When I facilitate my reputation management training, I always relate that building the reputation of an organisation is like layers of an onion.
The more layers of protection there is, the less chance of damage in a crisis. On the other hand it is also vital to look for potential vulnerabilities and concerns that can penetrate these layers.
These are the questions that I give out to participants with the following instructions – Here is a list of the questions that we need to answer/investigate in order to manage Reputation adequately in in an organisation. Let this partial list govern your thinking during this workshop and when we prioritise a list of action items to manage.
- What kind of company do we want to be? What are our defining traits?
- How distinctive is our Reputation from the rest of the Industry’s reputation?
- How accurate and consistent are the images that we project to our different stakeholders?
- How can we strengthen our relationships with these various stakeholders?
- Evaluate the way your organisation currently manage Reputation Risk. Is it still appropriate?
- What are the issues and problems at Business Unit level that can impact reputation?
- How do our internal features correspond to current perceptions of our Company by the different stakeholders?
- What policies, systems, procedures, rules, regulations, actions and behaviour are not consistent with the organisation’s desired reputation?
What are the issues/Problems affecting each Reputational Driver?
I am little bit shocked. For the past 2 days I facilitated an Effective Communication & Stakeholder Management Master class at one of our local hotels for a conference organization.
One of the topics that I dealt with, was that of Strategic Communication. Emphasizing the importance of research, I asked the audience whether they used benchmarking as part of their secondary research methods. The audience which consisted primarily of communication practitioners did not know what I meant. This is worrying. Benchmarking is such an important research tool and can shorten the learning curve or reveal important gaps.
To help these delegates, I have prepared the following article which readers might find useful.
What is Benchmarking?
Benchmarking is an objective & analytical technique that compares a firm’s business processes with those of other companies that achieved recognition for excellence for a specific process or function. With other words, if you are designing and writing a strategic communications plan, find out what others are doing. Why re-invent the wheel?
The goal is to identify and profile another organisation that achieved radical improvements, which significantly impacted their bottom line or reputation.
Benchmarking is not limited to a company’s financial performance, or industry. It’s a process that seeks to identify a company’s best qualities, regardless of industry. It focuses on practices used by industry-leading companies who constantly increase market share and profit margins by using radically better processes than their competitors.
This means you’re looking for companies that do something better than anyone else, in order to learn how they do it, so you can incorporate their processes into your inductive business plan. Thus Communication processes and/or Reputation can be benchmarked.
The most frequently used benchmarking tactics are:
ACTIVITY BENCHMARKING, which is directed at converting such support processes as order processing, project management, inventory, customer service, accounting and information technology into a competitive advantage.
COMPETITIVE BENCHMARKING, which compares a company’s processes, products and services against that of industry leading competitors.
WORLD CLASS BENCHMARKING extends the activity beyond your own industry. It looks at who is best irrespective of the industry.
It’s used for those processes that are generic of nature, plus such activities as product development, engineering, manufacturing, and customer service. At least half the new technologies that transform an industry come from outside the industry itself. Also, by seeking the "best of the best" of non-industry standards, instead of the ‘"best of breed" in your own industry, you can leapfrog over your competitors.
The lesson – Benchmark your organisation’s Reputation building processes, communication and crisis management against best practices. That will assist you to build a sustainable lasting reputation for the future.
I just read the results of the 10th Edelman Trust Barometer. There are so many lessons for Reputation Managers and those driving strategy and policy in these results.
The survey’s major finding is that nearly two-thirds of informed publics or stakeholders (62%) trust corporations less than they did a year ago.
When respondents in the United States were asked about trust in business in general, only 38% said they trust business to do what is right — a 20% plunge since last year — and only 17% said they trust information from a company’s CEO. Both are lower levels of trust than those Edelman measured in the wakes of Enron, the dot-com bust, and Sept. 11.
"It has been a catastrophic year for business, well beyond the evident destruction in shareholder value and need for emergency government funding," said Richard Edelman, president and CEO, Edelman. "Our survey confirms that it’s going to be harder to rebuild our economies because no institution has captured the trust that business has lost — trust is not a zero-sum game. Business must recast its role in society and move beyond simply generating ROI to its shareholders. It must partner with government and other institutions to assume societal responsibilities."
