Category: Stakeholder Management

One Event, Multiple Stakeholder Impacts


Dice 2

Just a storm in a teacup! How often have I not heard CEO’s say this, only for the share price to be 20% down a day later!

Normally these are the visible signs, but a crisis poorly handled, have a wider impact than most managers anticipated. Look at the following model.

A single risk event is likely to have multiple impacts on a company‘s reputation. To understand this, imagine that XYZ Corporation has been fined by the Competition Commission for price fixing and allegedly engaging in unfair and predatory business practices.

News of the lawsuit is picked up by major media outlets, which run exposés on the company and how it has taken advantage of its customers.

The list below gives examples of how different stakeholders may react to this single lawsuit.

Current Customers – Possible Action: A number of customers believe they have been taken advantage of, and they refuse to do business with the company again. Other customers, who may not even be part of the lawsuit class, decide to cut back on their business or switch to new, aggressive competitors.

Potential customers – Decide not to do business with the company.

Suppliers and partners – Decide not to enter into an alliance or demand more favourable terms because of discomfort at being associated with the company.

Employees – Not wanting to be associated with a company that takes advantage of its customers, or believing that future opportunities at the company are limited, decide to take other jobs.

Financial markets and lenders – Believe the growth prospects of the firm are limited or even worse, that the business model is no longer valid. Discount the share price and demand more onerous lending terms

Government regulators – After a few politicians make speeches mentioning the fine, an aggressive regulatory agency puts a team of lawyers on the case to decide whether the company has broken the law and should face further fines or limitations on doing business

The downside of failing to meet stakeholder expectations can be enormous. In many cases, brand equity value is the single biggest component of a company‘s market value, even exceeding book assets.

Sixty-three percent of a company‘s market value is attributed to reputation (Weber Shandwick/KRC Research, Safeguarding Reputation, 2006).

The growth of the Internet-powered economy has dramatically raised the importance of reputation. Today, the velocity of information flow has increased to a level unthinkable in the years before the proliferation of websites, blogs, e-mail, instant messaging and other Internet-powered communications. In this environment, we say: Semel emissum volat irrevocabile verbum (Horace).

Loosely translated, this means that once the word is out, it has flown and cannot be brought back. In today‘s wired business environment, positive events may bring incremental benefits, while negative perceptions can spread like wildfire, with devastating results to a company‘s reputation and, ultimately, its shareholder value.

While a company‘s reputation can be harmed by a single major event, more frequently, reputations are harmed over time by “erosion” – slowly chipped away by one unsatisfactory stakeholder interaction after another. For example, dissatisfied customers are more likely to do less business with a company than they are to abandon it completely. Yet the cumulative impact of these decisions can be profound.

Question: Can you really afford to not manage your stakeholders? No wonder that, in the King 3 Code specific mention is made of the importance of stakeholder inclusivity (,i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.

To learn more about how to manage and engage stakeholders, you should consider attending the following event:

 
What: Stakeholder Reputation Management Master Class
This intensive 2-day training seminar explores international best practice approaches to Stakeholder & Reputation Management and will help organisations to comply with Section 8 of the King Code 3 Guidelines on Corporate Governance. The course gives a delegate the practical, experienced guidance they need for designing a successful Stakeholder Reputation Management system and includes a dedicated look at communication, engagement and relationship building and reputation enhancement practices. To register, e-mail deonbin@icon.co.za
When: Monday, November 26, 2012 8:30 AM to Tuesday, November 27, 2012 3:30 PM
Where: Apollo Hotel, Randburg, Johannesburg

158 Bram Fischer Drive Johannesburg 2118
Johannesburg, Gauteng 2118   South Africa
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A Definition for the Word “Stakeholder”


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Last night I received an e-mail asking me for a modern definition of the word stakeholder.

Immediately my ‘humour’ side kicked in, and I thought of vampires  a-la Edward.

This is a question that I ask at conferences and in my workshops, and inevitably I will get words such as someone or a group that has an interest, or position, or impact on an organisation.

But being a stakeholder is so much more. So this was my response to my client’s request.

My definition : An Organisation derives its reputation from the way it’s performance, actions and behavior is perceived by stakeholders.

A Stakeholder is any group or individual that can affect or is affected by the performance, behavior and actions of an organization.

These perceptions are influenced by the relationship building, communication and engagement practices of the organization.

In the King 3 Code on Corporate Governance specific mention is made of the importance of stakeholder inclusivity (,i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.

Here are some typical questions that leaders should be asking about stakeholder & reputation management processes in their organizations.

  • Who are our stakeholders?
  • What are our stakeholders’ stakes?
  • What opportunities and challenges do stakeholders present?
  • What economic, legal, ethical, and social responsibilities does our organization have towards our various stakeholders?
  • What strategies or actions should we take to best manage stakeholder challenges and opportunities?
  • Do you have a system for managing relationships with stakeholders?
  • How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
  • In a crisis how quickly can you communicate with your relevant stakeholders?
  • Do you know the various methods to engage with stakeholders and when not to use it?
  • Can you state how much you are spending on each stakeholder group and what your ROI is?
  • Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?

Another definition says that the term ‘stakeholder management’ refers to the development and implementation of organisational policies and practices (example decision-making) that take into account the goals and concerns of all relevant stakeholders.

Example: If you have employees in wheel-chairs, surely you should have wheelchair ramps. In SA, the Chinese community went to the highest Court to be included as part of Black Economic Empowerment legislation.

The  keywords here are relevant (to the outcome or issue on hand) and the word stake.

The word stake can mean an interest, a legal or economic position (example shareholding or ownership), moral ( I do my best even though I am just a salaried employee), it could mean a public interest stake ( Media – The public has a right to know) or it can even be emotional in nature (example – I cannot relocate, because my forefathers are buried here – symbolising an emotional connection with the land – often seen at Land Claims Court).

Inclusiveness means to ensure the inclusion of the full range of different stakeholders, including marginalised and vulnerable groups.

Relevance –  Include only relevant stakeholders – those who have a significant stake in the process (i.e., not everyone is included).

Remember Gender sensitivity. Both women and men should have equal access within the participatory decision making process (and never forget transsexuals as well…real inclusiveness)

If you want to unpack it further:

· A stakeholder is any group or individual who can affect or is affected by an organisation’s impact or behaviour – I saw this on a Body Shop delivery truck in Singapore. Definition based on Friedman’s work

· Those who are affected by a particular issue, incident or program;

· Those who have information, knowledge, resources or positions which are relevant to the issue;

· Those who have some control over the outcome of the issue.

OK, so what does the above teach us:

– A Stakeholder can be a group or individual (example – a blogger)

– Stakeholder Profiling is contextual and have to be done EVERY TIME, a situation or issue change. Example – I may decide to become active over certain issues but stay dormant on others. THUS stakeholders can change positions.

