The past 18 months have seen organisations’ reputations put through the ringer. From financial mismanagement to unsustainable, short-term approaches to strategy, the recession highlighted many companies' weaknesses and left them open to bad press and plummeting consumer confidence. In 2010, leaders will need to focus on rebuilding and repairing the status of their companies with customers, stakeholders, investors and government. The need to regain trust and confidence in your organisation with the wider world has never been greater.
Historically, corporate reputation has been the domain of risk managers and PRs, but it's clear that it is now being put firmly in the hands of leaders. “Creating and maintaining the reputation and values of a business is an increasingly key component of the business leader’s job description. Visibly listening to, as well as educating and informing a variety of stakeholders shapes reputation. The recent crisis in the financial services industry highlighted those who paid more importance to this and the consequence of not doing so,” says Steve Cooper, Managing Director, Barclays Local Business.
Corporate reputation has traditionally been difficult to define and measure. Niel Golightly, Vice President, Downstream Communications and Sustainable Development, Shell offers this explanation: "Corporate reputation is simply the product of hard work and integrity. It's a result of business leaders getting up every morning and doing what they say they will do, living up to their values, respecting the expectations of stakeholders, delivering results and refusing to hide behind spin and excuses when things go wrong. Elaborate PR strategies and communications technologies can get the message to the right people, but the credibility of the message itself depends on the character of the leaders."
Indeed, despite the seeming ambiguity surrounding reputation management, Ian Ryder, Deputy Chief Executive, BCS, believes that building and maintaining reputation is extremely simple. He says: "Tell the truth (honesty), be open (communicate) and do what you say (deliver). There are, of course, many so-called 'experts' who make fortunes out of complicating these simple truths, and organisations that refuse to believe that they will make or break reputations!"
It might seem simple but the recession delivered a heavy blow to many organisations' reputations. For leaders, the key question is how to regain your standing with customers, and mitigate some of the damage caused. This is going to be a major challenge, as Kevin Murray, Chairman, Bell Pottinger explains: "The recession and events of these past two years have had a serious and wide-ranging impact on every facet of business life, especially reputation. Trust is now in very short supply and the bank of goodwill is heavily overdrawn.
“Companies need to be trustworthy if they are to regain the confidence of consumers and stakeholders. That means much more authentic communication and much wiser business decisions. It needs to be led by CEOs who recognise the need to have an ongoing dialogue with stakeholders to develop new and different relationships. For CEOs this is mission critical. They need to invest in more and better communications and make sure they have reputation in mind with every decision they make," Kevin continues.
Corporate reputation expert, Aneysha Pearce, Associate Partner, Prophet, explains the steps companies should go through if they find themselves with a damaged reputation. She says: “Rebuilding reputation is a journey that takes time, leadership commitment and support. Companies that have been able effectively to repair, build, and/or fortify their reputations have taken an approach that often follows three key steps: 1) assessing the current state of a reputation across stakeholders to reveal strengths and weaknesses, 2) developing a reputation strategy to address prioritised stakeholder gaps and 3) monitoring and measuring reputation performance among stakeholders on a consistent and on-going basis.”
As Kevin pointed out, the importance of leadership in such matters should not be underestimated. The CEO is the personification of the company and their proactive involvement in building reputation is paramount. Julie Clarke, Head of Employee Brand Engagement, Fujitsu Services, expands on this: “As businesses start to look at how they are going to manage their way out of the economic downturn, many are starting to pay more attention to their corporate reputation, and particularly the role of leadership in this area. Leaders are recognising that they have an important role to play in managing the organisation’s reputation – internally and externally. They have a responsibility to ensure that employees understand the organisation and its customers. Effective engagement in this area can result in employees becoming great, natural ambassadors for the organisation.”
If reputation is so strongly tied to leadership, perhaps one of the key facets of reparation is a new, fresh face at the helm. Clive Ansell, Senior Advisor to the Board, Royal Mail, believes that changing top management could help rebuild damaged reputations. He says: "Trust is given to and renewed much more easily for organisations than individuals - so sadly, whatever the system and cultural failures leading to breakdowns in corporate reputation, it is much easier for leaders to rebuild reputation if they are new. Beyond that, those leaders must be determined to know how to respond to the next crisis - acting decisively and consciously on behalf of their main stakeholders - with a single clear 'voice' from the organisation on situation and response."
In a global and digital world, reputations can form, grow and change quickly, the consequences of which can be far reaching. Emma Villiers believes the pervasion of the internet, blogs and social networking has made managing reputation extremely difficult. She says: "This is new and rapidly evolving territory. Leaders should not under-estimate how this impacts, and will continue to impact, reputation management. After all our reputation is only a measure of what people say about us as a brand. All organisations - and not just consumer brands - will need to address the risk that this presents and leaders will need to be prepared to take a more active role in managing their organisations' reputation - in the same way as they manage an organisation's financial well-being."
We have a number of articles and papers available in the issue of reputation in our 'Insights' section. The summary notes of a recent Criticaleye Discussion Group entitled The Corporate Reputation Imperative: How to measure reputation that includes Prophet's six pillars of corporate reputation. Also see, Getting reputation management into the heart of business, an article by Regester Larkin's Andrew Griffin and HSBC's Ivor Godfrey-Davies on how to make investment on reputation management pay off and align it with your company management and strategy.
Please get in touch if you have any comments about the issues in today's update. I hope to see you soon,