The Future of
Reputation
VOLUME 3, ISSUE 1
People’s Insights – the voice of SPRINT
People’s Insights is a collection of inspiring initiatives, insights and foresight...
The Evolving Role of the Board in Reputation Management
Brad Wilks, MD, Midwest, North America, MSLGROUP
France: Social Pe...
FOREWORD
CEO, MSLGROUP
Olivier Fleurot
4 The Future of Reputation
Trust and reputation were underlying themes
at the World Economic Forum held in Davos
earlier this year. From the many ses...
EXECUTIVE
SUMMARY
6 The Future of Reputation
SVP  Chief Strategy Officer,
MSLGROUP
Pascal Beucler
7The Future of Reputation | Executive Summary
People across the world are realizing the power of
social networks, valuing ...
8
Already organizations are
engaging with millennial
customers, regulators,
shareholders, employees
and external influence...
9The Future of Reputation | Executive Summary
Reputation Management:
From Risk Mitigation to
Competitive Advantage
These s...
Reputation Journey:
The Now  The Next
Olivier Fleurot,
CEO,
MSLGROUP
Pascal Beucler,
SVP  Chief Strategy Officer,
MSLGROUP
Paulo Andreoli,
Chairman, Latin Ameri...
If there is one industry that has seen its
reputation seriously damaged in the last
decade it is undoubtedly the financial...
Financial services seemed
immune to failure
How did it all start? In the late 90s the economy was booming, liquidity
was a...
Trust vanishes: Reality goes beyond fiction in 2008
When the US housing bubble burst in 2007-08, trust in the financial wo...
Dramatic loss of public trust
Although many perhaps couldn’t understand
every single intricacy around financial
instrument...
The Future of Reputation16
Rebuilding reputation
will take time
While trust in the financial industry has
improved since 2...
17
Giving people a bigger say in citizenship programs
Some banks invited people to decide which organizations,
charities a...
Video: World Economic Forum 2014: Pierre Goad
The Future of Reputation18
And, simply communicating better… or differently....
WEF 2014: Sir Richard Branson and Arianna
Huffington talk about Plan B
19
A purpose-driven
tomorrow
Increasingly, companie...
Pascal Beucler
Here are some tricky questions
our clients are dealing with today,
particularly at the C-Suite level:
What ...
21
The following analysis examines why reputation management is such a challenge in a world where transparency
is mandator...
The Future of Reputation22
A fast-changing
ecosystem
Key attributes such as long-term investment
value, quality of product...
The age of low predictability
Liable to change rapidly, a Corporate Reputation is a composite of diverse and highly volati...
Reputation as the #1 Risk in 2013
Changing perspectives is always a little slow, naturally, but the latest
“Exploring Stra...
The “post-disintermediation” Age:
Reputation Management in times of Social Guerrilla
As the Deloitte-Forbes research clear...
From Public Affairs to People’s Affairs:
Leaders – whether politicians or business execs - are put directly under people’s...
Whether it is a “real world” crisis (catastrophe,
sex scandal, oil spill) or a “flash mob” of
activism generated online (G...
The Reputation Complex: articulating Content  Engagement, to hit the sweet spot
Building and managing a reputation today i...
Over the past few years, some companies (from IBM to PwC) which happened to be at stake did better than others, because th...
From Philanthropy  CSR to Corporate Citizenship
This was again, over-demonstrated few weeks ago at the 2014 World Economic...
When the winds of change blow,
some people build walls and others
build windmills.
- a Chinese saying
31
VOLUME 3, ISSUE 1...
Purpose Led Company
Reputation Complex
Employer of Choice
Corporate Citizen
Social Squared Body
At this point, in most mar...
At the dawn of capitalism half a millennium
ago, a business’s reputation depended
on the skill of its owner to display him...
Human intuition has always defined social hierarchy
through material possessions. With the triumph of capitalism,
respect ...
From healthy balance-
sheets to ‘Doing the
Right Thing’
However, a sudden and important change
recently occurred; this cha...
The Future of Reputation36
Challenges of this new approach
Companies that decide to take this approach face at least two c...
37REPUTATION JOURNEY | Reputation and Corporate Image Today
The speed with which information spreads
over social infrastru...
Every company’s sales, products,
human resources and corporate image
face highs and lows. In the real world,
business brin...
39
CLICK TO SHARE
Walk the talk:
The need for Rational
and Long-lasting Action
The era of institutional hypocrisy has
ende...
Today’s Stakeholders:
Demanding but open
to collaboration
Your Corporate  Brand
Reputation is Now in the
Hands of Millennials
The Future of Reputation
is about Building from
the In...
Scott Beaudoin
Global Practice Director, Corporate 
Brand Citizenship/PurPle,
MSLGROUP
For companies to win in the new rep...
While most Millennials (74%) believe business is having a
positive impact on society, by generating jobs (48%) and
increas...
Deloitte’s third annual Millennial Survey surveyed nearly 7,800
Millennials from 28 countries across Western Europe, North...