Read this article for more clarity: http://deonbinneman.com/2012/05/21/understanding-analysing-stakeholder-positions/

This is what I teach.

Stakeholder Reputation Management Master Class 7–8 June in Johannesburg


I will facilitate my premier training course at the Apollo Hotel In Randburg, Johannesburg from the 7th – 8th June.

This 2 day training course is the only one of its kind in Southern Africa. It was developed to bridge the gap between stakeholders and organizations wanting to develop and enhance their reputations.

Since its inception in 2006, the Stakeholder Reputation Master Class has received many accolades and became established as the must-attend course for industry experts looking to share best practices about stakeholder management and building company reputation. See references.

This 2 -day course shows business leaders and managers how to establish and maintain positive, mutually beneficial stakeholder relations. It examines amongst many things the steps, hints and practices necessary to build lasting collaborative relationships, which should ultimately result in a better reputation.

Based on a synthesis of ideas from community relations, marketing, strategic communication, reputation and stakeholder management, organizational change, sustainability and CSI thinking, it offers an integrated framework, as well as practical tools for developing new kinds of collaborative relationships.

To find out more, go to: http://stakeholderreputation.invite43.com/

Understanding & Analysing Stakeholder Positions


 

justdoitI am often asked what the difference is between a stakeholder interest and a stakeholder position.

Here is a distinction that might help you next time when doing stakeholder or issue management analysis.

Positions versus Interests

Positions:

  • What they say
  • Where they stand
  • How they feel

Interests:

  • Why they say it
  • How they got there
  • Why they care

It is important to make this distinction in decision- making and stakeholder prioritisation in an issue. NLP (Neuro-Linguistic Programming) competency would come in handy here, so you could carefully analyse the language being used.

The Perceptual Position is another technique that I have found particularly useful. It comes from the brilliant book – NLP at Work by Sue Knight. NLP at Work is frequently described as one of the classics in NLP. It was the book that pioneered the application of NLP into business and made what had been previously a ‘dark art’ into an accessible practical concept that translated totally into the everyday world of influence, OD & Stakeholder Management.

She describes Perceptual positions are a way of appreciating situations from different standpoints.

Perceptual positions provide a balanced approach to thinking, not only about outcomes but about any other situation. In situations where you feel there is little or no understanding or progress, perceptual positions can provide a way of developing understanding and creating new choices.

This is a very powerful technique for finding congruent solutions especially during engagement periods.

There are many different ways of thinking about situations.

To begin with it is useful to consider the three primary positions.

1st Position

The 1st Position is seeing, hearing and feeling the situation through your own eyes, ears and emotions. You think in terms of what is important to you, what you want to achieve. Your language contains words such as ‘I feel”, “I want”, ‘I hear”, “I see”. The ‘I’ refers to your own way of perceiving the situation. Essentially you are experiencing the situation as you in your own shoes.

2nd Position

The 2nd Position is like stepping into the shoes of the other person and experiencing the situation as if you are them. When you are really in the other person’s shoes and not just intellectualising about them, then what you (the other person) are doing and saying makes sense. No matter how bizarre someone’s behaviour may seem, in their shoes it is normal. It is the best choice they have. When you are really in 2nd position you use ‘I’ meaning the other person because for this moment you are them. The ‘walk a mile in another man’s moccasins’ position.

3rd Position

The 3rd Position is the ability to stand back from a situation and experience it as if you are a detached observer. In your mind, you are able to see and hear yourself and the other person as if you are a third person. It is rather like being a fly on the wall. You are unlikely to have emotions in this position.

Imbalanced positions occur when the above method is not followed and it is often followed by resistance to change and stalling.

Skilful Stakeholder Managers instinctively use all three positions as a way of taking a balanced approach to a situation.

The definition of the word – Stake


j0402541What is a Stakeholder?

Most course delegates say that it is someone who has an interest in you. But, that is only partially correct. Yes, they might be interested, but what are they going to do with that “interest”?

Many definitions exist with probably the one that says it best – A Stakeholder is an individual or group that can impact the organization or be impacted upon by the organization.

However, few people ever stop to define the word – stake.

Maslow said if the only thing you have is a hammer you tend to treat everything as a nail. This is why definitions to me is a vital tool in ensuring common understanding.

The word stake refers to a rational or emotional stake. Thus a stake can be financial/economic in nature(ownership), it could be an interest stake, a legal one, a moral stake, an emotional one or in the case of the media – a public interest stake i.e. the public has the right to know..

Understanding a stakeholder’s stake or positioning on an issue is vital. Just because an issue is financial in nature does not mean that it does not have emotional issues attached.

For instance when companies offer stakeholders like the community money to move away from an area where they want to mine or build a dam, they often find the resistance by the community – frustrating.

The reason – Land has memories attached to it. I was sitting on my lawn the other day, when in my mind’s eye I saw my 2 kids who are now both in their late 20’s running and playing on the lawn.

Then I realised why this lawn means so much to me. It’s the memories, the emotional connection that counts.

My advice. Think carefully about what stakes are involved in an issue. If you do not know and understand your stakeholders needs, wants, desires and expectations, you could err in making value judgements about their positioning.

Or to say it succinctly – Think twice who you are going to get into bed with.

What is the value of Good Stakeholder Relationships?


Smiling People

Today’s complex business environment requires companies to build relationships with a wide variety of stakeholders. Each of these stakeholders have their own needs, expectations and positions and companies face stakeholder reputation risk if these needs and expectations are not monitored and faced.

Stakeholders offer organizations both opportunity and threat. For instance if an institution has a good reputation with stakeholders they may give the organization more latitude to operate.

On the other hand a poor reputation with the regulators may result in laws being passed that can make it more difficult for an institution to operate. The Consumer Protection Act is a prime example of what happens when the reasonable expectations of stakeholders are not met.

What international research have shown is that there is a lot that organizations can do to positively influence the process of creating good images in stakeholders minds.

The management of and interaction with stakeholders therefore needs careful attention if an organization wants to maximize its opportunities and minimize threats in dealing with stakeholders.

The King 3 Code on Corporate Governance makes specific mention of this need for stakeholder inclusivity (i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.

Research shows that when an organization builds relationships with key stakeholders, it saves the organization money by reducing the costs of litigation, regulation, legislation, pressure campaigns, boycotts, or lost revenue that result from bad relationships.

Good relationships with employees also increase the likelihood that they will be satisfied with the organization and their jobs, which makes them more likely to support and less likely to interfere with the mission of the organization.

In the not so distant past much PR efforts were one-way, designed to measure the effects of communication on stakeholders. Measuring relationships, however, assumes a two-way communication process with effects on both parties in the relationship.

The most productive relationships in the long run are those that benefit both parties in the relationship rather that those designed to benefit the organization only, the so-called Win-Win. Public relations theorists have termed these types of relationships symmetrical and asymmetrical, respectively.

It is my advice that relations with stakeholders be conducted in a context of transparency, honesty and professionalism.

