful as this seems to be, many Nigerian companies appear to have been successful by consistently treading on the path where they make fortunes by acting dishonestly, breaking promises, not keeping to contracts and so on. And because the system for Justice management is so defective, they easily manipulate them to their advantage and use the surplus income made dishonestly to pursue aggressive brand management. For instance, NAFDAC and the consumer protection agency have several cases of products that are inconsistent with quality expectations and that are in clear violations of consumer rights. Because those behind these cases appear to be taller than the law, many of them become more challenging for these agencies to handle.

Depending on the context, only one mistake or error of judgement can quickly destroy the positive reputation that an organisation has acquired over the years. Nevertheless, this is rarely the case in Nigeria. Most notably, the non-regulated businesses carry on with their activities even when there are hues and cries of customer rights violations. It is even worse if such a firm has substantial or monopolistic control of the market. For several years, the DSTV and MTN could walk away with shoddy services to thousands of its Nigerian customers without bating an eyelid about the consequences. And indeed there would be no consequences. And if signs of, any unpleasant effects from the government regulators appear, they are smothered immediately.

Additionally, quality considerations have been one major reputational issue that has hindered our successful exports of locally produced goods, including services. Even locally, inferior quality products prevail and are in large quantities in hinterlands and poorly policed areas. Many producers of unlicensed, albeit heavily demanded products that have questionable quality status find good markets in remote locations in Northern Nigeria. Such products also abound in many remote villages that are far from the cities and natural locations of most of the regulators and policing agencies of government. In the same vein, if a product receives the nod of the local regulatory agencies as being of good quality but does not meet the minimum globally expected standard when the producers have access to the right kind of technology for such manufacture, then there is a reputational problem. All things being equal and given reasonable technology access, it is not out of place to expect the producer to meet the average expectations of the customer. That challenge exists in the numbers in our country. As a result, in spite of all the protectionist disposition of our policy managers, the import level for products that can easily be locally manufactured remain unreasonably high.

Useful innovations are necessary consequences of the decision of firms to go for a strong positive reputation. High-quality products at competitive prices are always brought about by good thinking. By that token, high-quality products at competitive prices signal not only good thinking by the firm but also rigour in its manufacturing process. It is also indicative of the firm’s concern for the interests of the consumers as it offers the values of high quality and reasonable price. Many of our entrepreneurs attribute the price non-competitiveness of their products to a lot of issues summed up as inclement business environment. Accordingly, they end up driven out by more innovative and reputation conscious competitors. An example comes to mind here. The management at Indorama in Port Harcourt explained in 2013 that their fortnightly output and revenue, was higher than the annual production and income of Eleme Petrochemicals when they took it over. In advance of the takeover, Eleme petrochemicals was a burden to taxpayers and sustained a reputation of inefficiencies. On the contrary, the Indian investors and managers who now run it have created a different reputational niche for efficiency. They did not relocate the firm to a more humane business environment to achieve this.

In any case, efficiency is often the product of devoted compliance with carefully developed and thought through systems for optimising the production process by simultaneously pursuing the goals of output maximisation and cost minimisation. Achieving this requires meaningful levels of compliance integrity. These are some of the characteristics that define internationally positioned firms which a lot of organisations in Nigeria do not possess. However, the costs of not owning these characteristics by far outweigh the seeming benefits, which are short-term. They are sustained, however, by the failure of regulation and the justice system. The latter is supposed to give the necessary credence to the power of the markets to force competitors to act more efficiently, which is also consistent with the pursuit of a good reputation. The preponderance of these reputation slurs by our firms in the face of many agencies and institutions empowered to combat them give us away as a country populated by people and organisations with a questionable reputation. That unhealthy profile undoubtedly affects our capacity to engage fairly and competitively at the international markets. The implication is that there is an umbrella perception that the firms and the products originating from Nigeria are not as good as they are projected to be. This global profiling consequently affects the opportunity for more detailed assessments and the experiencing of the offerings and products of many individual firms.

In effect, therefore, without close monitoring of the internal relationships and activities of the firm by board and management, it will be difficult to detect when an organisation is wandering into a lousy reputation. This, therefore, means that the board and management of every organisation that is interested in the pursuit of strong positive reputation must have their eyes like a hawk over internal relationships within the organisation, the structure and processes of production as well as on the eventual output whether they be physical products or services. Agencies and institutions detailed to respond to the complaints and interests of the consumers need to rise to the challenge of this call. This would help to pressure firms into pro-reputation production mode.