In 2012 Richard Branson said that “your reputation is everything, you’ve got to fight to protect it”. This approach to business has made Virgin one of the most admired brands in the world and in the days since Friday’s Virgin Galactic crash Sir Richard has been fighting hard to keep it that way. His willingness to face the media head on and take responsibility for the brand has earned plaudits from fellow CEOs and communications professionals worldwide. On Monday he tried everything to move the story into so many different areas : evoking patriotism (“most British people want to see this company succeed”); daring to openly criticise the British media; praising his own staff and even claiming that two people joined the programme the day after the crash. It has, so far, been a bravura performance. Only time will tell if he is as successful this time, as he has been previously, in countering setbacks.
The Virgin Galactic crash follows hard on the heels of Tesco’s woes and emphasises the fragility of reputation in the modern world. This increased business focus on reputation prompted the Public Relations Consultants’ Association (PRCA) to ask me earlier this year to lead an industry wide campaign to discuss the impact of reputation to the bottom line, called “The Economics of Reputation”. We’ve so far produced a toolkit that tackles reputation by answering five fundamental questions :
· What is reputation?
· Why has reputation become a critical issue?
· How is reputation created?
· How does reputation create value?
· How can reputation be measured?-
The full toolkit, produced by Now consultancy in association with BNY Mellon, is available here. ‘Now’ also sourced ten leading academic papers on the subject from Corporate Reputation Review that can be found here.
The Richard Branson quote was chosen to lead the PRCA debate on reputation. However, the most popular quote from the toolkit’s filmed interviews with experts comes from FCA Communications & International Director Zitah McMillan who states that “you can’t talk your way out of what you behave yourself into”. Speaking at the PRCA’s Annual Conference in September I was asked that if reputation is all about behaviour, is this anything to do with communication ? In our view, the two are instrinsically linked, and we now believe that what we do at Lansons is better described as reputation management than PR.
The value of reputation management is now most appreciated by the person with the most holistic view of the organisation : the CEO. For the PRCA, YouGov interviewed 55 leading Corporate Communications Directors and asked whether they think that key people in their organisation believe “the day-to-day management of corporate reputation affects the organisation’s bottom line”. 91% said their CEO did, followed by the Board (80%) and Senior Managers (78%). The most surprising finding is that, according to Corporate Communications Directors, the person with the least positive belief in the value of reputation is the Marketing Director although 20% work in organisations where the CFO believes reputation management makes little or no difference to the bottom line(Table One).
Table 1 – Management of corporate reputation affects the bottom line – how much do you agree?
The survey asked Communications Directors to assess, from a list of sixteen attributes, which ones were of direct benefit to an organisation that enjoys an enhanced reputation. Top came the ability to recruit and retain the best staff, ahead of more positive media coverage. Encouragingly for Virgin, “greater likelihood of receiving the benefit of doubt from stakeholders if reputational damage is incurred” scored highly, in fifth place (Table Two).
Table 2 – Top seven business benefits of enhanced reputation
Virgin Galactic highlights the need for crisis planning in modern business, but many have cause for concern here. Only half of Britain’s Communications Directors (53%) say that their organisation has road tested its crisis communications plan in the last twelve months. The full details of YouGov’s research can be found here <LINK http://www.slideshare.net/Mattcartmell/the-economics-of-reputation >
The increasing body of research emphasising the value of reputation to a business raises all sorts of questions about how best to manage reputation : is it the responsibility of the Corporate Communications function or the Board ? The answer must vary from organisation to organisation. However, the findings of the YouGov survey and the lessons of Virgin Galactic point in one direction. Reputation is so crucial to the success of an organisation in the modern world that it is most effectively managed with the involvement of the person with the most holistic view of the organisation, the Chief Executive.