A director of public affairs for a county government once summarized the link between symmetrical public relations and organizational effectiveness: “The main strategy is open communication–by being open, in touch with your various stakeholders, determining what their needs and wants are, how they can best be achieved, and how you can all work together toward common goals. And, I think that’s key with any group and organization that you bring together. That’s what you build trust on, that’s what you build relationships on, and that’s what you accomplish goals with.”

Building positive and lasting relationships should be a key organizational function and strategy.

How to do this I will discuss in more in-depth in my next Stakeholder Reputation Management Master Class in June.

 
What: Stakeholder Reputation Management Master Class
This 2 -day course shows business leaders and managers how to establish and maintain positive, mutually beneficial stakeholder relations. It examines amongst many things the steps, hints and practices necessary to build lasting collaborative relationships, which should ultimately result in a better reputation.
When: Thursday, June 7, 2012 8:30 AM to Friday, June 8, 2012 4:30 PM
Where: Apollo Hotel, Randburg, Johannesburg

Bram Fischer Road
Johannesburg, Gauteng   South Africa

Stakeholder Group–The “Elderly”


A recent report by Goldman Sachs reported that economic growth in the BRIC countries will be impacted by the fact that young people will have to look more and more after older people. Estimates show that there will be a 46% increase in these countries of people over the ages of 65.

This information reminded me of reading the Commissioner’s report on Hurricane Katrina in New Orleans where it was mentioned that one of the stakeholder groups Emergency Teams were not equipped and prepared to deal with was old people – most not in the medical system. Disaster staff reported dealing with bed ridden old and frail people.

Due to world-wide advances in health care, people will tend to live longer than the median age. More and More reports are showing that many people will not be able to retire and live off their pensions.

This raises interesting thoughts for Stakeholder Managers, for instance:

  • How do we look after these people?
  • How do we make use of their experiences and knowledge?
  • What are their preferred needs and wants?
  • Their preferred communication methods?

Viewing it from another angle it also raises interesting angles for Universities. Your alumni will get older and will need to be kept in the fold.

There is also this fallacy that all people want to retire and live happily ever after. In the early 80’s I managed a Mentorship Scheme for the Small Business Development Corporation where we used retired executives to do small business management consultations and act as advisors to entrepreneurs (Similar to the US SCORE program). I recall working with a retired Swiss CEO called Werner Freund. He was as sharp as ever at 72 and I learned more from him in a year than I learnt in my studies.

These are the type of people who we need to embrace and use. They can be a useful resource if you think strategically about it.

I would also recommend that you visit the Department of Social Development’s website for updated information such as this report deals with the rights of older people.

My Stakeholder Reputation Group on Linkedin


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I started a Stakeholder Reputation group on LinkedIn last year, aimed at anyone that is working in and grappling with Stakeholder Management & Reputation related issues.

To date there are 345 members (and growing) which includes a number of senior communication and local and international consultants that I have come across.

The collective experience and expertise that resides within the group will enable any organisation to develop and execute a successful stakeholder engagement and reputation management strategy.

The primary aim of the group is to encourage the sharing of information amongst members such as the introduction of new ideas, concepts and tools, sharing personal experiences of things that work or do not work, overcoming resistance to stakeholder relationships in the market and within companies and asking for assistance for problems being experienced.

If you are interested in learning more about Stakeholder & Reputation Management and where it is going, I encourage you to join our group, participate and share. Here is the group link – http://linkd.in/aRGqiF to join.

Recently, I received a notification from Linkedin that I was one of LinkedIn’s first 100,000 members (member number 28959 in fact!*). In any technology adoption lifecycle, there are the innovators; those who help lead the way. That was me.

More than 100 million professionals have joined that site. If you are not on Linkedin, you are doing yourself a disservice. LinkedIn is changing the lives of millions of members by helping them connect with others, find jobs, get insights, start a business, and much more.

Formalising Stakeholder Relationship Management in an Organization


36322_3149I recently had an interesting conversation with a manager that had been tasked to formalise stakeholder management in his organisation (a Bank).

Without being able to do an in depth analysis of the specifics and needs of the bank, I summarised his basic needs as:

1. There is a need to start a strategic conversation process in the Bank about Stakeholder Management

2. Stakeholder Management are currently fragmented and there is a need for a more unified and strategic approach to its management

3. Special Focus needs to be placed on changing social reputation issues and stakeholder actions

This is what I suggested to improve stakeholder relationship management within the Bank.

My approach has always been to marry the discipline of Stakeholder Management with that of Corporate Reputation Management . I believe that that is a sound approach – after all an organization’s most important asset is its reputation, yet it is also its biggest risk.

My approach rests on the fact that an organization’s reputation is derived from the way that an organization is seen, heard about, spoken about and written about by stakeholders.

Reputation Risk emerges when the reasonable expectations of stakeholders are not met when it comes to performance and behaviour. Thus, if an organization wants to optimise its reputation, it has to carefully manage the interplay between and relationships with various stakeholders.

Whatever is done in Stakeholder Management impacts directly on the reputation of the institution. It is much like juggling a number of balls. I believe that my interventions and consulting approach has something powerful and dynamic to add in that respect.

There are some clear benefits from what I suggest. I think that this process will enable you to raise the profile and positioning of the department (I am not suggesting the building of an empire – but more a knowledge management capability – one of influence and real power – not position power per se), raise the department’s level of influence and ultimately make an indelible impact on your own and the department’s reputation.

Here are the Stages of the Development Cycle as I see them:

Stage 1: Create a Common Reference & Framework

Ask any manager or SME in the Bank to define the word Stakeholder Management to you. Ask them what the Universal Clarkson Principles of SRM (Stakeholder Relationship Management) is about. Would I be right to say only a handful will know? Do the staff in CSI and Issues Management know these concepts? Do they know how important it is, to redefine stakeholders based on an issue or project every single time?

So the first objective will need to be to raise levels of awareness and understanding through the development of common definitions and terminologies. That we can do through a number of high-level presentations, workshops and other inclusive interventions.

1.1. Expose the Board and Executive Team to a short intervention (1 hour to 3 Hours max on Stakeholder Reputation) Reason: Waterfalls flow top to bottom

1.2. Expose the Marketing, Corporate Affairs and Communication team members to the concepts and ideas of Stakeholder Reputation Management by getting them to attend 2 day workshops on SRM (Example course outline –  http://stakeholderreputation.invite43.com/). The reason I suggest this is that they are involved in aspects of stakeholder management and can act as catalysts to further the approach in the Bank – like a virus spreading.

1.3. Expose BU Executives, Line management and HOD’s to the concepts and ideas of Stakeholder Reputation Management by getting them to attend 2 day workshops on SRM . To do this will need high-level management commitment and support, liaison with Learning & Development, OD, and Performance Management executives.

