Beware of "Rateocracy"

Robert Moran, a Partner in the Brunswick Group, has come up with a great term for the new era of consumer driven ratings - "Rateocracy". In his article published in Sodexo's recently released Workplace Trends Report (p. 23) ( he correctly cites the impending impact of a world of "i-raters" - individuals who are compelled to share their view and experiences through real-time rating vehicles. In his article he states "Rateocracy will be numeric and transparent, providing real-time data that push corporations to "live their purpose." It will also increase public expectations, creating a virtuous "race to the top," forcing businesses to compete in areas they may have never competed in before." Perhaps.

The question is whether rateocracy becomes a meaningful management tool or a beauty contest in which contestants are forced to compete. The world has enough beauty contests for reputation. Add to this the known issue that people tend to be motivated to provide a rating as a result of either a great experience or a really poor experience - the majority do not participate. Management must have systems in place that take a much broader perspective of their reputation - from multiple stakeholders and across multiple dimensions. I don't doubt that with easily accessible systems, the volume of ratings of businesses from multinational corporations to your local ice cream store will proliferate. Who hasn't checked a Trip Advisor rating lately? But is management to manage its reputation for the purpose of PR or for the purpose of ultimately achieving its business strategy. I argue the later.

Robert Moran is correct on one count - corporations will be compelled to react to forces previously inconsequential in an era of rateocracy. Managing a business with reputation as a strategic framework will require executive teams to utilize a much more comprehensive framework that becomes part of the overall risk management process. Those who adopt such an approach will be able to manage the outcomes of rateocracy much more intelligently than those who fail to adopt such frameworks and become hostages to the perils of it.