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REPUTATION MANAGEMENT
Presentation by John Dalton
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What’s Changed
• Image is no longer a credible communication tool –people and organisations talk about reputation
• Today, to sustain a competitive advantage, even for a short term, requires a brand to have developed a reputation, which means that it delivers on its promise – and not just its image
• Reputation is about transparency and delivery,through consistent, credible communications andbehaviour – central to which is a strategic corporatecommunications function
Context
• The economic advantage of having a good reputation is well established
• Issue of causations and correlations between positive reputation and financial performance still being debated as issues are complex
• Reputation relates to social capital and social authority
• Reputation and its management witnessed a paradigm shift since early 2000 and the development of social media
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Context
• Witnessing an era of a reputation economy
• Brands cannot hide and must deliver on brand promises
• Reputation cannot be managed per se, just guided and shaped
• Reputation also linked to business resilience – the ability of a brand to adapt and market pressures and withstand volatility
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What is Reputation?
• No universally accepted definition• “A collective representation of an organisation’s past actions and results that describe the organisation’s ability to deliver valued outcomes to multiple stakeholders” (Fombrun 2001)
• A form of assessment - how stakeholders perceive organisational and employee behaviour
• Growth in reputation agents: credit agencies; NGOs;regulators; scorecards and indices – Dow JonesSustainability Index
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Confusion of Terminology
• Brand/product reputation
• Organisational reputation or corporate reputation
• Industry reputation
• The concept of reputational capital
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What is Reputation?
• A collective representation based on stakeholders’ opinions
• An aggregate evaluation that stakeholders make about how well an organisation meets its customer needs based on current and past actions
• A holistic impression of a person or company based over time; it can neutral, positive or negative
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What is Reputation?
• For many, the reputation construct is based on:
• Past action: – based on past performance, therefore reputation has an important retrospective component
• Current state: the perceived state of the organisation-based on direct and indirect experiences and information received
• Future prospects: financial and behavioural –environmental or social
LSPR © 2012
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What is Reputation?
• Reputation is most damaged when a crisis attacks anorganisation’s core competence – this leads toconsiderable reputational damage
• Problems do not even have a reality, just a perceptionthat something is wrong
• Intangible risks are all too often overlooked and far too much emphasis is still placed on risk analysis post crisis event: need to develop pro-active risk and issue analysis systems
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Corporate Communications & Identity Image & Reputation
IDENTITY
IMAGEREPUTATION REPUTATION
IMAGE
IDENTITY
Identity
Various perspectives
Marketing : – impressions
– received
Organisational : – visual design & personality
Corporate Reputation-The Interplay of Identity & Image
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CorporateReputation
Shaped by Customers
Vision & Mission
CorporateIdentity
Corporate Image
Positioning
Shaped by Corporations
Reputation: An Overview12
“Reputation is the sum values that stakeholders attribute to a company, based on their perception and interpretation of the image that the company
communicates over time”
John Dalton – Managing Corporate Reputation
A company’s overall reputation is a function of its reputation amongst its various stakeholders
Harvard Business Review –Feb 2007
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What is Reputation?
• It is a intangible – economic asset
• Linked to brand equity and management
• Should not be considered interchangeably with image – some differences
• Perception is important in reputation and can often be viewed as the reality
• Tone for reputation is set at the top – CEO’s reputation very important
• Involves the management of visibility and credibility
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What is Reputation?