1.4. Start a common language process within the Bank by using vehicles such as the internal newsletter and tools such as the Intranet to get the message out there.

1.5. Develop a Series of Management Protocols and Guidelines (The Strategic Rules of Engagement that I call them) that can be used as reference points in the Bank on how to establish relationships, leverage and enhance those relationships with Stakeholders (Please note that I did not say manage – I don’t think you manage a relationship, you can manage the people involved, the processes, the tools but not the relationship – if you differ of the opinion let’s debate it). These guidelines can be used as training, coaching and performance management tools and incorporated into the knowledge management system of the Bank.

The information for these guides will essentially come from the workshops that I run and record as well as literature research and other information, and the on-going communication from delegates as they deal with stakeholders and share that information with us.

Stage 2: Formalise Stakeholder Management

2.1 This stage will include a more standardised approach to measuring stakeholder relationships and will entail the development of measurement criteria and tools – as I suggested a type of dashboard effect. (It is at this stage where I see decisions be taken about the positioning of SSRM in the Bank).

2.2 It will entail the inclusion of Stakeholder Management into the Bank’s existing Performance Management system such as Balanced Scorecards etc.

My reasoning is that you cannot hold an employee accountable for relationships with stakeholders if you have not empowered him or her with specific knowledge on how to do so.

I used the example today of diversity training. Diversity training is a form of stakeholder training as it empowers people to understand their own inherent prejudices, deal with them and move on in ways that can only be positive.

Most important this whole process needs a Champion. Someone that will be prepared to take risk and have the passion to push for this within the Bank. This is a pivotal role. In my 25 years of internal and external consulting any process without a Champion have little chance of succeeding. (As Guy Pinchot wrote years ago: “Change activates the Corporate Immune Response”. You need to deal and push through those boundaries).

These are my immediate thoughts. Based on experience, this is not an overnight or a singular workshop experience. It will need resource application – dedication of effort, time and expertise.

Dates for the next Stakeholder Reputation Management Masterclass


The next Stakeholder Reputation Management Masterclass takes place from the 4th – 5th May in Johannesburg, ZA.

Experience has shown that when relationships with any stakeholders sour, the impact on bottom line and reputation can be severe. This two day program explores ways and means to enhance reputation through better stakeholder relationships and engaging their hearts and minds.

The course will explore the best practice approach to Stakeholder & Reputation Management processes, in accordance with international best practice and will help organisations to comply with Section 8 of the King Code 3 Guidelines on Corporate Governance. The course gives a delegate the practical, experienced guidance they need for designing a successful Stakeholder Reputation Management system.

It covers stakeholder profiling, stakeholder communication, stakeholder engagement & relationship management, as well as the criteria to use to measure the success of relationships and the ROI in programs.

There is an Early Bird booking special available – 10% discount on any payment option valid until this Friday, the 8th April. All you have to do, is to go online, click YES if interested. Fill in your details and I will then follow up with you.

Register online – http://stakeholderreputation.invite43.com/

This is what one of the delegates that attended the last seminar, had to say about it: ‘It is a must for any communications, marketing, Human resource, project manager, organizations …… the list goes on and on. It really gives one an edge when put what we have learned in practice. I have applied this since coming back and I have seen an increase in my relationship with the specialists who support my projects inspired to act, I have increased my rapport with them, they are going an extra mile for me as I have focused on them not me. Some of the tools I already knew however I was not applying them intelligently. You have really opened my mind to think broadly and it reinforces better planning. It helps you to connect, create meaningful bonds as you will know what each stakeholder need to know – you share what they need to know, using the right media and at the right time. You are also able to anticipate possible areas of resistance/issues and deal them upfront. If this is the only career investment I make this year, then the money is well spend.’

Let me know if you would like to join us for an insightful and interesting learning experience. Who else in your organization will benefit from attending such a program? Please forward me their e-mail details, so that I can send them the information.

ALSO:

12 – 13 April – Strategic Employee Stakeholder Engagement Master Class – http://employeestakeholdermanagement.invite43.com/

During this two day workshop‚ you will learn how to boost internal stakeholder engagement & communication‚ enhance professional stakeholder management processes and enhance the organisations’ quest to be an admired employer.

Join us!

Creating Shared Value is a Stakeholder Manager Priority


Here is an interesting article that contains  a number of important lessons for Stakeholder Managers – Reconnect business success with social progress.

via Make money and do good is the new corporate buzz | Reuters.

In my mind, it speaks of the necessity to integrate sustainability thinking into the everyday processes of the organization, whether it is choosing paper for the photocopier or pressing a button spilling effluent into a pristine water ecosystem.

Creating Shared value fits into the Inclusive Stakeholder Management thinking model and is in line with the recommendations of the King 3 Code on Corporate Governance.

In a stakeholder inclusive approach, the organisation considers the legitimate interests and expectations of stakeholders on the basis that this is in the best interests of the company, and not merely as an instrument to serve the interests of the shareholder. What this means in practice is that in the ‘stakeholder inclusive’ model, the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company.

The integration and trade-offs between various stakeholders are then made on a case-by-case basis, to serve the best interests of the company. The shareholder, onthe premise of this approach, does not have a predetermined place of precedence over other stakeholders. However, the interests of the shareholder or any other stakeholder may be afforded precedence based on what is believed to serve the best interests of the company at that point.

The best interests of the company should be interpreted within the parameters of the company as a sustainable enterprise and the company as a responsible corporate citizen. This approach gives effect to the notion of redefining success in terms of lasting positive effects for all stakeholders, as explained above.

Creating Shared Value for all.

 

Crucial Questions to ask about Stakeholder Management


995748_91898411An organization derives its reputation from its stakeholders. Therefore the perceptions that is created through the things stakeholders see, read, hear about or experience first-hand.

This implies that there exist a web of relationships with a diverse range of stakeholders that needs to be monitored and managed.

But what is a stakeholder? The word stakeholder means anyone that has a legal, moral or economic stake in an activity. Some stakeholders have more clout than others, but that is also changing.

For example – Ghandi was an activist. Today with the right tools, any one person can become an activist or a journalist, hence the rising of the citizen reporter phenomenon. I can have a block of shares in a company, worry about ROI irrespective of the number of people who are retrenched. Alternatively I can be a member of the media. I will have an interest in what your organization does…because the public has a right to know.

The term ‘stakeholder management’ refers to the development and implementation of organisational policies and practices that take into account the goals and concerns of all relevant stakeholders.

The term Stakeholder Management also involves the dialogue, relationship building and process generation that take place between an organisation and its various stakeholders. Each of these stakeholders can affect an organisation’s reputation positively or negatively and necessitate different strategies to leverage the situation.

In the King 3 Code of Corporate Governance specific mention is made of the importance of stakeholder inclusivity (,i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.

