How confidence, not reputation, drives stakeholder behaviors

As the strategic communications division of an international business advisory firm, FTI Consulting specializes in using communications to help companies achieve a full range of critical business outcomes that build enterprise value – outcomes that require influencing stakeholder behaviors, such as:

• Attracting and retaining industry-leading talent
• Increasing a company’s market share and profit
• Reducing the opposition organizations face from activists or from legislative or regulatory activity
• Enhancing a company’s share price

FTI recently initiated The Enterprise Value Study for the basic purpose of understanding which attributes best predict business stakeholder behaviors.

To do so, we surveyed US-based stakeholders – employees, b-to-b customers (with decision-making authority), investors, and the most influential swath of the general public – regarding their attitudes about specific companies and their likelihood to engage in specific behavior. 

Whereas conventional wisdom has long held the belief that reputation is essential to a company’s well-being, the study reveals that confidence is a significantly stronger predictor of stakeholder behaviors. On average, companies have a 30% better chance of achieving the desired behaviors if stakeholders are confident than if they say the company has a good reputation, the study found.

The study also finds that once achieved, stakeholder confidence affords companies a better probability of achieving desired behaviors, such as:

• Recommending goods and services to others – a 121% probability advantage for confidence
• Increasing the business relationship with the company – an 84% advantage for confidence
• Recommending the company as an employer – a 48% advantage for confidence
• Supporting the company operating in the community – a 38% advantage
• Investing in the company – a 36% advantage

 We’re not eulogizing the demise of reputation. To the contrary, a good reputation is important and, indeed, foundational.  Our data plainly demonstrates that confidence in a company cannot be achieved until it enjoys a good reputation among its key stakeholders. The study identified a Maslow-like hierarchy of attributes that includes a good reputation, while culminating in stakeholder confidence.

Cultivating stakeholder confidence in a company requires it to manifest – and be communicative about – specific behaviors. Each of the four stakeholder groups surveyed indicate that strong leadership, being a good employer, belief that a company can execute its strategy, and agreement that an organization’s past decisions were correct ones are prerequisites for confidence.

Furthermore, the study finds confident stakeholders act as advocates for companies. The data further reveals the existence of a ‘moveable middle’ group of stakeholders – those who may be on the fence about a company, but can be persuaded to not only move, but also move to become passionate advocates for an organization. And the key to transitioning a stakeholder from sitting on the fence to an advocate is building confidence.

Robert C. Knott and Brent McGoldrick lead the corporate communications and strategy consulting and research practices in the Americas, respectively, for FTI Consulting.