• Reputation is emotional as well as rational• Depends of consistency of delivery and credibility• Built up over time through repeated interactions (canbe catalysed by celebrity or events)
• Subjective and socially dependent• Relative- depends on the behaviour of the market and others
• Reputation is largely controlled by stakeholders’ viewpoints
Related Issues• Reputation and the mismatch between capabilities and assets
• Business models increasingly based on trust
• 24-hour news media
• User-generated content (UGC)
• Online communities
• Innovation and disruptive technologies
• Power micro-constituencies
• Black Swan events and the global economy
• Regulatory compliance
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Sources of Reputational Risk• Management decisions
• Unacceptable employee behaviour
• Breaches of environmental or social behaviour
• Technology failures or data loss
• Failures in health and safety
• Failure of regulatory compliance
• Failure in traceability –contamination
• Accidents
• Online/social media damage/rumours
• IP infringements
• NGO activisms
• Faux pas by employees or senior management
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Misconceptions about Reputation Management
• RM is largely a function of corporate communications
• RM is relatively simple
• Reputation issues can be tackled and solved by technical and legal address
• Just doing the right thing is enough
• Reputational challenges are largely the result of external challenges
• RM is a corporate function
• Reputation is best understood in terms of analytics, numbers and financial performance
• Growth and previous success are essential ongoing elements of building reputation
• Reputation exists within the corporation
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Basic Rules of Reputation
• Have credible brand experiences and products/services
• Having strategic intent: vision and mission
• Having sound brand values
• Admit errors and correct them
• Have a social media strategy to develop reputation and tackle online reputation management (ORM)
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Basic Rules for Reputation
• Ensure that structures and operations are “fit for purpose”
• Have a credible and congruent CSR strategy
• Develop customer experience
• Have a strong brand identity
• Be adaptable and innovative
• Understand risk and issues analysis – pre-crisis planning
• Stakeholder engagement
• Brand narrative
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PR and Reputation Management
• PR – how brands, people and organisations manage their media and customer perception; largely tactical and short term
• Corporate communications – how organisations manage their internal and external communications; more strategic than PR and engages with multiple stakeholders
• Reputation management – how stakeholders’ collectively view the organisation – i.e. reputation exists outside of the organisation
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Brand & Reputation21
What is the difference between brand and reputation – are they the same?
Brand = promise
Reputation = delivery on the promise
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Traditional PR
• Less strategic
• Non-integrated
• Focus - short-term
• Key people involved
• Aims to give the best possible image
• Media relations focused
• Focus on transactional stakeholders
• More strategic
• Integrated
• Holistic - long-term
• Involves all employees
• Aims to deliver an image and brand promise
• Uses all forms and opportunities to communicate policy and values
• Greater emphasis on multiple stakeholder relationships
1990s, 2010 2017
Reputational Management
PR and Reputation23
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Desired image Vehicle of promise Delivery of promise
PR ReputationBRAND
Reputation and CSR• Corporate social responsibility (CSR) or corporate sustainability/citizenship has become a vital strategic tool for managing reputation
• Examples:
• Pampers
• Mont Blanc
• Avon and breast cancer
• Marks and Spencer –Plan A
• Marine Stewardship Council
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Social Media and Reputation Management
• Online reputation management (ORM)
• Social media requires a strategic response
• Platforms for social media• Blogs
• Social bookmarking
• Social news
• YouTube
• Wikis
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Purpose of Online Reputation Management
• Online reputation management (ORM) is largely reactive with emphasis on SEO
• However, it should be equally be strategic and pro-active, with a clear understanding of who are the key influencers, the best platforms to engage and what content to include
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Places to Search for Negative Comments
• Blogs
• SERPS
• Review sites
• Message boards
• Online forums and discussion pages
• Hate sites
• Social bookmarking sites
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Structure/Process of ORM
• Conduct an audit on of online comments and opinions
• Establish any key phrases or terminology being used, frequency and origin
• How are comments being framed?
• Establish, what, if any, issues, need to be addressed and why?