The Edelman Trust Barometers explores trust in four institutions: business, government, media, and NGOs.
Seventy-seven percent (77%) said they refused to buy products or services from a company they distrusted — the first time the survey explored people’s direct actions toward trusted and distrusted companies. Seventy-two percent (72%) criticized a distrusted company to a friend or colleague.
Respondents say being able to "trust a company" is one of the most important factors in determining a company’s reputation. Among a global audience of 25-to-64-year-olds, trust ranks just below the quality of a company’s products and its treatment of employees — more important than a company’s financial future, job creation, giving back to the community, and innovation in products and services.
Transparency, defined as frequent and honest communication, also outranks those attributes.
Sixty percent (60%) said they need to hear information about a company three to five times before they believe it. Specialists remain the most trusted purveyors of information about a company, with 62% globally saying an academic or expert on a company’s industry or issues would be extremely or very credible. Employees and peers are also considered credible sources of information about a company, with 47% trusting what they hear from "a person like yourself" and 40% trusting conversations they have with employees.
"To regain trust and re-earn the mantle of authority, business needs to make substantive shifts in both policy and communications," said Mr. Edelman. "This means forging partnerships, effecting real change in business practices from executive compensation to supply chain, and communicating all with transparency. Without this type of public engagement, which fuels trust, it will be difficult for business to help rebuild the financial system or earn the license to innovate, much less operate."
Other key findings of the 2009 Edelman Trust Barometer include:
- Trust in nearly every type of news outlet and spokesperson is down from last year. Trust in business magazines and stock or industry analyst reports — last year’s leaders — decreased from 57% to 44% and from 56% to 47%, respectively.
- Globally, only 29% trust information about a company from a CEO — down from 36% last year.
- Only 13% trust corporate or product advertising — down from last year’s low of 20%.
- In the U.K, France, and Germany, trust in business was already at a low level of 36% among our tracking audience of 35-64-year-olds — and stayed there this year. The only EU countries where business made a notable gain in trust were the Netherlands and Sweden.
Learning Points: As I tell audiences over and over, Reputation and trust goes hand in hand together. Violate trust, damage reputation.
About the Edelman Trust Barometer
The 2009 Edelman Trust Barometer is the firm’s 10th trust and credibility survey. The survey was produced by research firm Strategy One and consisted of 30-minute telephone interviews conducted using the fielding services of World One from November 5 – December 14, 2008. The 2009 Edelman Trust Barometer survey sampled 4,475 informed publics in two age groups (25-34 and 35-64). All informed publics met the following criteria: college-educated; household income in the top quartile for their age in their country; read or watch business/news media at least several times a week; follow public policy issues in the news at least several times a week.
Edelman is the world’s largest independent public relations firm, with 3,200 employees in 53 offices worldwide. Edelman was named "Large Agency of the Year" in 2008 by PRWeek and a top-10 firm in the Advertising Age "2007 Agency A-List," the first and only PR firm to receive this recognition. CEO Richard Edelman was honored as "2007 Agency Executive of the Year by both Advertising Age and PRWeek. PRWeek also named Edelman "Large Agency of the Year" in 2006 and awarded the firm its’ "Editor’s Choice" distinction. For more information, visit http://www.edelman.com/trust/2009/.
The Ernst & Young’s Business Risk Report for 2009, released on Friday, outlines the top 10 risks to business across 11 industries.
“There are great opportunities despite the difficult times ahead,” said Ernst & Young director of advisory services Celestine Munda. Risk management will help South African companies prepare for the worst to achieve the best, the report said.
- In the 1st place is the credit crunch with firms in asset management, real estate, insurance and banking being hardest hit. Capital-intensive sectors like power and utilities are also feeling the pressure of a tighter credit environment.
- Regulation and compliance, 2008’s top threat, has dropped to number two this year. Experts anticipate more regulations will be put in place due to global market conditions, but they believe these regulations should be more balanced. “There needs to be a more pragmatic approach to regulations, especially in the financial sector.” said Munda. “As we globalise, we are exposed to different regulatory practices in different countries, making it more complex.”
- Deepening recession is in the third spot with funding drying up, numerous leading global firms closing their doors and consumer confidence spiraling downwards. “The global economic crisis is probably going to get worse, we don’t know how much worse, before it gets better,” said Munda.
