Commonly, credibility breaks into three general dimensions, namely competence, trustworthiness and dynamism:
Competence is assigned to a leader based on her/his knowledge, expertise, intelligence, skills and good judgment. In order for a leader to be perceived as competent, s/he needs to provide a specific set of skills that an organizational group needs at a given point in time. All the knowledge in the world will not be perceived as valuable unless a group needs the information and unless it is communicated skillfully.
Trustworthiness is assigned based on a leader’s character. A leader must be perceived as honest and consistent in order to engender trust. Furthermore, trustworthiness is measured by a leader’s sincerity in relation to team members and organizational outcomes.
Dynamism is comprised of a leader’s perceived confidence, activity and assertiveness. Dynamic leaders communicate confidence, inspire others to work harder and make sacrifices for the group (including working hard themselves).
Optimally, a leader will exhibit qualities that elicit the perception of credibility along all three dimensions; however, a leader can be perceived as highly competent, yet untrustworthy. One’s credibility might change over time, depending upon work performance and based on the interactions s/he has with co-workers.
While an intangible concept, having a good reputation can benefit a business in a multitude of ways including: consumer preference; support for an organization in times of crisis or controversy; and the future value of an organization in the marketplace.
If an organization has a good reputation in the marketplace, consumers may have a preference for that company even if there are similar businesses offering the same products or services for different prices. The reputation of an organization can enable a company to differentiate its product in highly competitive markets, allow it to have premium pricing, and can become the ultimate factor in whether a customer decides to patronize one business over another.
Research shows, for example, that due to an increased demand for healthier foods, organic products, and more environmentally friendly food, companies have begun to distinguish their products through food labeling, and are noticing that consumers are willing to pay a premium price for labels that are considered to have more of a prestigious reputation than others.
An American study indicates there are ten main components of organizational reputation used in reputation measurement systems:
Ethics: the organization behaves ethically, is admirable, is worthy of respect, and is trustworthy.
Employees/workplace: the organization has talented employees, treats its people well, and is an appealing workplace.
Financial performance: the organization is financially strong, has a record of profitability, and has growth prospects.
Leadership: the organization is a leader rather than a follower, and is innovative.
Management: the organization is well managed, has high quality management, and has a clear vision for the future.
Social responsibility: the organization recognizes social responsibilities, and supports good causes.
Customer focus: the organization cares about and is strongly committed to customers.
Quality: the organization offers high quality products and services.
Reliability: the organization stands behind its products and services, and provides consistent service.
Emotional appeal: it is an organization I feel good about, is kind, and is fun.