Three of the seven dimensions that drive reputation (citizenship, governance, and workplace)
fall into the CSR category—an...
It turns out the corporation with the very best CSR reputation is Microsoft,
the Washington state-based software giant. Be...
Most reputable
corporates  brands:
Google is also at the top of the list and
continues to be seen as the best company to
w...
The Future of Reputation48
a sense of fulfillment. So why would we put our company’s
reputation in their hands? It’s easy....
49
The human truth
beyond the theory
You’ve managed people, and led them –
so have we. We don’t need convincing of
the imp...
Take just one large cross-industry survey from
the US (TARP), which suggests that almost
70% of customers who leave a busi...
Unprecedented risk
and Opportunity
From the Goldman Sachs ‘Vampire
Squid’ saga on one hand, to the famous
smiling service ...
Too often we see corporate communications
briefs with employees identified as a
‘secondary’ audience, receiving little if ...
As the power of almost every available
transmission mechanism for corporate
messages wanes, the importance of
personal net...
Almost every single organization we’re
working with is grappling with the issue of
how they effectively and efficiently so...
In virtually every organization expenditure
and effort on communicating externally vastly
outstrips efforts focused on emp...
The Future of Reputation56
Reputation Building by Stakeholder
Collaboration
Numerous companies and brands have
recently re...
57
The Why: stay close to
your brand purpose but
follow the conversation.
An inquiry into the purpose-related
communicatio...
Video: Future Influencers: Unlocking the Energy
Challenge
IBM’s Smarter Cities initiative has been a
good example for a co...
The What: if you are not
up for a long-runner,
do not start to walk
(and talk).
Format options for collaborations range fr...
The Future of Reputation60
The How: networking
and own visibility beat
platform technology as
attractors.
State-of-the-art...
61
The Who: talking with
“my” generation – if it
has influence.
Some general learnings apply, regardless
of whether compan...
The Future of Reputation62
Siemens Future Influencers
Future Influencers is an online
community initiated by Siemens as
a ...
63
Learning from the Future Influencers initiative
Companies and brands can gain access
to “real” conversations not tainte...
Reputation Management: From
Risk Mitigation to Competitive
Advantage
From Ignition to Recovery:
The Components of Today’s Crises Nidhi Makhija,
Senior Manager – Insights,
MSLGROUP
The Evolvin...
Nidhi Makhija
Senior Manager - Insights,
MSLGROUP
From Ignition to Recovery:
The Components of Today’s Reputation Crises
6...
A look at recent brand crises reveals that people care most about
67REPUTATION MANAGEMENT | From Ignition to Recovery: The...
68
The majority of crises fall into this category,
as several brands struggled to deliver on their
basic offer (e.g. the h...
69
Company’s conduct
Armstrong doping
scandal
Cyclist Lance
Armstrong’s doping
confession led to a drop
in support for his...
Increasingly, people are paying
attention to a company’s contribution
to state coffers and its strain on public
services. ...
Economy and Environment
TAX AVOIDANCE
LOW WAGES /
UNPAID SALARIES
MAN-MADE
DISASTERS
Welfare queens
Walmart and McDonald’s...
A large number of brand crises revolve around human rights,
as people continue to fight gender inequality and demand
equal...
Human Rights
EXPLOITATION
DISCRIMINATION
HIRING BIAS
Chinese princelings
JP Morgan’s practice of hiring
sons and daughters...
WHAT BOFA
DID
PEOPLE’S
RESPONSE
IMPACT
Crisis Catalysts: Three things to watch out for
In addition to the issues themselve...
In April 2013, the global fashion industry was accused of labour exploitation after the collapse of
the Rana factory in Ba...
Recovering from crisis: Leading the Conversation
In times of crisis, people expect corporates and brands to step up and le...
Power of Cultural Leadership: GE
A decade ago, GE was known as a leading
polluter. The company has since transformed
itsel...
Components of a Reputation
Recovered
When it comes to crisis, it’s not a question of
just ‘if’ and ‘when,’ but also ‘how.’...
How to Manage your Reputation
in the Social Age
Establishing a great reputation used to be a
slow moving exercise – it was...
80 The Future of Reputation
In the era of social media, short attention
spans and one click hops, this isn’t the case
anym...
1)	 Don’t throw out the baby (let alone
the bathtub) with the bathwater
Unless 2 million readers a day mean
nothing, The N...
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
The Future of Reputation - People's Insights Magazine
Upcoming SlideShare
Loading in...5
×

The Future of Reputation - People's Insights Magazine

14,165

Published on

Our reputation management experts in France, Brazil, the US, UK, Germany, India, the Netherlands, China and Poland, explore the evolving definition of reputation, how it can be protected, and how its sustainability can be assured for the future.