- In the fourth place is Radical Greening (What is your carbon footprint?).Environmental & Sustainable practices will be under the spotlight.
- Non-traditional entrants are named as the fifth business risk.(This impact has already been seen – through surveys conducted by the Reputation Institute and Weber Shandwick. As Prof. Charles Fombrun have said:”Watch out for competitors, they will come into your industry and do it quicker, faster and better than you. Just ask Sony when they were surpassed by Samsung in the World’s Most Admired Company survey)
- Cost containment. Ernst & Young said companies have to maintain a careful balance between the risks of cost-cutting and talent management if they are to succeed. These business risks are ranked sixth and seventh respectively.
- Attracting and retaining talent. Just because there is a recession, due thought needs to go into giving people the red card.
- The eighth business risk is executing alliances and transactions. This remains crucial to business strategies of leading firms in telecommunications, media and utilities, even as tightening credit conditions have resulted in fewer mergers and acquisitions.(Think about who you want to get into bed with)
- The ninth risk is business model redundancy, forcing industry leading firms to reinvent their corporate strategies.
- Lastly, reputation risks need to be considered. Companies are here to make money, but they cannot survive on profit alone. There needs to be a combination of both profit and a good reputation if businesses are to survive, said Munda. “Corporate governance is becoming more transparent and I believe this will continue.”
See, you cannot ignore your reputation. It is woven into the fabric of the company.
Question to you: Is Reputation part of your company’s DNA? If you say yes, how do you know THAT. If not, what strategies will you use to embed it?
In August 2004 I wrote an article in my newsletter Powerlines Number 50 that is well worth repeating today.
Well, if you have been reading the papers lately, you would have noticed that quite a few organizations have received nasty fines from the Competition Commission of South Africa for price fixing and other anomalies. And, these are the ones in the limelight.
PricewaterhouseCoopers have found in one of their research studies that compliance failure is one of the biggest reasons for reputation loss.
Here is the article:
A company was fined a heavy penalty the other day for a workplace accident that was caused by the company managers condoning illegal actions, because that is the “way we have always done it in the past”.
In this case an unlicensed driver of a forklift caused an accident. The company decided to plead guilty being negligent in terms of the Occupational Health & Safety Act, expecting a thousand rand fine, but the court decided a fine of R10000 would be more appropriate.
The judge’s words: “Do not think you can just come in here and walk away with a small fine and continue the practice. This fine will help you to take Health and Safety issues seriously”.
What if the accident resulted in a death and the company had no proper safety practices in place? According to the law the CEO could then be held negligent, and he could receive a sentence of two years in jail and a fine of R100000. With that the media would have a field day!
Luckily in this case, no media reporter picked up the case, so the damages were confined to R 10000, but what if they did?
Organisations have two kinds of visibility to deal with.
The first is planned visibility, which is caused by day-to-day operations and actions by your organisation. The second is unplanned visibility, which is caused by the vulnerabilities you face due to the very nature of your business. These threats are caused by employees, environmental threats, safety issues and government intervention due to a company’s noncompliance to a changing legal environment, and unplanned visibility often does more harm, because of its editorial value.
In this case the company caused problems for itself by not taking the law seriously. In South Africa laws are changing “thick and fast”. Keeping up with all the new legal developments is difficult. Maintaining compliance is even more challenging. Fortunately, employers can take practical, proactive steps to maintain compliance and reduce liability risks.
Here’s a list of some of the steps you can take to reduce non-compliance:
- Take appropriate measures to ensure that you receive timely notice of new legal developments, and that someone be instructed to evaluate its potential impact. Often in companies this is the job of the company secretary to evaluate the potential impact of for instance Internet legislation and the HR department to evaluate Employee Equity and whistle blowing legislation on company policies.
- Take note of internal developments and their impact on the company’s legal obligations. Reengineering efforts and business expansions can have an impact on employee legislative matters.
- Find out which policies are being complied with and which are not working anymore. Review current procedures and policies of your organisation — especially those regarding good business practices, including those to reduce risk of product contamination, etc; what hazardous chemicals are used; how product is labelled for distribution; and, what mechanisms are in place for communicating externally and internally. A simple exercise is to conduct a quick survey amongst senior management or the crisis team. Ask them to list those current procedures and policies that need to be examined and documented, or to list those that are no longer in use or working in practice.
