The Costs and Benefits of Seeking Recognition from External Bodies

Costs Associated with Seeking Recognition from External Bodies

Fees and Dues: Securing acknowledgment from external bodies often involves paying initial certification fees or annual dues, which can contribute to a company’s operational costs.
Investment in Compliance: Firms may have to invest significantly in updating their practices or systems to comply with the standards set by the external body.
Potential for Negative Publicity: In cases where a company fails to secure recognition or loses it, this can lead to negative publicity, damaging reputational value.

Benefits of Recognition from External Bodies

Enhanced Reputation: Recognition can bolster a company’s credibility, integrity, and standing in the market, making it more attractive to consumers, investors, and prospective employees.
Market Differentiation: Being recognised by a respected external body can help a company differentiate itself in a crowded market, providing a competitive edge.
Reduction in Legal Risks: Complying with the standards set by external bodies often incorporates adherence to legal regulations, reducing potential legal risks and liabilities.

Challenges and Risks of Seeking External Recognition

Resource Intensive Process: The process of obtaining recognition can be resource-intensive, requiring significant time and personnel engagement.
Unpredictability and Uncertainty: There can be uncertainty over the outcome of the recognition process, and changes to the standards or requirements can happen unpredictably.
Dependence on External Bodies: Dependence on an external body for recognition can lead to a sense of being ‘at their mercy’, particularly if standards or requirements change.

The Impact of External Recognition on Stakeholders

Increased Trust from Stakeholders: Recognition can lead to enhanced trust from stakeholders, including customers, employees, and investors, boosting business performance.
Stakeholder Expectations: Recognition from external bodies may raise stakeholder expectations. If not met, this can lead to disappointment and output pressures.
Investor Appeal: Recognition often appeals to socially responsible investors, providing companies with an avenue to secure funds or improve share price.