How far do board directors believe in the value of building, maintaining and protecting corporate reputation?
An article 15 years ago in Harvard Business Review (HBR) claimed that “executives know the importance of their companies’ reputations” for a variety of reasons based on how it affects external perception: that they “provide more value, can charge a premium, will deliver sustained earnings and future growth and attract better people”.
Despite what the (HBR) authors saw as the indisputable benefits of managing reputation, they acknowledged then that “most companies do an inadequate job of managing their reputations in general and the risks to their reputations in particular”.
The article still appears near the top of Google organic search for “importance of corporate reputation” and has, according to one SEO tool, 629 backlinks. So, it has clearly carried some weight since 2007.
Arguably, the general landscape of the relationship between people (customers, suppliers, investors, local communities) and organisations (be they business, public sector or charity) is more fraught than ever, with issues such as climate change, #metoo, #BLM and the perpetual scrutiny of activists and social media.
If ever there was a time to take corporate reputation seriously, it’s now.
Building business trust
In a PR Moment webinar, Emily Westgate of Signal AI – citing a survey of 1,000 CEOs – claimed that reputation and narrative were increasingly a “boardroom concern”, with 75% putting reputation above margin as the main driver of business performance in the next five years.
She said: “Businesses are taking reputation seriously because it does drive business outcomes,” also referencing that company reputation makes up 30% of market capitalisation of the S&P 500 stock market index.
And Westgate draws the link between building a sound reputation and what that creates when doing business: trust.
This informs some of the questions she claims companies should be asking themselves: What’s driving trust in our company? What are the reputation risks in our supply chain? Is our company narrative driving positive or negative perception?
The building blocks of trust
According to Edelman – authors of the annual Trust Barometer research, the building blocks of trust for organisations are based on:
- Ability – (are you good at what you do?)
- Dependability – (do you keep your promises?)
- Purpose – (do you have a positive impact on society in an authentic/credible way?)
- Self – (does your business resonate with your audience emotionally?)
CEOs, according to the research, are expected to be the face of change, to be personally visible and to speak about controversial social and political issues people care about.
So, what are the steps you can take to ensure that corporate reputation is more than just an item on the boardroom agenda?
- Take your corporate trust temperature
Using either primary research with your customers and/or other relevant stakeholders, or analysis of your online presence (i.e., how is your organisation perceived in online commentary and conversations), get a clear picture of where your reputation is performing well, less well or not at all. Anecdotal knowledge is a good starting point but quantifying more accurately the level of positive and negative perception and sentiment will enable a better response.
- Pinpoint the pain points
From your research, identify the issues that pose the greatest risk to your reputation and prioritise them. It’s unlikely – even impossible – that you can make everybody happy all the time. So, focus on the areas that, if left unchecked, could potentially cause your company most damage.
- Resolve to make tangible changes – not just vague pledges
Addressing reputational issues is often about the way you do business, not just the way you communicate at a time of crisis. Understand the underlying causes of your reputational risks and put a plan in place to put them right, or at least mitigate their effects. Good practices for environment, social and governance (ESG) reporting acknowledge that not every company has reached its zenith of ESG performance but can be transparent about its weaknesses and how it intends to rectify them.
- Be willing to engage with your detractors
Whether it’s with the media or other critics of your operations, be prepared to listen before mounting a defence, as they might well have a point about the things you do. Also, using communications as a diversionary tactic – otherwise known as spin – is likely to be exposed in the short term and be a drag on reputation in the long term.
- Engage public relations experts at a strategic level
If you consider corporate reputation to be of strategic importance to your organisation, then you need to involve public relations (PR) professionals (either internal or external agencies) in evaluating your current position and ongoing strategy. PR professionals should be the go-to sources for an unbiased assessment of the situation, to offer honest counsel (however uncomfortable it might be for the business) and craft effective communications approaches.
Are you happy with your corporate reputation? Do you know what the risks are? Do you need professional public relations advice and support? Contact Metamorphic PR