• Establish if there is any factual or perceptual misrepresentation
• Monitor what is being said and actively engage
• Publish and promote new sites to help displace any existing negative comments
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Monitoring Reputation
• Google Alerts: www.google.com/alerts
• IceRocket: www.icerocket.com
• Technorati: www.technorati.com
• Twitter Search: www.twitter-search.com
• TwitterMeme: www.tweetmeme.com
• Alexa: www.alexa.com
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Financial results and capital
Customer benefits
Tangible assets
Intangibleassets
Human/Structuralcapital
Stakeholderrelations
Culturevalues
Businessprocesses
Adapted from: Intangible Assets: J. Daum; Wiley, 1999
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• “If we picture a company as a living organism, say a tree,then half of the mass or more of that tree is undergroundin the root system. And whereas the flavour of the fruit andthe colour of the leaves provides evidence of how healthythat tree is right now, understanding what is going on in theroots is a far more effective way to learn how healthy thattree will be in years to come”
Leif Edvinsson and Michael S. Malone; Intellectual Capital
Reputation and Intellectual Capital
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Market Value
Financial Capital
Intellectual Capital
Human Capital
StructuralCapital
CustomerCapital
OrganisationalCapital
MARKET VALUE
Intellectual Capital
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OLD ECONOMY
NEW ECONOMY
Brand capital
Human capital
Working capital
Physical capital
Sales “push” focus Customer “pull” focus
Production focus Customer focus
High Low
(WIP, finished goods) (direct deliveryto customers)
Intangibles
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Market CapitalisationBrand
Reputation
IP
Customers
Employees
Innovation
Organisational structure
Book value ___________ $* The above would also be affected by other variables including
macroeconomic factors, shareholder sentiment and market speculation
Intangibles
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Importance of Intangibles
• Most people recognise the importance of intangibles andhow brand and reputation are the two critical elements, butpeople are still poor at fully comprehending how intangiblescan be made to work harder and, hence, generate morewealth – the erosion of reputation as an intangible results insignificant and long-term damage for a corporation that isdifficult to reverse
• Reputation is the outcome intangible upon which stakeholders based their collective views on the performance, values and behaviour of an organisation
Reputation Elements
• Reputation and capabilities
• Reputation and business models
• Reputation and innovation
• Reputation and audits
• Reputation and brand narratives
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Financial Performance and Reputation
• Link with investor relations (IR)
• Need to understand the value of a business
• Its potential to deliver in the future –shareholder value
• Enterprise value and brand equity value
• Fundamental or relative value
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Fundamental Valuation Models
• Discounted cash flow (DCF) model
• Cash flow return on investment (CFROI)
• Dividend discounted model (DDM)
• Real options valuationThe above are based on cash flow
Residual income model
Economic value added (EVA)The above based on returns
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Examples of Relative Valuations
• Earnings multiples P/E
• Cash and EDITDA
• Asset multiple - price/book value
• Operating multiples – EV/customer
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Value Drivers
• A value driver is some entity that helps generate value for the corporation – it can be financial, operational, technological, or reputational
• Barriers to entry
• Brand strength
• Relative market share
• Satisfied customer index
• Customer loyalty index
• Industry growth
• Appreciation rates for target groups
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Reputation and Shareholder Return
• Reputation is more than just shareholder return
• Shareholder value is an outcome, not a strategy
• Linked to TSR is socially responsible investment (SRI)
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SRI and Reputation
• What is meant by socially responsible investment?
• How important is it?
• What is investment screening and the purpose of ethical investment?
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RM and Systems Perspective
• Reputation as a complex construct cannot be understood or defined from one simple perspective
• As complex open systems, modern organisations should be best viewed with a systems perspective
• A system is a product of the relationship between any of its parts, giving primacy to the interrelationship between elements and not the elements themselves in the system
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Reputation Management The Key Elements
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• Identity and Image• Use and protection of assets and IP• Management quality• Strategic media relations - messages• Customer experience • Brand experience• Innovation + R & D• Communications• Structures and operational efficiency• Financial performance and stability• Investor relations• Stakeholder relations • Brand equity and credibility (relevance and strength)
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Other Factors that Influence Reputation
• Leadership – getting people to work in the same direction to a common purpose
• Values – workers and other critical stakeholdersshould understand through your corporatecommunications what are your values and beliefs as anorganisation
• Culture: corporate culture is shaped by both the above and is central to
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Reputation and ImageThere is some confusion over the use of these two terms. They areoften used interchangeably, but there are some fundamentaldifferences:
• Image and reputation differ in time - reputation evolves overtime – image is very much the “here and now”
• Reputation, as a concept, is more deeply rooted in moral language,whereas more diffuse copywriting-like language is associated withimage
• Image is orientated on how things might “appear”, whereasreputation is more symbolic and fragmented
• Reputation is based on the collective assessment by manystakeholders on an organisations identity and image
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What are the Advantages of Reputation?
• Increased market share• Enables “premium” pricing • Better protection – “shield” – especially in a time of crisis• Employee loyalty• Better capital investment• Easy to enter new markets• Helps build brand equity over time• More attractive to investors and builds credibility• Facilitates brand extensions• Reduces impact of competitor actions• Provides stability and gives credibility• Increases brand loyalty
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Critical Questions• Who is in charge of managing your reputation?
• Do you have your own scorecards?
• Define what issues matter to you?
• Have you conducted a reputation audit?
• How credible are your corporate messages?
