It’s time for a reputation management plan

Warren Buffett once wrote to his managers that “We can afford to lose money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation.”

Reputation now accounts for 38% of the market value of the UK’s leading stock market listed companies according to the Reputation Dividend Report.

 

Every business has a reputation whether it chooses to acknowledge it or value it or manage it.  And every business’s reputation has a tangible value, whether positive or negative.

Organisations with the best reputations outperform their rivals. They can recruit higher quality staff and sometimes even pay them less; they can  charge more for their products and services; they can achieve more for each pound spent on marketing – and they can exert greater influence over Governments.

That’s why reputation has become one of the key discussions in the Board Room and at the top of Government.

I find that almost everyone agrees that a good reputation is highly valuable. But hardly any organisation has a reputation management plan.

There are two good reasons for this.

One reason is that understanding reputation is both complex and all-encompassing in scope. My favourite definition of reputation comes from John Doorley who co-authored the excellent Reputation Management with Helio Fred Garcia.

His formula is admirably straightforward, it states that reputation is the sum of the images of others, and it comes from performance plus behaviour plus communication – and that it can only be sustained if an organisation is authentic and true to its purpose or to a set of values.

That says it all, but emphasises that reputation is primarily about performance and behaviour not communication.  As Stephen Covey famously said, “you can’t talk your way out of a problem that you behaved yourself into”.

The second major reason that organisations don’t have a reputation management plan is that the need isn’t acknowledged. There isn’t (yet) a Chief Reputation Officer.

As reputation is, clearly, the product of everything an organisation does, surely the business plan is effectively also the reputation management plan ? I’d argue against this – the business plan rarely takes sufficient account of what key external audiences think and doesn’t always ensure that everyone in the organisation understands the purpose and values, and lives by them. It also doesn’t always ensure that the bonus and remuneration structure is aligned to the purpose and values. A reputation management plan would do this.

A few things have happened recently that are likely to bring about change.

The most significant was The Royal Shakespeare Company (RSC) firing BP as a funder of its £5 ticket scheme that had helped 80,000 16-25 year olds see Shakespeare’s work. Their reason was that the association with BP was putting young people off the RSC.

This was a huge shock to an organisation that claims to be committed to a low carbon future and BP were aggressive in their response. Other companies should ponder the implications of this. What happens when an organisation asks its employees (or just people generally) what kind of organisation they want managing the pension fund, or supplying energy or providing banking services ?

The statements by new RBS CEO Alison Rose are a sign of where corporate Britain is headed. On her first day she promised a “more purposeful bank” that would, amongst other things, help tackle “the threat from climate change”.

The business environment is changing so quickly and in the UK this will be accelerated by the current General Election.

Whatever the result, we are going to see an increased focus on the problems caused by climate change and inequality. And there will be some pretty uncomfortable moments for big business and the wealthy in general. This will have an impact beyond December 12th, even if the Conservatives are returned with a majority.

In future years, I’m convinced that organisations will have a more holistic reputation management plan that aligns the business plan with a rapidly changing society. Some do already of course, as William Gibson said “the future is already here, it’s just not very evenly distributed”.

At Lansons we’ve started to move in that direction and now consider ourselves to be reputation managers, in addition to corporate communications, marketing and public relations practitioners.

To give an idea of the nature of a reputation management plan, I’ve developed an outline “toolkit” below. We’d be delighted to discuss the concept and process further if your organisation is ready to move in this direction.

 

 

For more information or to contact Tony about the Reputation Management Toolkit, please email TonyL@lansons.com