Read more: http://peopleslab.mslgroup.com/reputation

The Future of Reputation - People's Insights Magazine

  1. 1. The Future of Reputation VOLUME 3, ISSUE 1
  2. 2. People’s Insights – the voice of SPRINT People’s Insights is a collection of inspiring initiatives, insights and foresights shared by MSLGROUP’s SPRINTers – our global team of 85+ strategic planners, researchers and insights experts. We feature the best of these initiatives as People’s Insights monthly briefs, and original insights and foresights – from our SPRINTers and other MSLGROUP experts - in our People’s Insights magazines. We share these reports on our social platforms and distribute them freely to inspire more engaging campaigns. People’s Insights covers the latest trends in engagement on both the consumer and corporate side: • For the latest in consumer engagement, read our ten-part annual report, The Future of Engagement or our magazine The Future of Money. • For the latest in corporate engagement, read our magazine The Future of Employee (Re)Engagement and watch out for our upcoming magazine The Future of Citizenship. People’s Insights is available as a blog, a series of easy-to-read powerpoint decks and infographics, white papers and magazines, a Kindle eBook and even an iPad app. People’s Insights monthly briefs NowNext iPad app People’s Insights quarterly magazines Big ideas that are rooted in strong insights and foresights have never been as important, and conversations and communities have become the most important sources of insights. Follow us on Twitter at @PeoplesLab or subscribe to our newsletter to receive our monthly briefs and quarterly magazines.
  3. 3. The Evolving Role of the Board in Reputation Management Brad Wilks, MD, Midwest, North America, MSLGROUP France: Social Performance Comes First Fabrice Fries, President, France, MSLGROUP China: Facing the Challenges of a Low-Trust Society Par Uhlin, MD, MSLGROUP in Hong Kong and Vice Chair, MSLGROUP China India: The Awakening Jaideep Shergill, CEO, India, MSLGROUP Poland: Invaluable Reputation - Protects, Motivates, Sells! Katarzyna Stamatel, Head of Law Consulting, Poland, MSLGROUP Reputation Journey: The Now The Next Reputation Management: From Risk Mitigation To Competitive Advantage Perspectives: Reputation Around The Globe The Reputation Complex: Seeking Sustainability in a Liquid World Pascal Beucler, SVP Chief Strategy Officer, MSLGROUP Reputation and Corporate Image Today Paulo Andreoli, Chairman, Latin America, MSLGROUP Your Corporate Brand Reputation is Now in the Hands of Millennials Scott Beaudoin, Global Practice Director, Corporate Brand Citizenship, MSLGROUP The Future of Reputation is about Building from the Inside Out Jason Frank and Brian Burgess, Global Co-leaders, Employee Practice, MSLGROUP Reputation Building by Influencer Collaboration Martin Dohmen, Germany Director, Corporate Brand Citizenship/ PurPle, and Chief Strategy Officer, MSL Germany The Reputation Journey: What we can learn from the financial services crisis Olivier Fleurot, CEO, MSLGROUP From Ignition to Recovery: The Components of Today’s Crises Nidhi Makhija, Senior Manager – Insights, MSLGROUP How to Manage your Reputation in the Social Age Merrill Freund, MD, San Francisco, MSLGROUP Tap into Big Data: The Transcript of your Reputation Frederike den Ottelander, Head of Digital Social, Netherlands, MSLGROUP ...66...12 ...79 ...20 ...83 ...33 ...88 ...98 ...42 ...104 ...112 ...49 ...118...56 Today’s Stakeholders: Demanding, But Open To Collaboration
  4. 4. FOREWORD CEO, MSLGROUP Olivier Fleurot 4 The Future of Reputation
  5. 5. Trust and reputation were underlying themes at the World Economic Forum held in Davos earlier this year. From the many sessions and conversations, two trends were clear. First, the trust crisis is still top of mind for many international executives and leaders. There was a general consensus that organizations still need to restore trust and actively manage their reputations. Second, good reputation is considered good for business and for smoother relations with all stakeholders. There were many discussions around the positive role that business can play in society and leaders seemed more willing to embrace sustainable growth and corporate citizenship. For corporates and brands, there is a strong need to protect reputations and mitigate risk and to leverage strong reputations for competitive advantage. As trusted advisors to our clients, we are dedicated to helping you do both. In this magazine, experts within MSLGROUP dissect reputation to understand: » What’s new, what’s same, what’s different, what’s coming? Why does it matter to our Corporate and Consumer clients? » How does Reputation resonate with Values, Purpose, Corporate Citizenship and Talent Engagement? » What should we know about the Generation Gap, the new dynamics created by the highly demanding GenY and soon GenZ? » How has the digital and social revolution changed the game? » From a North-American, Latin-American, European, Chinese, Indian perspective, what are the key components of a reputation in the Conversation Age? I hope that you will enjoy reading this report and find that it simplifies the complex world of Reputation. 5The Future of Reputation | Foreword
  6. 6. EXECUTIVE SUMMARY 6 The Future of Reputation SVP Chief Strategy Officer, MSLGROUP Pascal Beucler
  7. 7. 7The Future of Reputation | Executive Summary People across the world are realizing the power of social networks, valuing social performance ahead of financial performance and demanding corporates and brands contribute to local communities. Reputation: The Now the Next A lot has changed in recent years. In particular, three shifts have boosted reputation to the #1 Strategic Risk today, as was found in a recent Forbes-Deloitte study. 1. Shift in stakeholders - From Powerless to Empowered 2. Shift in corporate ethics - From Social Responsibility to Citizenship and Sustainability 3. Shift in purchase decisions - From buying the Product to buying the Purpose More and more, we are seeing these trends emerge across markets. People across the world are realizing the power of social networks, valuing social performance ahead of financial performance and demanding corporates and brands contribute to local communities. As a result clients across the globe are embracing communications to manage reputational issues. In this issue of the People’s Insights magazine, our experts explore the concept of reputation to understand what it is composed of, who is driving it, and how brands can excel at building strong reputations for the long term.
