The 4 Step Reputation Focused Decision making Model


Forget what you have been taught about decision making!

I have a different thought approach that you may wish to consider, that is, if you cherish your reputation and that of your organization.

Every decision that an organisation must make has four broad sets of implications. The obvious three sets of implications are operational, financial and legal.

Thus: Is it legal? How much will it cost? Can we implement it?

The fourth set of implications is generally ignored, delegated or included in the process only on the basis of the "gut instinct" of one of the participants. Or even worse factored in, once stakeholders have reacted negatively. This fourth set of implications is reputational.

The reputational implications of a business decision can be defined as those that impact the way in which an organization is regarded by those with whom it interacts, including shareholders, customers and employees, as well as suppliers, government regulators, the media and even competitors (and any other stakeholder).

Any organisation is dependent on its stakeholders for support and the strategic importance of any stakeholder depends on how dependent the organisation is upon it. And this relationship can change over a period of time or due to indiscretions.

It is important to realise that a decision has reputational implications if it has the potential to affect the relationship between the company and any of these stakeholders. In other words, it is difficult to think of a decision that does not have reputational implications.

In Health & Safety circles the judge applies the reasonable man principle to decisions taken. What would a reasonable man have done?

Every decision made should be put through the 4 point test

  1. What is its financial impact?
  2. Is this doable, legally?
  3. Is this practical?
  4. What would be the reaction of our various stakeholders, should we make this decision?

Thus the ultimate question: What is the risk to our or my Reputation?