The King Code also makes mention that the Code is on an ‘apply or explain’ basis and that the board of directors, in its collective decision-making, could conclude that to follow a recommendation would not, in the particular circumstances, be in the best interests of the company. ‘’The board could decide to apply the recommendation differently or apply another practice and still achieve the objective of the overarching corporate governance principles of fairness, accountability, responsibility and transparency. Explaining how the principles and recommendations were applied, or if not applied, the reasons, results in compliance. In reality, the ultimate compliance officer is not the company’s compliance officer or a bureaucrat ensuring compliance with statutory provisions, but the stakeholders”

In particular, the one danger that everyone is missing is Section 8.1 of the King Code 3 i.e. The Governing of Stakeholders states that the Board should appreciate that stakeholders’ perceptions affect a company’s reputation.

How can managers do this if they do not fully understand stakeholder management and its impact on governance and reputation?

Here is a quick test for you. Can your management team answer the following strategic questions:

  • Who are our stakeholders?
  • What are our stakeholders’ stakes?
  • What opportunities and challenges do stakeholders present?
  • What economic, legal, ethical, and social responsibilities does our organisation have towards our various stakeholders?
  • What strategies or actions should we take to best manage stakeholder challenges and opportunities?
  • Do you have a system for managing relationships with stakeholders?
  • How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
  • In a crisis how quickly can you communicate with your relevant stakeholders?
  • Do you know the various methods to engage with stakeholders and when not to use it?
  • Can you state how much you are spending on each stakeholder group and what your ROI is?
  • Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?

Once you have answered the above questions, then you should attempt these:

– What strategies or actions should our firm take to best manage stakeholder challenges and opportunities?

– Should we deal directly or indirectly with stakeholders?

– Should we take the offense or the defence in dealing with stakeholders?

– Should we accommodate, negotiate, manipulate or resist stakeholder overtures?

– Should we employ a combination of the above strategies or pursue a singular course of action?

All of these are vital strategic questions to ask for any project, incident or issue. Reputation Risk emerges when the reasonable expectations of stakeholders are not met.

What is reasonable? Let me use an example. The recent amount of product recalls and scandals examples illustrates this very clearly. As a consumer safety is a basic right. I therefore would expect an organization to communicate with me, and warn me of the advantages and drawbacks of a product including tips on how to use it. (I wrote a short article on this in of my Powerlines newsletters )

But do companies do this? Only those who are enlightened do so, and not all are. It is only when a body like the FDA or the Consumer Protection Act forces some companies to comply, that they will come to the party.

Take a look at the Supersize Me saga, where through a class action law suit, McDonalds were forced to start to use more ethical labelling and change their menus. Why did it happen in the first place?

They were out of touch with current thinking. It is the same with collaboration methods. There are companies who try and stop staff from accessing Facebook, write blogs and use other forms of social media, thinking they can control messages. Yet, we deal with people in companies. Real, live people – not spokespeople, not Corporate Heads, but normal day to day people.

People want to connect with other real people.

How ready is your organization to engage with its stakeholders? Is there an integrated or a fragmented approach to managing stakeholders in the organization? Would you like to learn more about this interesting and holistic field of management?

Why don’t you attend the next Stakeholder Reputation workshop in March in Johannesburg, South Africa. For more information visit http://stakeholderreputation.invite43.com

Managing ‘Organized Media’ with Strategic Intent


2495004170_4797c10298_mIn today’s era of pervasive communications media, senior executives, public officials, consultants, politicians and leaders of all types of groups cannot avoid facing the media at one time or another.

Whether you operate at provincial or local government level, hold a position in a listed or  educational organisation, at some time a microphone or tape recorder will be thrust in front of you and you will be required to make a statement that will be read, heard or seen by thousands or even millions of people.

Using the media is also a wonderful opportunity to build your organisation’s reputation, and to add to your organisation’s messages and further the organisation’s marketing efforts.

However when you face the media, nothing you learned in your career training, on the job, or even in a fancy MBA program prepares you. Media interviews involve techniques of questioning and editing of responses that are not taught in university or management courses.

Journalists are trained in how to ask probing and often in – your-face type questions. They also are familiar with sophisticated editing facilities and techniques that can extract segments of what you say, or join statements together which can alter the context and even the entire meaning of your comments. They are taught investigative techniques, just like detectives.

Spokespersons for organisations and companies often naively face media interviews ill-equipped for the dynamic communication and publicity opportunity that media interviews provide. In most interviews, the journalist is holding all the cards. It need not be so. Some basic tips and training can equip you to get your points across in an interview and minimise misreporting and misquoting. If you talk to the media now, or are likely to do so in the future, you need to be prepared.

All your dealings with the media must be with strategic intent.

To achieve this, you need to understand that:

There is a distinct need for senior management and staff to receive media awareness training as opposed to practical spokesperson coaching. Let me explain. Companies traditionally appoint two to three spokespersons. The spokespeople (who are carefully chosen), need to receive hands on practical training in front of cameras, microphones and live audiences. This type of training is extremely expensive and time intensive and is normally conducted in a studio. Some trainers put spokespersons on the spot and then proceed to show them their weaknesses. This often breaks down people self-confidence levels and should be avoided (You cannot build on sand). Spokesperson training should be positive and uplifting and conducted in simulated environments.

However they also need “contextual” training – training that will add to their understanding but that will be added on in a studio later.

In my own capacity, I work with senior management & staff that needs media awareness understanding. I teach them a context so that they understand the media stakeholder, how they operate and how to conduct themselves in a media interview situation. This is normally different to those people who speak to the media on a continual basis. It is better to use local providers such as specialized media training coaches for that type of training. It is more cost-effective as long as it is built on a base of solid understanding.

Often senior management are the people who have to formulate the messages that spokespersons need to convey or decide on an approach in dealing with the media. They therefore need to understand the media stakeholder, so that these messages and chance interactions with the media will be positive and uplifting.

My favourite saying is that media relations need to be approached with strategic intent and if you do not know the rules of the game, how can you play it.

I believe that my recommended two-tier approach is the best for building sound media relations and reputation capacity in the organisation. To this end, I present a one-day workshop called Media Survival Skills. In this workshop, we cover media awareness, understanding and the seven tools for better media interviews and various powerful and useful tips and suggestions. The day involves pulling newspapers apart, theoretical inputs, skill practices and case study analysis.

Footnote – The title refers to working with ‘organized’ media. The reason is that we need to separate organized media from the fact that there are people who have the tools to be publishers and conveyors of information without understanding journalistic principles, so the so-called rising of the citizen reporter. Read my other blog post – The Tools exist to Do Damage

Stakeholder Reputation Management Masterclass 19 – 20 May


What: Stakeholder Reputation Management Masterclass
This acclaimed two-day Masterclass focuses on the strategic management of stakeholder relationships and enables organisations to comply with Section 8 of the King Code 3 on Corporate Governance. It will provide managers with a structured stakeholder management approach and the know-how and means to strategically guide and influence relationship building, communication and engagement practices in their respective organisations. Target Audience: Reputation Managers, Stakeholder Relations Managers, Public Relations & Corporate Communication Managers, Channel Managers and those responsible for managing any form of Business relationships. For more information e-mail me at reputationeducation@icon.co.za or Register online
When: Wednesday, May 19, 2010 (all day)
Where: Hotel Apollo, Ferndale, Randburg

Johannesburg, Gauteng   South Africa

Why the One Report is Necessary – It Speaks With One Voice to All Stakeholders


Stakeholders expect it. And smart companies are doing it: integrating their reporting of financial and nonfinancial performance in order to improve sustainable strategy.

