Reputation is critical for any person or business – we only have to look at the professional reputations of the James Hardie directors & managers in the news today.

Social media can be a great way for companies & individuals to build their reputations. But it also means that we need to manage reputation proactively. This is because social media harnesses the effects of network amplification, for both good and ill.

The great success stories show how it can be done effectively. For example, Tony Hsieh of Zappos (just sold to Amazon) has used social media – like blogs & Twitter – to share the corporate culture & to support both customer service and branding goals.

Also a number of people I know personally have obtained new jobs via social media – posting about their availability for work on their blogs, LinkedIn or Twitter.

But the other side (some might call it the dark side) works just as effectively. One friend of mine lost a job because of a seemingly innocent (but slightly derogatory) remark on Twitter. Or the very recent examples of:

• Pear Analytics – whose recent piece on Twitter as “40% pointless babble” came under fire from various quarters, e.g. Stephen Dann & Stilgherrian.

• “The PR Agency of Satan” whose email list travails were recounted so amusingly across the blogosphere & twitterverse.

The very thing that makes social media a powerful force for building online profiles so rapidly also enables the downside unfold just as quickly. The sheer velocity with which bad news can spread nowadays makes social media a sword that cuts both ways.

As Jeff Nolan points out:

“… there is no latency in communication today.”