  8. 8. 8 Already organizations are engaging with millennial customers, regulators, shareholders, employees and external influencers. Not only is this generation personally driven to be better citizens and make a difference, it expects businesses to do more to address society’s challenges. The Future of Reputation Today’s Stakeholders are demanding, but open to collaboration In the past, companies catered primarily to customers, regulators and shareholders, not necessarily in that order. Today, thanks to the social digital revolution, new stakeholders have emerged: » Millennials born between the 1980s and 2000s, this generation extends across all stakeholder groups. Already organizations are engaging with millennial customers, regulators, shareholders, employees and external influencers. Not only is the generation personally driven to be better citizens and make a difference, it expects businesses to do more to address society’s challenges » Employees past, current and future employees are empowered by personal and professional social networks. Through their actions in both the real and virtual world, they can have a direct impact on customer loyalty and corporate reputation. » External influencers external subject matter experts are passionate about shaping the future and willing to co-create it. They exert influence within their own networks of like-minded peers or occasionally through traditional media.
  9. 9. 9The Future of Reputation | Executive Summary Reputation Management: From Risk Mitigation to Competitive Advantage These stakeholders represent a huge untapped potential to be really authentic and powerful advocates and influencers. To engage them, companies must: » Do the Right Thing – with ethical and sustainable development plans » (Re)engage with employees tap into their Social IQ – to harness authentic and powerful voices » Co-create the company’s offer and strategy with influencers – to boost innovation and add credibility to a brand’s promise of sustainable development » Engage around a shared purpose – that aligns the interests of business and stakeholders In addition, corporates and brands can leverage the latest social and digital tools to: » Monitor what people are saying with Big Data Social conversations and data can be analyzed to track the rise of negative comments (who, what, where) and intercept before they become crises, understand how people really perceive your brand and measure the impact of communications in real-time. » Communicate frequently and consistently by becoming Social Squared Organizations should balance traditional and new techniques – cater to influencers with mass reaches while also tapping into new influencers and niche communities – and generate a steady stream of meaningful content. Finally, to succeed in the long term, organizations must take measures to elevate the importance of reputation internally: » Assign ownership to senior executives at the Board Level Senior buy-in is crucial to drive meaningful change across the organization and earn credibility externally. By assigning responsibility to the board or a dedicated executive or team, organizations are better geared to approach reputation as a competitive advantage. Today’s winning corporates and brands are already inspiring young talent, benefiting local communities, building a smarter tomorrow, creating shared value and committing to sustainability. Tomorrow’s reputed organizations will be purpose- led companies, good corporate citizens, employers of choice and social squared organizations. We invite you to explore these ideas over the next pages and to start a conversation with us on how you can protect and project your organization’s reputation.
  10. 10. Reputation Journey: The Now The Next
  11. 11. Olivier Fleurot, CEO, MSLGROUP Pascal Beucler, SVP Chief Strategy Officer, MSLGROUP Paulo Andreoli, Chairman, Latin America, MSLGROUP The Reputation Journey: What we can learn from the financial services crisis The Reputation Complex: Seeking Sustainability in a Liquid World Reputation and Corporate Image Today VOLUME 3, ISSUE 1
  12. 12. If there is one industry that has seen its reputation seriously damaged in the last decade it is undoubtedly the financial services sector. Dubbed “the worst financial crisis since 1929”, the Eurozone was, as we know, severely shaken with several countries ultimately facing embarrassing bail outs from international creditors. Olivier Fleurot CEO, MSLGROUP The Future of Reputation12 The Reputation Journey: What we can learn from the financial services crisis
  13. 13. Financial services seemed immune to failure How did it all start? In the late 90s the economy was booming, liquidity was abundant, and western banks were encouraging people to ‘live the American dream’ and borrow ever more money. A few bells started to ring in 2000 and 2001 when the high-tech bubble burst and the Enron scandal unravelled. But trust in the financial world was so deeply rooted that people perceived these events as nothing more than isolated instances. Riding on the people’s trust and ambitions, bankers continued to chase higher profits and to offer more sophisticated and riskier products. Hollywood and the media were quick to sensationalize the ambition, hunger and, at times, greed of Wall Street. The financial industry began to be perceived as a stairway to wealth – an industry that was thought to be immune to failure. This perception in turn attracted more and more investors and encouraged talented people to join financial firms. Yet despite this vicious circle, a few lone voices, mostly academics and analysts, began to warn that such growth and expansion was simply not sustainable. What finally made the bubble burst? In reality it’s impossible to trace the cause of the crisis to any single event: experts often cite deregulation, the rapid pace of innovation, lack of global regulation and an industry-wide lack of accountability as critical factors. REPUTATION JOURNEY | What we can learn from the financial services crisis 13