How can managers better identify, describe, and confront the issues of environmental and social sustainability that their companies increasingly encounter? One answer is One Report, a method of integrating information about financial and nonfinancial performance into a single, jargon-free document.

HBS senior lecturer Robert G. Eccles and coauthor Michael P. Krzus explain the benefits and value of the One Report method. Plus: book excerpt from One Report: Integrated Reporting for a Sustainable Strategy.

One Report: Better Strategy through Integrated Reporting

Leslie Gaines-Ross, Chief Reputation Strategist of Weber Shandwick, commented in the article that "In today’s multi-stakeholder and multi-channel society, CEOs are increasingly concerned about reputational risk, both for their company and themselves. Now is the time for CEOs to carefully explain their companies to stakeholders, engage in productive two-way conversations, and clearly communicate their contributions to the market and society.

If stakeholders are left on their own to unify all the information they need about an enterprise, companies could find themselves vulnerable to misinformation and hearsay and put their reputations at risk."

Just reading this quote also defines a new look at the use of social media in an organisation. How to integrate not just reporting but two-way conversations with stakeholders. And, the importance of integrating reporting and use of social media into a company’s strategic communications plan.

Interesting and essential reading for Stakeholder Reputation Managers.

A Suggestion Scheme as a Listening Tool


Listening is a key concept in stakeholder management. By listening to your stakeholders you can gather valuable information, plug gaps and design appropriate strategies to maximise relationships and reputation.

A Valuable but underutilised tool in many companies is the suggestion scheme. The suggestion scheme can be very useful to pick up hints and ideas to improve processes but could also be seen as a risk management tool. Employees may sometimes use this scheme to communicate issues and risks that exist.

I always check the use of this scheme when doing a communications audit and have been astounded by how few organisations have a flourishing scheme. Almost always the statement is that it is not working. This reflects a lack of strategic planning and championing of the process.

Perhaps this will help you to plan for or revive your suggestion scheme.

ARE MANAGEMENT & STAFF OPEN TO NEW IDEAS AND SUGGESTIONS?

110_036 Before a Suggestion Scheme/Box can be implemented you must consider whether a climate for innovation exist in the organisation.For instance, can any individual answer yes to these two types of questions:

  • "In my business unit new ideas are welcomed and management is willing to support you in the subsequent implementation".
  • "People in my Business unit are open-minded and accept the possibility that there may be better ways of achieving the same objectives"

It is my belief that you will be asking people to be creative and innovative and yet most people don’t believe that they are creative or, are stifled when they are.You will have to provide interventions such as training to enable staff to think beyond the boundaries.

Your aim should be: " How can we stimulate the creative thinking of our people". There is enormous creative potential locked inside the heads of staff, "How can we tap it?"

It starts way before a suggestion box or a suggestion scheme.

Every Organisation suffers from innovation inhibitors – attitudes and policies that limit the search for new ideas. For example, a group of senior managers at a large educational research institution reported recently that managers tend to resist good ideas suggested by subordinates. That is a clear organisational inhibitor to innovation.

In order for the suggestion scheme to work you will have to create awareness of these inhibitors and provide interventions to overcome them. You could for example run a course, on Creativity and Innovation for Senior Management, covering topics such as types of creativity and the creative process, types of thinking, characteristics of the creative organisation, methods to stimulate creativity and innovation and breaking the barriers to corporate creativity.

This will start to create a climate in which suggestions can flourish.

Here is some specific notes on suggestion boxes/schemes that you can use. The suggestion scheme can be approached from two angles i.e.:

  • A new idea scheme
  • A cost saving scheme

PLANNING THE SUGGESTION SCHEME

An analysis of suggestion schemes in world-wide shows that the formula or success in implementing the schemes are as follows:

1. All details of the system must be well planned from the definition of a suggestion to evaluation and award criteria.

2. Responsibility for programmed co-ordination must be assigned to a responsible management member (someone who will "Champion" the cause).

3. Programme details and procedures must be clearly communicated to all employees.

4. Top management must visibly and enthusiastically support the programme and communicate it’s continual commitment to it.

5. Acknowledgements must be prompt.

6. The program must receive ongoing publicity.

I strongly believe that suggestion schemes can work, if properly administered. The question that will arise from the individual is normally: "What is in it for me?"

Adequate financial incentives should be provided but that is not enough.What people really want is public acknowledgement, personal expression of appreciation coupled with financial incentives.

SELLING THE BENEFITS OF A SCHEME

To ensure that a suggestions scheme will succeed, you will have to "sell it" to management and staff, preferably from the top down.

The following steps could prove advantageous in doing so:

1. At the launch of the scheme – the purpose, details and advantages should be spelled out to them orally and then followed up with a written document.

2. An attractive notice or poster, briefly summarising the essential features of the scheme and designed to draw attention to it, should be placed on notice boards in the branches.

3. A suggestion Committee should be selected on the basis of their technical and managerial knowledge to appraise and rate the suggestions fairly and accurately. (Some members noted for their creativity should be included).

4. The suggestions should be evaluated on a regular basis, i.e. bi-monthly.

It is essential that suggestions should be dealt with promptly, so that staff may be assured of the sincere desire of management to receive and evaluate suggestions.

5. Regardless of its value, every suggestion should be acknowledged promptly and as soon as possible the employee who made the suggestion should be advised of the outcome thereof, by personal interview or letter.

This will prevent staff from losing interest in the scheme.

6. Any usable suggestion should result in some definite recognition to the employee concerned, ranging from: Honourable mention, or letter of appreciation to a maximum cash award.

7. In order to ensure impartiality on the part of the members of the committee it is desirable that the person who comes with the idea’s identity be unknown to them to prevent bias.

8. Every suggestion that is adopted should be noted on the staff member’s service record for consideration when the question of promotion arises.

9. The Suggestion Scheme could also be viewed as a complaints channel provided the Department head’s authority is not undermined.

REWARDING SUGGESTIONS

Due thought needs to be given to the award criteria. These can range from tangible to intangible awards.

Financial awards could consist of various grades of suggestions per company ranging from Overall award for the year to Quarterly awards. It can,however,be assisted by other methods:

A Floating Trophy.A large floating trophy should be purchased and be given annually to the company or branch which came up with the best reward, at either the Annual Conference or the AGM. The individual and regions name should be engraved on nameplates and mounted on the trophy. Another factor is that this trophy can be held and displayed at the winning office for the period between judging, thus generating regional pride.