- You could even set up a web based survey using http://www.surveymonkey.com, or http://www.zoomerang.com/– Some of these sites offer a basic free survey. This technology can help you to quickly gauge opinion and get a feel for issues surrounding compliance.
- Identify all the relevant legislation concerning your products and services. Consult various government departments and in-house or external legal counsel to ensure that nothing has been omitted. Measure your organisation’s compliance with these laws and evaluate likely impact of non-compliance.
- Review your approach. The old Latin maxim: “Ignorance of the law is no excuse” applies here. What is often ignored is the reputational impact of business decisions taken. Taking a minimum legal compliance approach in your business may not be enough to avoid potential litigation and the ensuing publicity that could accompany it. What about your company’s role in becoming a good corporate citizen and paying attention to the triple-bottom line? Should you go beyond what is legally acceptable? A useful rule of thumb; “Will your decision stand up in a court of public opinion, never mind a legal court?”
- Noncompliance with changing laws can damage your reputation. How compliant are you? When last have your company conducted a reputational audit? A Reputation audit is a systematic way of approach to identifying issues and risks 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, legal, social and technological forces).
- 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.
Does your company have a dedicated person dealing with the issues of compliance? If it doesn’t, perhaps you need to reconsider. Tiger Brands recently only appointed a Chief Compliance Officer after a number of scandals. Perhaps you need to get some advice from the Compliance Institute of Southern Africa.
Take a look at http://www.compliancesa.com/.The Compliance Institute is the recognised industry body for compliance officers in the South African financial services arena and it endeavours to enable professional compliance and to promote the application of international best practice.
The lesson: Prevention is better than cure.
For many years I have been stating in my workshops that reputation is important because people will tell other people about their experiences in dealing with your organization. For many years marketers have spoken about the exact same thing , with their focus being on marketing and sales targets.
It is a known fact that we will ask the people we trust for advice when making major purchasing decisions. For instance a young person buying a car most likely will ask his father for advice on the purchase that he or she wants to make. Often we do this as routine behavior. The words we hear can have a major impact on our buying decisions.
Now new research from academics at the London School of Economics and Political Science (LSE) and The Listening Company have revealed the real financial impact words can have.
They found that word of mouth, both positive and negative, is a powerful component in driving UK business growth.
Word of mouth can also be used to predict sales growth; the higher the net-promoter score*, the industry standard measure of word of mouth, the higher the growth. Dr Paul Marsden and Alain Samson of LSE and Neville Upton, The Listening Company, compared the results of a telephone survey on a random sample of 1,256 adult consumers in the UK against the 2003 and 2004 sales data from banks, mobile phone networks, supermarkets or car manufacturers.
The found that both word of mouth advocacy (as measured by net-promoter score) and negative word of mouth were statistically significant predictors of annual 2003-2004 sales growth:
- Companies enjoying higher levels of word of mouth advocacy (higher net-promoter scores), grew faster than their competitors in the period 2003-04.
- Companies suffering from low levels of word of mouth advocacy and high levels of negative word of mouth, grew slower than their competitors.
- A 7 per cent increase in word of mouth advocacy unlocks 1 per cent additional company growth.
- A 2 per cent reduction in negative word of mouth boosts sales growth by 1 per cent.
The report concludes by suggesting that the net-promoter score as a measure of word of mouth advocacy may be useful not only in predicting sales growth, but also in predicting share performance and employee productivity….ultimately having a influence on how the company is regarded (reputation)
Dr Paul Marsden, LSE’s Institute of Social Psychology, said: ‘These findings suggest that businesses seeking year-on-year growth may be overlooking their most powerful growth-generating asset; existing clients, customers or consumers. With a range of turn-key solutions for optimising word of mouth advocacy, businesses can transform satisfied buyers into vocal advocates who become part of a volunteer sales force.’
The researchers conclude that three simple questions could predict overall business performance:
- Likelihood that customers would recommend a company or brand to friends or colleagues. Net-promoter score as a predictor of sales growth.
- Likelihood that investors would recommend investing in a company to friends or colleagues. Net-promoter score as a predictor of share performance.
- Likelihood that employees would recommend working for their company to friends or colleagues. Net-promoter score as a predictor of productivity.