  14. 14. Trust vanishes: Reality goes beyond fiction in 2008 When the US housing bubble burst in 2007-08, trust in the financial world vanished. The extent of the damage and the severity of the consequences were unprecedented and astonishing. Even worse: some banks and institutions remained in denial and sought to hide the extent of potential losses. In the five years that followed, we witnessed: Bankruptcy On both sides of the Atlantic, most notably with Lehman Brothers going out of business in the US. Rebranding Some banks changed their name to start afresh (GMAC became Ally) or as a result of being acquired (Northern Rock was eventually absorbed by Virgin Money). Penalties The cost of the crisis in legal expenses and settlement costs is still being paid – one settlement reached as much as $13 billion. Customer defection Customers shared their negative experiences and organized events such as Bank Transfer Day on social networks. The Future of Reputation14
  15. 15. Dramatic loss of public trust Although many perhaps couldn’t understand every single intricacy around financial instruments, publics were certain that, somehow, the financial world had betrayed them. And their distrust extended beyond the financial services industry, beyond rating agencies and regulators, to the corporate world as a whole. Employee frustration Dissatisfied employees too turned to social networks, especially YouTube, and news sites to share their stories. Citizen activism In 2011, young Spaniards launched the “Indignados” movement, soon followed by the global Occupy movement – groups founded to enable the free and broad expression of people’s outrage at the economic crisis and anger towards national governments. Nationalization, Bailouts and Forced Mergers Central banks in the US and Europe injected hundreds of billions into the system. They nationalized and bailed out institutions and orchestrated mergers to keep weak players afloat. Governments in Asia too announced large stimulus packages to offer some stability to the system. 15REPUTATION JOURNEY | What we can learn from the financial services crisis
  16. 16. The Future of Reputation16 Rebuilding reputation will take time While trust in the financial industry has improved since 2008, it remains lower than in other industries and continues to fluctuate, in response to post-crisis evidence of misbehaviour and the emergence of new scandals (such as the manipulation of interest rates). The debate around executive pay and bonuses still rumbles on in many countries, especially in markets where taxpayer’s money was used to bail out financial companies. As we know, it can take years, at times decades, for a company to build a good reputation, and only a few days to destroy it. The challenge of restoring trust and good faith is made more complicated by the challenge of communicating in the information age. People expect companies to engage in two-way dialog in real-time and be consistent across geographies. Beyond this, people demand that companies look out for all stakeholders and respect the larger ecosystem in which they operate. Becoming a genuine partner for entrepreneurs Some banks launched efforts – both short and long term – to support local businesses and entrepreneurs. Over the last few years, banks have delivered on these expectations with initiatives that combine Purpose, Participation, Performance and Sustainability. This meant… Innovation Challenges Citipartneredwith NBC’sEducation Nation’sInnovation Challengetofundentrepreneursin theeducationspace. Support Communities AmericanExpresslaunched theonlinecommunityOPENForum,which offersawealthofbusinessadviceandconnects smallbusinesscustomers. Australia’sBendigoBank launchedthePlanBig platformtohelp entrepreneursachieve theirgoals. Change Movements Crowdsourcing Campaigns AmericanExpress kickstarted theSmallBusiness Saturdaymovement, toencourageAmericans, andrecentlytheBritish,toshopatsmall storesduringtheholidayseason. KBCBanklaunched TheGapintheMarket tocrowdsourcebusiness opportunitiesacrossBelgium.
  17. 17. 17 Giving people a bigger say in citizenship programs Some banks invited people to decide which organizations, charities and even national monuments would receive the largest share of funding. Re-defining banking together A number of banks engaged customers and students in conversations and initiatives to build a better system. REPUTATION JOURNEY | What we can learn from the financial services crisis AmericanExpresslaunched Member’sProjecttolet customersmakeadifference throughvotes,volunteerhoursor donationoftheirAmEx member’spoints. ChaselaunchedChase CommunityGivingtolet peopledecidewhichcharities wouldgetthebiggestshareof grantmoney. Barclaysintroduceda new“co-created” creditcard, BarclaycardRing,to givethecommunitya sayinthecard’sfees, policiesandrewards. INGlaunchedNextGeneration Bankingtochallengethe ‘bankersoftomorrow’to envisionthefutureofbanking. EvenformerRBSchiefStephen HesterengagedstudentsatLSE inacandiddiscussionabout RebuildingBanking.