• How does your industry and market affect your reputation?
• How do you deal with audit and assurance?
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Fortune-World’s Most Admired 2010
1. Apple2. Google3. Berkshire Hathaway4. Johnson & Johnson5. Amazon.com6. Procter & Gamble7. Toyota8. Goldman Sachs9. Wal-Mart Stores10. Coca-Cola
Source: Fortune Magazine March 2010
Fortune-World’s Most Admired 2011
1. Apple
2. Google
3. Berkshire Hathaway
4. Southwest Airlines
5. Procter & Gamble
6. Coca-Cola
7. Amazon.com
8. FedEx
9. Microsoft
10. McDonalds
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Fortune-World’s Most Admired 2012
1. Apple
2. Google
3. Amazon.com
4. Coca-Cola
5. IBM
6. FedEx
7. Berkshire Hathaway
8. Starbucks
9. Procter & Gamble
10. Southwest Airlines
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Tools for Managing Reputation
• Corporate advertising• Corporate presence in social networking sites• Developing a strong identity/image• Strong risk and issue analysis (environmental scanning)• Congruent and developed CSR programmes• Good governance and regulatory compliance• Innovative products and services – brand “energy”• Monitoring of evaluation of “noise” in the web• Strategic marketing and promotion (sponsorship)• Well developed stakeholder management and external communications• Talent management and employee engagement• Effective crisis management
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Corporate Advertising• Paid media that seeks to benefit the image of the corporation as a whole
• Issue or advocacy advertising• Publicise CSR or philanthropic activity• Correct a misconception or response to an activity (crisis) – recovery strategy
• Issue – plastics industry; BP; Shell; Total• Before an IPO• Crisis situations: Mattel• United Technologies Corporation (UTC)
Directing Communication Through Common Starting Points
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Marketing Communication
Common StartingPoints
Management Communication
BrandIdentity
Strategy
Organisational
Communication
Reputation and Corporate Communications?
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Reputation can be managed and controlled partly through corporate communications
Corporate communications is a management function that offers aframework for effective co-ordination of all internal and externalcommunication with the overall purpose of establishing andmaintaining favourable reputation with stakeholder groups uponwhich the organisation is dependent
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Reputation Must Be StrategicAlthough it is increasingly difficult to manage reputation, through the strategic corporate communications function, it is possible to manage three key elements;• Good communications (getting across vital “themed messages”
• Good deeds and behaviour (link CSR and sustainability)
• Good stakeholder relations (work in collaborations with organisations to solve mutual problems)
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Best Practice in Developing a Reputation Strategy
• Make it credible and serious - make it a senior management priority withaccountability
• Integrate it across functions – make a “joined-up”, holistic system that aligns allthe values and behaviour irrespective of the organisation function underconsideration: adopt a common model
• Be realistic, set sensible objectives with appropriate funding• Understand the complexity of the issues involved and stakeholders’ concerns• Appreciate stakeholder conflict• Actively engage with stakeholders and be prepared to be criticised• Demonstrate transparency and a readiness to talk to the media and advocacygroups, especially NGOs
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Principal Elements of Corporate Communications
• Management Communications
• Organisation Communications
• Marketing and Reputation Management
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• Media Relations
• Corporate Advertising
• Product Advertising
• PR & Reputation Management
• Community Relations
• Special Events
• Sponsorship
• Product & Brand Management
• Online Management and e-Engagement
Marketing & Reputation Management
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Overlap Between Marketing & Organisational Communication
Marketing
Communication
Organizational & Management
Communication
Advertising
Public
Affairs
Investor
Relations
Internal
Communication
Personal Selling
Sales
Promotion
Marketing
Public
Relations
Public Relations and
Issues Management
Experience
Marketing
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Corporate Communication in Practice
VISION REPUTATION
1. STRATEGIC INTENT
2. DEFINE COMMUNICATION OBJECTIVES
3. IDENTIFY & PRIORITIZE TARGET AUDIENCES
4. IDENTIFY THEMED MESSAGE(S)
5. DEVELOP MESSAGE STYLES
6. DEVELOP MEDIA STRATEGY
7. PREPARE THE BUDGET
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LEGO
Philips
Shell
Alcatel-Lucent
