Cut corners now and pay up later

Corporate reputation, a frequent topic of discussion at the World Economic Forum in Davos, which I attended last week, has always been a 'you can pay me now or you can pay me later' game.

Rob Flaherty: some approach issues of responsibility with a mindset that says, 'wash me, but don't get me wet'
Rob Flaherty: some approach issues of responsibility with a mindset that says, 'wash me, but don't get me wet'

Companies that cut corners and avoid responsibility now - in areas ranging from environmental policies and labour practices to paying corporate taxes and supporting public health - pay a price later.

For decades it was not a great problem because the gap between now and later was years or decades - postponing the consequences and maybe even leaving it for the next chief executive to handle.

Not so now - social media-fuelled transparency, the shift in power from institutions to individuals and the proliferation of professional and amateur watchdogs and critics have shortened the now/later gap to the length of a tweet.

Fortunately in Davos, I heard from chief executives who have figured out how to be successful enough as a financial enterprise to also be highly responsible in other areas. They are ahead of the pack and seizing leadership by embracing three priorities: people, planet and profit, where societal interests are consistent with, not in conflict with, their corporate self-interest - the business case for 'doing good while doing well'.

Others are still trying to take shortcuts. They approach issues of responsibility with a mindset that says, 'wash me, but don't get me wet'. In other words, let me feel good about addressing these issues, but don't expect me to do anything that intrudes on my real priorities.

This mindset leads to programmes that are more about promotion than making a real difference. It leads to glaring gaps between company behaviour and stakeholder expectations. It leads to change forced upon them by new regulation rather than self-initiated policies that allow them to control their own destiny.

In short, that leads to reputation strength and corporate brand equity with as many holes as the national cheese in this Swiss ski resort.

For leaders who don't understand these changing expectations, time is running out.

Rob Flaherty is senior partner and chief executive officer of Ketchum.

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