Read more about this survey:
Moving prospects along the Ladder of Loyalty to become advocates – people who will vocally promote your organization is an important task for managers, but even more so for Reputation Managers.
We need to monitor very closely what people are saying about us, and when these words are not positive we need to correct them, we need to educate and persuade until a person’s words of choice becomes favourable to the organization.
SOUTH Africans have lost trust in virtually all major public institutions —except churches — because of political scandal, greed, crime and poverty. Scandals that have eroded trust include the arms deal, bribery and corruption allegations against ANC president Jacob Zuma and alleged criminal misconduct implicating Police Commissioner Jackie Selebi.
An annual Human Sciences Research Council’s survey on public attitudes has found that trust in national government and Parliament dropped by 20% between 2004 and last year and trust in political parties dropped by 16%.
Other institutions such as courts, provincial government, the defence force and the police have also seen modest but notable declines in trust (between 5% and 10%). South Africans were now less likely to place confidence in local government and the police (34% and 39% respectively).
What could be driving the rising mistrust in the country’s political institutions? On the basis of other studies, a number of plausible hypotheses emerge:
· political scandal;
· self-enrichment and conspicuous consumption among officials and leaders;
· critical media messages about politicians and the government;
· a public perception that societal problems such as poverty and crime are not being solved;
· perceived poor responsiveness of politicians to citizens’ grievances; and
· ineffectiveness in delivering upon developmental promises.
The causes of mistrust serves as a lesson to those who want to protect the reputation of their institution. Take for instance promises versus delivery. In my Reputation classes I call this consistency work. When words, actions and behaviour are in synch with each other.
Why promise something if you cannot deliver on it? Empty words can be damaging. There is also a clear warning that strategic communication plans are not working. There is a saying that perceptions are a person’s reality. Is it? There is something called Subjective and Objective Reality. Using the facts can often result in understanding, provided certain rules of communication applies. Communication that reaches its destination can prevent skewed perception. This survey seems to indicate that a revamp of strategic communications plans is a necessity.
The perceived poor responsiveness issue speaks clearly about recording of grievances, response and communication again and again. In one IT company, there is a system of escalation where a complaint is escalated every 2 hours until it reaches the Chairman. Apparently few reaches his ears.
The survey state that other factors to be considered include illiteracy, which constrains access to knowledge and information; and the lack of firsthand knowledge of many institutions due to geographic isolation from many public institutions. (Illiteracy again demonstrates the inability of institutions to factor into communication plans, the problems of the so-called voiceless)
The survey, conducted by Ben Roberts, a research specialist in development programmes, found that political parties consistently received the lowest trust ratings (27% in 2007) of all the institutions examined. (Now does that seem strange to you?)
But the majority of citizens (81% on average) have consistently shown greatest confidence in churches. Hopefully churches will stay immune to scandals. After all we have had the Jim Bakers, Jimmy Swaggart, Catholic Churches molestation debacles, gay issues and high- profile divorces.
It is time again to enter the BEST Employers South Africa survey. This annual HR research & PR project is an ideal opportunity to benchmark an organization’s human resources processes and measure reputation success.
The ability to attract and retain human capital is one of the criteria of developing a sustainable reputation. By entering this survey – now in its tenth year, an organization can find out how they rate compared to their peers and best practice in industry.
Participating in surveys can:
- Credibly position your organization as an employer of choice
- Show the value of HR as a strategic business driver
- Identify gaps in an organization’s reputation building approach and assist in closing them
- Identify international and local trends to keep your HR practices current
For more information:
As a reputation management consultant, I highly recommend this participation. Developing a reputation as an employer of choice is no light task but absolutely essential.
Best companies attract top talent. Top talent innovate better and offer more value. Ultimately the organization will develop a superior reputation. It is a relatively simple formula.
A Good example of a company that used this type of survey is the banking group ABSA. They moved their position ranking from 20th to eventually No. 1 – for 2 years in a row. They even wrote a book about it called the Employee Brand.
Sure it took a lot of investment, but why did Barclays acquire the organization? Was it because of financial fit only or because of the people element? It is well known that in any Merger and acquisition the most difficult thing is to get the people element to blend.
Was this mere coincidence?
It is your choice to participate! Not participating does come with a cost. At least consider it with an open mind.