Brands and Reputation63
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Phase IPhase I Phase IIPhase II Phase IIIPhase III
Corporate Corporate Identity
ReputationCorporateImage
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• Quality of products and services• Passion for brand• Customer relationship marketing• Strong corporate governance and compliance• Integrated risk and issue management• Crisis planning• Corporate responsibility (CR)• Strong brand values, experience and communications• Organisational culture and structure• Contract fulfilment• Business presentation and conferences• Customer facing staff
How to Develop a Reputation
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• Innovation• Vision and leadership by CEO• Investor relations and public affairs• Intelligence gathering • Developing media profile • Adaptive and ability to reinvent• Community relations• CEO’s reputation• Core competencies• Establishing networks and alliances• Understand the market• Develop brand experience: “moments of truth”
How to Develop a Reputation
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• Clear strategies and resources
• Learning from other’s mistakes
• Listening to customers’ opinions
• Audit and assurance
• Measuring and evalutation
• IP protection
• Stakeholder analysis, mapping and engagement
• Deliver on customer promise
• Think global, act local
How to Develop a Reputation
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How to Conduct a Communication Audit
Based on GCI group – Corporate Brand study• Internal – management survey - employee survey• External – Stakeholders survey• Assessment
• Gap analysis• Structural equation modelling• Sensitivity analysis• Competitor analysis
• Strategic communication planning• Communication programme implementation• Evaluation, measuring and monitoring
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Steps in Recovering a Reputation
• Take the heat – analyse and show distinct leadership • Do not stop communicating at any stage – disclose things swiftly and honestly
• Analyze in depth what when wrong and why• Initiate change strategies to restore errors and communicate any major changes to key stakeholders
• Measure what others are saying about you – Nielsen BuzzMetrics
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Ask Critical Questions• What business are we in and what are our primary objectives?
• Who are our most important stakeholders?
• Which competitors do which wish to measure ourselves against?
• What do stakeholders believe about us now?
• What, and how big, is the gap between how we want to be perceived and how we are perceived?
• Which of messages have the most credibility?
• What benchmarks are we going to measure reputation and its improvement?
Measuring Reputation70
•Y & R’s Brand Asset Valuator
•WPP’s Brand Z
• Harris Interactive – EquiTrend
• Fortune’s Most Admired
• Harris-Fombrun –Reputation Quotient (RQ)
•The Reputation’s Institute -RepTrak
Measuring Reputation
Various ways to measure reputation
• Measures based on commercial, applied research programmes and indices
• General measures – based on corporate performance
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Measures based on research programmes
• Harris Poll Reputation Quotient (RQ):
• www.harrisinteractive.com
• Reputation’s Institute Rep Track: www. reputationinstitute.com
• WPP’s Brand Z: www.wpp.com
• Fortune’s Most Admired: www.money.cnn.com
• Y&R’s Brand Asset Valuator: www.bavconsulting.com
• Harris Poll EquiTrend: www.harrisinteractive.com
• Brand Power: www.corebrand.com
• FTSE4 Good index: www.ftse.com
• Interbrand: www.interbrand.com
• Dow Jones Sustainability Index: www.sustainability-index.com
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Alternative Ways of Measuring Reputation
• Financial
• P/E ratio
• Total Shareholder Return (TSR)
• Economic Value Added (EVA)
• Return on Equity (ROE)
• DuPont Model
• EBITDA
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Alternative Ways of Measuring Reputation
• Customer and employee surveys
• Shareholder resolutions
• Customer complaints
• Risk reports
• Staff turnover
• Safety reports
• Cases of litigation
• Cases of regulatory issues
• Carbon footprint
• Social and environmental audits
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The Reputation Institute’s RepTrak® Scorecard
PERFORMANCE
Profitable
High-performing
Strong growth
prospects
Well organized
Appealing Leader
Excellent
management
Clear vision of
its future
Environmentally
responsible
Supports good causes
Positive influence on
society
Innovative
First to market
Adapts quickly to
change
Rewards
employees fairly
Employee well-
being
Offers equal
opportunities
High quality
Value for money
Stands behind
Meets customer needs
Open & transparent
Behaves ethically
Fair in the way it does
business
ESTEEM
TRUST
RepTrak™
Widescreen Test Pattern (16:9)
Aspect Ratio Test
(Should appear circular)
16x9
4x3
