Laurence Oliver and Frank Finlay in Shakespeare’s Othello – a study in the power of reputation.
Among the other resolutions that New Year brings, how will business leaders resolve to improve their companies’ corporate reputation in 2013?
And, oh boy, does the business world need to clean up its act.
With the exception of two among Channel 4’s top 10 business stories of 2012, scandal, fraud, bad practice and incompetence appear to reign supreme. In most cases of exposed corporate malfeasance, somebody is made to pay; either in cold, hard cash fines, doing time behind bars, resignation or getting a dressing down in front of politicians.
But, surely, it shouldn’t require a reputation crisis to instigate action that protects the most valuable intangible asset on the balance sheet. Equally, reputation damage should be considered more than just a mere “marketing mishap”.
Among the 2012 examples in Marketing Magazine’s top 10 marketing mishaps round-up, several of them present problems that run far deeper than giving the marketing director sleepless nights. Starbucks’ tax revelations resulted in the company making a larger, one-off payment than the corporation tax it was actually due to pay, such is the shock to the corporate system that attends a major and well-publicised reputation blunder.
The timing of Starbucks’ tax affairs exposure – and that of other companies including Amazon, Facebook and Google – couldn’t have been worse, as the UK deals with on-going economic austerity. As journalist Seamus Milne commented, “Companies that are milking the country at the expense of the majority are especially vulnerable to brand damage. Forcing them to pay up is a matter of both social justice and economic necessity.”
What with HSBC’s money laundering travails, the fiasco and expense of G4S’ Olympic personnel shortfall and the sheer brass neck involved in Barclays Bank’s rigging of the Libor interbank lending rate, what has gone wrong with corporate governance? Is business less about building a long-term reputation and more about the short term tactic of “what can we get away with”?
Business journalist, Simon Caulkin, blames the Chicago school of economics which, he says, “put at the heart of governance a reductive ‘economic man’ view of human nature needing to be bribed or whipped to do their exclusive job of maximising shareholder returns.” And the net result of this, he claims, has been “downtrodden and outsourced workers, mis-sold-to customers, exploited suppliers and underpowered innovation”.
Caulkin calls upon the eminent Peter Drucker in summing up what he thinks justifies the pursuit of business from his 1954 book, The Practice of Management: “Free enterprise cannot be justified as being good for business. It can be justified only as being good for society”.
In an attempt to reconcile what some companies may see as the unrelated ambitions of philanthropy and making profit, what reputation resolutions should they be making this year?
- Ask yourself – who or what is the living, breathing conscience of your organisation? The CEO tends to carry the bulk of expectation when it comes to embodying and protecting corporate reputation. But should there be others specified and empowered to monitor your reputation radar, both internally and externally, and given the freedom and licence to call out bad practice or behaviour incompatible with a sound reputation.
- Keep your friends close and your enemies closer…you don’t have to like your detractors, but it can help to empathise with them and their position about your company. Don’t give them the ability to accuse you of not listening.
- How well do you know what your staff think and feel about working for your business? When was the last time you asked them? The way they feel – and how that’s transmitted to your customers, suppliers or other stakeholders – puts your company reputation firmly in their hands.
- What does your market make of you? When did you last take the time to seek out some home truths from your customers and confront the most unpalatable facts about your business?
- How widely are you listening? Beyond the more obvious places where your company might be mentioned and your reputation affected – such as in the mainstream media – there is a world of online chatter that, though beyond your control, is not beyond your influence.
- How well-prepared are you for a reputation crisis? Complex planning documents may well end up collecting dust on a shelf, but that doesn’t mean a core group of decision makers and communicators within your organisation, plus an external consultancy if you have one, shouldn’t have a crisis plan in place for when the worst happens. Reputation strategist, Leslie Gaines-Ross emphasises the importance of a CEO in a crisis.
- How much do you value the power of the apology? After a major mess-up, exhibiting arrogance, disregard or just inaction are reputation Kryptonite whereas eating humble pie early on, along with having a clear, demonstrable plan of action for rectifying your mistakes, are essential.
- How well are you managing your Corporate Social Responsibility (CSR) efforts? According to the Reputation Institute “A five point increase in a CSR rating would result in a 9.1% rise in the number of people who would definitely recommend a company. There is real money in improving reputation through CSR, but companies are failing to leverage this.
Leaving the penultimate paragraph to the words of Simon Caulkin:
“The irony is that we know what makes companies prosper in the long term. They manage themselves as whole systems, look after their people, use targets and incentives with extreme caution, keep pay differentials narrow (we really are in this together) and treat profits as the score rather than the game. And it’s a given that in the long term companies can’t thrive unless they have society’s interests at heart along with their own.”
Here’s to a Happy, and reputable, New Year!
Jon Clements is a Chartered PR consultant specialising in B2B PR, corporate and marketing communications and is the founder of Metamorphic PR.