Opinion: Public sector bodies are too complacent about reputation

I have just got back from a New Year holiday in Sydney where a corporate reputation story caught my eye.

In Australia, James Hardie Industries has agreed to pay $(Aus)1.5bn to compensate sufferers of asbestos-related diseases contracted as a result of its products.

This was extraordinary given that a special commission had found the company had no legal liability to compensate sufferers.

So what made it pay out for the record settlement? Quite simply – the link between the bottom line and corporate reputation.

After refusing to fund adequate compensation payments, the company had found itself on the end of a concerted campaign led by the unions. Even the New South Wales Local Government Association boycotted its products. Profits suffered, and the company was known as the 'pariah of Australian business' in the media.

A new chairman was canny enough to realise that there was no choice but to lance this particular boil. On news of the settlement shares soared and the unions urged customers to end boycotts so that the company would be profitable enough to honour its new obligations.

There are parallels for the public sector here. In my experience, many public sector bodies are too complacent about corporate reputation, and over-value their 'stock' with government, customers and stakeholders. There is no visible bottom line to jolt organisations into action.

Often the complacency continues until they learn one day, via a ministerial speech or a media briefing, that they are about to be sidelined or abolished. Witness the axe falling on individuals and whole NDPBs as the election approaches, and expect more to follow afterwards. There is a political bottom line that the Government is not willing to sacrifice.

Shareholder and customer pressure is a strong lever for change. Without it, there is little impetus to address issues of reputation. So part of the role of communications professionals in the public sector has to be to act as the catalyst for senior management teams and board members to think honestly about corporate reputation.

In the public sector, the equivalent of shareholder value is public trust. It's a difficult concept but, just like reputation, it can be measured and valued. It ought to be treasured by public sector managers in the same way as their private sector counterparts treasure market share.

Carol Grant is a director at Grant Riches Communications.

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