  18. 18. Video: World Economic Forum 2014: Pierre Goad The Future of Reputation18 And, simply communicating better… or differently. Several banks embraced new media to encourage financial literacy and differentiate themselves from the ‘bad banks.’ In the last eighteen months, some banks have indeed begun to successfully differentiate themselves from the category and stand out. As HSBC’s co-head of global communications Pierre Goad shares, it is now a priority for these institutions to actively improve their reputation and manage reputational issues early on. Financial Literacy USBank encouraged teenagerstocreate videosaboutthevalueofsaving. Thewinningvideo-arapvideotitled “Don’tforget‘boutyadebt!” Humility AIGusedvideoinfographicsto communicateits“TurnaroundStory” andannouncethatithadrepaidits bailoutinfull.AIGfollowedthiswith thefilm“ThankYouAmerica”- albeittomixedresponse.Solidarity DeutscheBank expressedits solidaritywith customersagainst unnecessarybankfeeswitha tongue-in-cheekvideo“Youwouldn’t acceptitfromyoursupermarket.”
  19. 19. WEF 2014: Sir Richard Branson and Arianna Huffington talk about Plan B 19 A purpose-driven tomorrow Increasingly, companies are embracing concepts of sustainable growth and corporate citizenship – because they are indispensable to attracting and retaining talent and because they can also be good for business. We are also seeing leaders make the case for purpose-driven business (The Stengel 50) and partner with organizations and other corporates to reinvent the way we do business (Plan B). Indeed, this was the central theme at the recent World Economic Forum at Davos - Reshaping the World: Consequences for Society, Politics and Business. For banks, financial institutions and other companies to recover, maintain and build good reputations, we believe they must implement six actions across the organization, at all tiers and locations: 1. Establish a shared purpose Identify a core purpose that drives the organization and its people, and align programs and strategies around this shared heartbeat. 2. Co-create the future Engage customers and other stakeholders in helping defining the organization’s policies, services and corporate citizenship actions. 3. Lead the dialogue Harness social, digital and other media to lead, or at least contribute to the continual dialogue around issues that are important to customers. 4. Win over influencers Demonstrate new priorities through bold outreach to influencers, governments and media. 5. Minimize risks Anticipate and plan for issues that may still negatively impact the organization’s reputation. 6. Empower employees Amplify good news by encouraging employees to be strong ambassadors for the good work the organization is doing. These actions are not easy and transformation will not happen overnight. But over the long term, they will help safeguard a company’s reputation and re-gain the loyalty of stakeholders. As Warren Buffett said, “If you lose money for the company, I’ll be understanding. If you lose a shred of the company’s reputation, I’ll be ruthless.” REPUTATION JOURNEY | What we can learn from the financial services crisis
  20. 20. Pascal Beucler Here are some tricky questions our clients are dealing with today, particularly at the C-Suite level: What is the link between Business and Reputation today? What is the value of Corporate Reputation (the one of the firm, not just of its brands, services products), whether in a B2C or B2B context? Why and how is the Digital Social turmoil changing the whole game? Why should we address reputational issues versus all stakeholders, not just shareholders but also customers of course, employees and partners, people and communities? Why is investing in Corporate Citizenship critical today, from a Reputation Management standpoint? Is a silent firm always defined by others? Why are silence or secrecy not sustainable options anymore? SVP Chief Strategy Officer, MSLGROUP The Future of Reputation20 The Reputation Complex: Seeking Sustainability in a Liquid World
  21. 21. 21 The following analysis examines why reputation management is such a challenge in a world where transparency is mandatory, social engagement is required, corporate citizenship is highly expected and content is king. Corporate Reputation is what supports Corporate Equity Basically, that’s what we mean with the concept of “Reputation Complex” and the way we define it: The “Reputation Complex” is a moving combination of various reputational factors, components and drivers that are linked in a close and complicated way. This combination brings with it, for all organizations, equal risks and opportunities – the first to be managed and the second to be exploited in the right manner. From this standpoint, Reputation Management is probably today the most demanding of our Global PR Practices, at the intersection of Corporate Brand Citizenship, Financial Communications, Public Affairs, Digital Social and the Employee Practice. As a matter of fact, Corporate Reputation protects a company’s equity, plays a growing role in investors’ eye, and strengthens customer’s confidence in a firm’s products and services. In fact, checking who’s behind the brand/the product/the service – who owns it? – is a fast-growing trend. Corporate Reputation also nurtures key opinion leaders’ appreciation, attracts the best partners and helps recruit and retain the best talents. In a nutshell, Corporate Reputation is cornerstone for all businesses. And, let’s make this clear: Reputation is not fame, admiration, image or esteem – all of these can generate a positive halo, but none of them is a founding factor. Let’s not mistake the effect for the cause. Last, contemporary Corporate Reputation is not based only on cold analysis, rationale and reason; it’s also linked to emotional attributes, perceptions and empathy, all of which are key drivers a genuine societal commitment can help create. REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World VOLUME 3, ISSUE 1
  22. 22. The Future of Reputation22 A fast-changing ecosystem Key attributes such as long-term investment value, quality of products and services, and financial soundness have been utilized year after year by various rating systems asking professional panels to evaluate firms on X-point scales. That’s for sure essential, but such classical, endogamic and “coefficient centric” approaches do not suffice anymore in a world where ethics as well as the nature and the level of engagement with people and communities are cornerstone. Corporate Reputation needs to be seen through a different lens, with a much wider focus and mind-set. Who doesn’t see the terrible consequences of the various scandals and crises the past decade produced, starting with the Enron earthquake and continuing today with the 2008-10 Wall Street “Big One” and post crisis tremors? Each and every survey in the L’air du temps: seen in a restaurant in Berlin, January 23rd, 2014 past decade has described a very unfriendly, suspicious, negative environment, with unprecedented levels of public distrust and anger. Trust in all institutions, including corporations and governments, remains at an all-time low across the world, and this is worrying. And it’s no surprise that the “Financial Planet” continues to suffer from the poorest reputation of all business sectors.