PUBLICIZING THE SCHEME

You will have to actively drive and sell the programme. This could be effected by:

  • The running of promotional campaigns, i.e. using well designed posters, circulars in pay packets etc.
  • Placing photos of staff awarded and an article should be published in the in- house magazine and corporate newsletter.
  • Another alternative can be involvement by the HR Division. The design and running of a "Creativity and Innovation" training workshops can assist in the process. The benefit of this course will be that Managers, including staff, will know how to evaluate ideas, generate ideas and how to share ideas.
  • A climate for suggestions can be created.

What are you doing to capture the thoughts and ideas (the intellectual capital) of your employees? Time and time again research has shown that employees have ideas that can benefit the organisation.

Unfortunately ideas and thoughts are like light bulbs. If not captured, they disappear at the flick of a switch.

Powerlines Number 90 – The newsletter for Reputation & Stakeholder Managers available for download


The 90th edition of Powerlines is now available for download. This newsletter aims to provide you with timely, accurate and useful information to help you build, sustain and protect your organisation’s reputation.

Powerlines currently serves more than 8500 international and local readers! It is an opt-in newsletter list and comes at one cost – the time to read and share it! Please feel free to forward it to someone that may benefit from the content.

In this Issue

  1. Quotes & Thoughts – Alltop
  2. What Type of Reputation Management Consultant are you?
  3. How to Write and Implement a Media Policy
  4. The Implications of the King Code 3 on Stakeholder Management
  5. What is the Definition of Effective Risk Management?
  6. Manage your Stakeholders…Manage your Reputation Event invitation
  7. The Meanings of Words are in People’s Heads and not in the Words they use
  8. Develop a Breakthrough Marketing Action Plan for 2010
  9. I want to speak at your next event!
  10. Introducing REPUCOMM – The Reputation Management Training Specialists

Access Powerlines by clicking the following link

 

No organization can state that they have no stakeholders!


Last week I sent out my Powerlines newsletter Number 90 – a newsletter for Reputation Managers and those involved in stakeholder management.

Like any newsletter it always gets its own fair amount of subscriptions and unsubscriptions. However what got me this time was an e-mail from someone that stated the following:’’Your newsletter would be inappropriate for us as our business is not affected by your content”.

Now I don’t mind unsubscriptions and would rather have a targeted list of readers, but if ever I needed to take an exception over a statement it was that one.

The statement that any business would not be affected by the content is wrong. Knowledge, awareness and understanding of stakeholders and the reputation management process can only be beneficial for any organisation, no matter its size or stature.

No organization can state that they have no stakeholders. In fact it is useful to revisit the definition. Stakeholders are anyone, group or individual that can affect or is affected by an organisation’s behaviour, actions and performance. There is thus a fine interplay of factors to manage if an organisation wants an excellent reputation.

An organisation derives its reputation from the way it is perceived by its stakeholders. They will evaluate your actions, performance and behavior, and will in turn act reciprocally by either buying your products, recommending you, using your services or acting towards you in a favourable manner.

It is these actions that are important. You want stakeholders to say good things about you and your organisation, you want them to work for you and be loyal if they are an internal stakeholder, you want to be able to source funding when you need it because you have a good image and reputation in the eyes and minds of the shareholders and financial institutions.

In the world of the interconnected economy, the reputation of an organisation has become its biggest asset and risk. Research clearly shows that these days that reputation is a function of the communication with stakeholders, the understanding and perceptions they have about your business and the levels of relationships that have been fostered.

It makes the management of the stakeholder interface a strategic and vital one for any organisation. In fact, it has become so important that the new King Code 3 of Corporate Governance makes specific reference to it in Section 8. Although the Code is not enforceable it sets forth standards of good practice and provides guidance that will shape dealings with stakeholders in years to come.

Section 8: The Governing of Stakeholder Relationships spells out certain practices, as follows and I quote:

  • Section 8.2. 1 Management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping. This implies that an organisation has a formalised stakeholder management model or system in place and that due thought has been given to dealing with each relevant stakeholder. A Good example of this is the difference between working with the Government stakeholder versus the Media Stakeholder. Deadlines for these two stakeholders differ. The Media stakeholder is always on deadline, whilst in Government, decisions go through a consultative process that includes strict use of protocol. Thus you cannot manage these different stakeholders appropriately unless you understand the different rules and nuances of the stakeholder game. It is these types of issues that I also address in my Stakeholder Reputation courses.
  • Section 8..2.2. The board should consider whether it is appropriate to publish its stakeholder policies. Some companies like BHP Billiton have this information in their HSE reports and on their websites. They thus demonstrate their commitment to positive relationships based on trust, openness and transparency.
  • Section 8.2.3. The board should oversee the establishment of mechanisms and processes that support stakeholders in constructive engagement with the company. There are many ways to engage. These methods are influenced by timing, decisionmaking resources and other issues. Again, due thought needs to go into deciding which engagement tools are appropriate and under what circumstances. The use of Facebook and other social media technologies are not by the way just a communication or an IT bandwidth or security issue, but falls right into the domain of engagement.
  • Section 8.2.4. The board should encourage shareholders to attend AGM’s and Section 8.2.5. The board should consider not only formal, but also informal, processes for interaction with the company’s stakeholders are dealt with above.
  • 8.2.6. The board should disclose in its integrated report the nature of the company’s dealings with stakeholders and the outcomes of these dealings.

All these specifications implies that a company will need a formalised stakeholder management system*** in place, in order to comply and adhere to these recommended practices. The Code also goes on to say that the board should take account of the legitimate interests and expectations of its stakeholders in its decision-making in the best interests of the company.

This means having a different set of criteria when making decisions – see my blog post called Which Decision-making Model are you using?.

However adhering to these recommended practices will be far from easy. Traditional company models rely on functional layering, whilst the skills and approach needed to manage a Stakeholder system will necessitate a systemic model, one in which a person will be required to work across departmental boundaries.

Company processes and practices will also offer their own set of restrictions. In my blog posting of 26 March 2008 I asked the question: ‘‘How much are you spending on Stakeholder Relations?.

I had few responses, and those who did, could not tell me how much they were spending on each stakeholder group, nor what the ROI was. This will be a problem in the future, because what we try and do in stakeholder reputation work is to influence perceptions and ultimately affect stakeholder behaviour. Spending money on these relationships are not wasted. Spending money on learning how to maximise these relationships will not be a not a waste.

Planning and managing the Stakeholder function will need to be done systematically and with great strategic insight.

So to conclude to the reader who unsubscribed. In my newsletter I try and raise awareness of these type of issues and topics. Whether you like it or not you will affect your stakeholders and they will in turn affect your reputation.

