Several years ago at our 14th international conference on reputation management, held in New Orleans, my colleagues at Reputation Institute introduced a new business paradigm - 'The Reputation Economy'. The reputation economy is described as an environment in which people buy products, take jobs or make investments based predominantly on their trust, admiration and appreciation for the companies and institutions that stand behind them.
The reputation economy is now a reality. But are firms taking advantage? In a Reputation Institute study this year, 97 per cent of business leaders agreed that firms were increasingly competing in a reputation economy. However, only 38 per cent believed they were positioned to take advantage of the opportunities it presents.
What can companies do about this? Most important is recognising that reputation strategy is business strategy. It is about having a clear vision of what you want to stand for as a business and then working to ensure that this is aligned with stakeholder expectations and internal resources and capabilities. For corporate comms and PR professionals, this represents an opportunity to genuinely influence business strategy and implement an approach that can add tangible value to the company.
This requires the ear of the CEO or the CFO and an evidence base that links strategic reputation management to the bottom line.
But who should set reputation strategy? Reputation strategy is set by the comms or PR departments in 50 per cent of the firms surveyed and in 63 per cent the same department is also responsible for its management. But reputation cannot be regarded as a role for a single department working in isolation. It has to be managed across every area of the business from the CEO's office through all functional areas.
Among the biggest challenges faced by PR and comms professionals is that many do not have a structured process to get reputation thinking embedded in business planning (47 per cent), internal stakeholder owners are not aligned and do not work together (32 per cent), and they are not leveraging knowledge to be relevant to each stakeholder (41 per cent). The first two are directly related to the third. Without having the 'proof points' of how reputation is influencing business results, implementing a system more widely and getting leaders across the organisation on board is all but impossible.
Business leaders also believe that the role of corporate comms is likely to increase over the next two to three years. Also, those departments that have a 'stakeholder-facing' role - such as customer experience and corporate affairs - will become more important.
So, the rules of the game have changed. There is a clear call for PR and comms professionals to take a lead on the changes firms must make to succeed in the reputation economy. And in doing so, shape business strategy. Here is my three-step guide to getting started on your 'reputation journey'.
1. Take the business case for a company-wide reputation strategy to the CEO through demonstrating the link between corporate reputation and business value.
2. Ensure cross-functional consensus through establishing a 'reputation council' comprising all stakeholder owners within the firm. Use this to identify the value each stakeholder group brings to your company and set out to identify what these stakeholders currently expect of your company.
3. Take a systematic approach to understanding, protecting and building your corporate reputation. Implement reputation into the actions and comms towards stakeholders.
VIEWS IN BRIEF
- Are there any businesses from corporate sectors that you would not represent?
We would never rule out an initial conversation to determine what the business was looking to achieve. If a business with a questionable reputation comes to us for advice, that can be the first step in a change for the better.
- The biggest improvements to a corporate reputation come in the wake of a crisis - true or false?
We've seen businesses crash and burn after a crisis and we've seen others not only recover, but improve their reputations. A good example was Rolls-Royce.