  23. 23. The age of low predictability Liable to change rapidly, a Corporate Reputation is a composite of diverse and highly volatile perceptions and emissions – most of which being hard to manage: Few years ago, Reputation was a somewhat elusive intangible asset, in the hands of a small number of selected gatekeepers. Today, with the explosion of social media, reputation can be enhanced or damaged in the blink of an eye. Most corporations are in the risk zone, where a low level of public trust meets a high level of people’s empowerment. And this is exactly why every Reputation issue is potentially Global, Social, Viral. 23 It’s mostly out of control of all the communications about an organization, very few are within control today. The comment is the message be it employees or external stakeholders, people are generating far more content about an organization than can be created by the organization itself. We may like it or not, but it’s just what it is some of the messages are positive, some of them are negative, but together, it all reflects a firm’s or a brand’s reputation. VOLUME 3, ISSUE 1 REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World
  24. 24. Reputation as the #1 Risk in 2013 Changing perspectives is always a little slow, naturally, but the latest “Exploring Strategic Risk” joint study by Deloitte Forbes Insights shows an impressive evolution over the past three years, with Reputation rising to become the #1 Risk in 2013: The “Exploring Strategic Risk” global survey included more than 300 respondents from the Americas, EMEA, and Asia-Pacific. Nearly all respondents were C-level executives (263), board members (22) or other risk executives (21). Surveyed companies came from all five major industry sectors (consumer/industrial products, life sciences/health care, technology/media/ telecommunications, energy and financial services), and all had annual revenues in excess of US$1 billion (or the equivalent). Three years ago, reputation was already the top risk area in financial services – and remains so today. Now, reputation is rated as the highest impact risk area – not just overall, but for most individual sectors as well. The Future of Reputation24 Why all of a sudden? Social technologies are one of the main factors driving rising concerns about reputation. Given the speed and global reach of social media, companies today are losing control over how they are perceived in the marketplace. “One of the big changes in recent years is speed to market.” “As a consequence of social media, reputations built up over decades can be challenged in an instant. Customers are able to make decisions on an organization based on social media comment, potentially well before your ability to be able to defend or articulate a response.” - ANZ’s Jennifer Evans (Banking Financal Products) It takes 20 years to build a reputation anD five minutesto ruin it. If you think aboutthat you’ll do things differently. Warren Buffett Q. Which of the following risk areas have the most impact on your business strategy (three years ago, today, and three years from now)? 41% | Brand 28% | Economic trends 26% | Reputation 2016Today2010 29% | Economic trends 26% | Business model 24%| Reputation - Competition 40%| Reputation 32% | Business model 27% | Economic trends - Competition
  25. 25. The “post-disintermediation” Age: Reputation Management in times of Social Guerrilla As the Deloitte-Forbes research clearly shows, reputation risk is now the biggest concern, due in large measure to the rise of social media. Social media enables instantaneous global interactions that make it impossible for organizations to “control” the on-going conversation about them, and the impact on their reputation. This is true everywhere and for every organization, as shown in recent examples where public authorities were targeted by citizens and forced to take action. Such viral initiatives are the “New Normal” today, and they prove to be very effective. 25 We clearly see a double move here: From Influence to Engagement: Influencing influencers silently, secretly, behind the scenes, has been the norm for decades, and it still works in specific contexts. But it’s far from enough today: in all industries and everywhere, disintermediation is rapidly, and profoundly, changing the rules of the game. Brokerage based businesses are all potentially under threat. Gatekeepers and barriers are vanishing, while people use the boundless power of social media to raise their voice and be heard by the decision-makers, be they politicians or business executives. 1 REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World
  26. 26. From Public Affairs to People’s Affairs: Leaders – whether politicians or business execs - are put directly under people’s heavy pressure through Twitter, Facebook or YouTube. Within days, sometimes hours, they have to cancel an initiative, abandon a controversial project or quickly act to address a pressing public demand. 2 AOL’s CEO Tim Armstrong reversed a change in policy following employee media backlash (via washingtonpost.com) Dutch Parliament intervened to ensure a subsidy was provided to the Metropole Orchestra after the popularity of the Metropole Tweetphony campaign Russian politicians fixed city potholes after a social guerrilla campaign by news site Ura.ru (Make the Politicians Work) #TweetsFromTheDeep is another great example of Social Guerrilla in the area of public affairs. What would you do to help defend UK fishermen, under permanent scrutiny for their alleged exploitation of the sea’s resources: classical media relations? It may not bring much attention from the audience you wish to engage with. An ad campaign in mainstream media? It will be a bit costly for a professional association and, again, it won’t be authentic, genuinely human-based, it will just be one point of view versus the other. Here’s what the National Federation of Fishermen’s Organization did: give a fisherman access to their Twitter account and let him tell his own story himself, from deep in the ocean, with his own words and tone of voice. Much more efficient. Brilliant! The Future of Reputation26 Video: The NFFO Fisherman David Warwick sends Tweets from the Deep