*** Here is a quick test for you. Can your management team answer the following strategic questions:

  • Who are our stakeholders?
  • What are our stakeholders’ stakes?
  • What opportunities and challenges do stakeholders present?
  • What economic, legal, ethical, and social responsibilities does our organisation have towards our various stakeholders?
  • What strategies or actions should we take to best manage stakeholder challenges and opportunities?
  • Do you have a system for managing relationships with stakeholders?
  • How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
  • In a crisis how quickly can you communicate with your relevant stakeholders?
  • Do you know the various methods to engage with stakeholders and when not to use it?
  • Can you state how much you are spending on each stakeholder group and what your ROI is?
  • Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?

If you need more help to understand this, take a look at this site: http://stakeholderreputation.invite43.com

Which Decision-making Model are you using?


When I entered the business world, the flavor of the month decision-making model was the Kepner Tregoe problem solving & decision-making model.

Soon that was replaced by a model from a book, that is if I can remember its name– something like the 1001 things I did not learn at Harvard Business School. And, just when I got my breath back, De Bono came along with his 6 Hats.

And so it went on…De Bono…..to various techniques involving linear and creative thinking methods. Just read Michalko’s Thinkertoys as an example.

In my own consulting experience in reputation management I have found that the MISTRUST that is created in companies or by companies today is a direct cause from a lack of stakeholder understanding and misperceptions that is created when decisions are made. (For more information on this, read this blog’s archives)

Perhaps the following information can add to your decision-making model that you wish to develop. Perhaps you could even develop a model that will grace the charts worldwide (Please quote me…)

This is my theory.

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

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. 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).

This fits in well with the ecology model of organisational effectiveness.

The New Collins Concise English Dictionary defines ecology as: "The study of the relationships between living organisms and their environment, the set of relationships of a particular organism with its environment."

This means that the ecology model is concerned with the organisation’s ability to deal with internal and external contingencies, and its ability to manage interrelationships between stakeholders in the context of its environment.

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 thus important to realise that any 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.

Reputation, most managers today would agree, is an asset, even if only a perceptual asset (or, if mismanaged, a liability). It certainly is not optional. Every corporation, organization, institution, individual has a reputation. The only option is whether to manage it or allow it to be inferred.

If it is to add value, it should be managed with the same care and attention as any asset. It should be obvious that if a decision has four broad sets of implications, and only three are formally and routinely considered, the potential exists for flawed decision making. After all, the role of a manager is to manage all the assets under his or her control effectively.

It is certainly conceivable that financial considerations are often deemed more important than reputational impact, but even that is not to say that they should not be considered and factored into the process. There is mounting evidence though that as general rule reputational implications is important to sustained corporate success. The scrutiny under which business operates today (Witness the success of investigative TV programs), the amount of information in the hands of consumers and other publics, make reputation a vital asset, and in some industries the most important.

And, interestingly if this was not important, how come it is specifically included in the new recommended King Code 3 of Corporate Governance (Section 8). For more information, go to the website of the Institute of Directors and check it out for yourself.

Unless decisions are scrutinised through a stakeholder lens, problems are due to erupt.

The Skills needed by a Chief Reputation Officer


In an excellent article Chief Reputation Officer: Whose Job Is It, Anyway?, Anthony Johndrow, the U.S. managing director of the Reputation Institute in New York makes the point that ‘’the requisite skills that reputation managers and stewards need to thrive in this brave new world appear to come in five diverse skill sets’’:

  1. Cognitive Skills (knowledge about business and communication functions, plus stakeholder-specific know-how)
  2. Analytical Skills (causal thinking and drawing inferences, plus systems thinking and contextual analysis)
  3. Process Skills (change management, plus facilitation and coordination execution)
  4. Communication Skills (writing, speaking, presenting, plus comparative dynamics of old and new media)
  5. Organizational Skills (persuading others and mobilizing support, plus organizing and leading high-performance teams)

This is what I have been writing and saying in my presentations the past few years. I have always stated that the ideal CRO will need OD (Organisation Development), Management Consulting and PR skills,. and have used techniques and tools from these various disciplines in my courses.Now finally there is a dawning and an understanding that Communication is only but one tool to use to manage Reputation.

credited_207102084_79747d8a40 Let’s analyze this further, by looking at some definitions. This is vital because communication is the sharing of meaning. As Abraham Maslow, the motivational psychologist ( The Hierarchy of needs originator) said :

" If the only thing you have is a hammer you tend to treat everything as a nail". Definitions create the lenses through which we look at the world.

Here are some of definitions that I use in my work:

Public Relations is the management, through communication, of perceptions and strategic relationships between an organisation and its internal and external stakeholders.

A company’s reputation is its most valuable asset. The reputational implications of a business decision is those that impact the way in which the organisation is regarded by those with whom it interacts, including shareholders, customers, employees, the media and any other stakeholder. Reputation is not optional. Every company, organisation, individual has a reputation. The only option is whether to manage it or allow it to be inferred.

The management of Reputation includes a proactive and systematic approach to identifying issues that currently affect your company or will affect it within the next 12 to 36 months. Like it or not, your company’s policies and actions are shaped and developed in anticipation of, and reaction to, political, economic, social and technological forces. PEST will impact.

It is also a process of casting a look internally and examining processes, procedures, policies and issues that could impact and damage the company’s reputation. It involves an in depth look at the quality of management, financial soundness, use of corporate assets, community and environmental responsibility, quality of products or services, value as a long term investment, innovativeness, and the ability to attract, develop and keep talented people.

Thus, reputation management goes beyond the traditional parameters of marketing, public relations and communications. It is much more than just measuring reputation annually through some research. It is in my humble opinion a far more holistic management approach than previous traditional approaches.

Corporate Communications is quite broadly—the professional practice of developing and implementing communication “rules and tools” to enhance the dissemination, comprehension, acceptance, and application of information in ways which help to achieve an organisation’s goals( Diane Gayeski)

Organization development (which is part of Strategic Management) is defined as a planned effort, organization wide, managed from the top, to increase organization effectiveness and health through planned intervention processes, using behavioural science knowledge" (Richard Beckhard)

Looking at these various definitions and realizing that Reputation is both an organization’s biggest asset but also its biggest risk today, it must be clear that what is necessary to build, sustain and protect this asset is a multidisciplinary effort in any organisation. It is no longer a PR only function.

It is strategic management of the highest order.

Take a look again at your definitions – and you will see how it shapes your thinking and your consulting (internal or external) approach in situations.

If I have to make one point I think what needs to be added to Anthony’s list of skill sets is the ability and knowledge to handle crises of all kinds under all types of conditions. Crisis Management skills is a skill set on its own driven by experiences and knowledge gained by Emergency Management, Disaster, Crises Communication and Business Continuity fields.

Organisations will have to have a rethink of who they believe is capable of managing and protecting their organisation’s biggest asset.