Should PR be in charge of reputation?

Barclays' new CEO made it clear: Protecting the global bank's reputation is his priority.

Barclays' new CEO made it clear: Protecting the global bank's reputation is his priority. So more than 100,000 Barclays employees are undergoing training to align their behavior with CEO Antony Jenkins's agenda. Compensation supports the program by rewarding those who embrace a new corporate culture, while marketing staffers who question the new values are being encouraged to leave.

A blistering rate-rigging scandal brought these and other changes to Barclays, including shuttering or shrinking profitable operations that exposed the bank to reputation risks.

Similar cross-function programs designed to rebuild reputation at companies emerging from or facing crisis have been used at Walmart, BP, Citigroup, and Toyota. News Corporation, Johnson & Johnson, and Goldman Sachs appear to have taken some of the same steps as Barclays to rebuild their post-crisis reputations.

Although public relations has managed traditional reputation work, influence in reputation recovery programs is shifting to other corporate functions. Executives responsible for compensation, training, culture, strategy, and risk assessment are now playing key roles in reputation change. The risk here is that PR will retain responsibility for media relations, public affairs, and perhaps internal communications. But it won't keep oversight of the entire program, making a policy role less likely.

There's no question communications and media relations are essential in reputation and crisis management. Taco Bell's communications gets much of the credit for defusing a looming 2011 crisis when a plaintiff charged its meat was really something else. The company's factual response was so comprehensive the suit was promptly dropped.

Following furious media attacks against Goldman Sachs during the financial crisis, Jake Siewert, Goldman's top communications officer, has artfully humanized the firm through CEO Lloyd Blankfein, and shored up the investment bank's stature.

There will always be demand for skilled communications executives. But PR people seeking responsibility in multi-function reputation programs will have to develop additional skills if they expect to lead.

To understand the differences in the two careers paths, it helps to envision a wagon wheel with a hub and radiating spokes. In the new model, which I call “repucentric,” many corporate functions participate in reputation management, including HR, risk management, PR, IR, strategy, marketing, law, government affairs, and the board of directors.

Only one function can be at the center. And since repucentric programs require diverse skills, the traditional PR function may be too narrow to lead, putting it at risk of becoming a spoke.

While PR's traditional role in reputation work gives it an edge, winning a hub role in the new model is not assured. Leadership requires a broad understanding of the company's overall operation, a keen eye for corporate culture, the ability to coordinate a multi-function program and a working relationship with the CEO.

The hub need not have detailed knowledge of all corporate functions in the program, but it must weave them together in a seamless, sequenced plan. This structure is both a career opportunity and threat for aspiring PR managers.

If you think a repucentric approach is only for companies hit by crises, that may be short-sighted. The best time to build this model is before a crisis. It offers the most effective crisis-prevention planning available. Companies with cross-function reputation plans that candidly examine culture, compensation, operations, and behavior are more likely to take early action that reduces reputation risk.

Walmart didn't wait for a crisis to build a repucentric plan. Leslie Dach, the retailing giant's EVP for corporate affairs, is at the hub of the program. Working closely with former CEO Lee Scott, Dach orchestrated the transformation of Walmart's reputation from Main Street predator and employee exploiter to sustainability pioneer. More recently, Walmart and First Lady Michelle Obama have joined to encourage healthy eating behavior. Disclosures of Walmart bribery in Mexico have tarnished Dach's successes, but much remains accomplished.

Other major companies now recognize both the opportunities and threats of a repucentric approach. The Arthur Page Society, the prominent professional organization whose members run PR at many Fortune 500 companies, introduced its “New Model” last year. The model encourages PR practitioners to connect with other functions and take a hub role.

Interest in reputation goes beyond management. Boards of directors started paying closer attention after being required by the SEC to publicly report their oversight of major risk areas. The Barclays board, for example, appears to have played a key role in reducing reputation risk.

Surveys by insurance provider Aon, the Conference Board, and management consultants consistently show that both boards and corporate risk managers rank reputation near the top of their concerns. Yet the majority express confusion on how to manage it.

This is an opportunity for PR to win the strategic role that has been elusive at many companies, and for those who have one, to keep it.

Alan Towers is president of TowersGroup, a reputation management consulting firm in North Salem, NY.  He is also a senior adviser to Water & Wall Group, a PR firm in New York City.

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