  27. 27. Whether it is a “real world” crisis (catastrophe, sex scandal, oil spill) or a “flash mob” of activism generated online (Greenpeace vs. KitKat), the news curve and the crisis curve are closely linked, and Social Media is spreading the blame game at a very high speed. The Bank of America case is a very insightful one, as Nidhi Makhija demonstrates in this report (see Page 74). From low intensity controversies to high intensity crises: Reputation is at stake 27 Social Media’s impact on share prices is critical too, particularly since the SEC ruled in April 2013 that companies can disclose important information on social media accounts as long as they alert investors in advance of which platforms and accounts they will use. Now, in addition to spontaneous celebrity social endorsements (Oprah’s $150mn tweet), companies’ executives’ social media posts are impacting stock price and movement. For instance, Netflix CEO’s Facebook post sparked a 13% rally in Netflix shares, sparked an SEC investigation and resulted in a new regulation allowing companies to make announcements through social media. A hacker’s tweet from the AP account, that ‘President Obama was injured in a White House explosion,’ erased $200 billion from US stock market for six minutes in April 2013. Analysts blame algorithm trading systems that scan news and social conversations for the temporary drop. Oprah’s spontaneous tweet instagram generated and boosted Groupe SEB’s market capitalization by 1 mn tweets- $150 m 27 VOLUME 3, ISSUE 1 REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World
  28. 28. The Reputation Complex: articulating Content Engagement, to hit the sweet spot Building and managing a reputation today is firstly building and managing a content strategy, then rightly engaging around it with all relevant audiences. • What do you stand for as a firm? What’s your purpose? • Does your Corporate Governance meet today’s societal expectations: ethics, quality of leadership, social responsibility and diversity? • Is your business performance sustainable? • What’s the social impact of your business on people, communities and society at large? • What does your Corporate Citizenship consist of? • Are you an Employer of Choice? CONTENT ENGAGEMENT Content is King, and it all starts by defining and expressing the fundamentals of every organization’s core strategy: It’s then about rightly engaging with all stakeholders: The Future of Reputation28 • How can Communications better shape share the story about the firm’s history, legacy and strategy – both internally and externally? • Beyond the Investor’s Day, the priority is to craft a narrative architecture to help larger audiences understand where the company comes from and what it stands for. • Why sustainability, value creation and innovation are key pillars to its success? • How the firm, wherever it is on Earth, is committed to developing close links with people and communities? • Why building a strong Employer Value Proposition is crucial for today and tomorrow?
  29. 29. Over the past few years, some companies (from IBM to PwC) which happened to be at stake did better than others, because they better managed what they wanted to focus on (content), and because the way they engaged with people was superior (relationship). The Reputation Complex is thus a system of different levels and dimensions, as well as an on-going iterative process with no beginning and no end, blending beliefs, perceptions and representations, all based on a firm’s global behaviour. Helping our clients navigate the blur and manage complexity is our main task today in the fast-changing world of PR – People Relations. Before being good or bad – and moving from one state to the other doesn’t have to take very much time – a reputation firstly is: A firm’s resistance, and potential resilience, very much depends upon these four points, when its reputation is at stake. IBM announced its ambition to create a Smarter Planet and involved people, innovators and local leaders in its mission (People for a Smarter Planet community, Smarter Cities Challenge), PwC appointed a head of reputation to mend its relationship with regulators, and is positioning itself as part of the conversation around building trust (Inspiring Trust report), Coherent, or not, with what a firm actually is about, and stands for Consistent, or not, with its core beliefs and values Solidly grounded, or not, into a well- told story Managed, or not, properly 21 3 4 29 29REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World
  30. 30. From Philanthropy CSR to Corporate Citizenship This was again, over-demonstrated few weeks ago at the 2014 World Economic Forum in Davos. To “reset” the world’s economy, restore some sort of public confidence in the world of business - particularly in the Financial sector, as we see it - many top leaders highlighted the fact that corporations need to speak and act as Good Corporate Citizens. Such a movement is here to stay, and it’s a growing concern for all stakeholders. As Unilever CEO Paul Polman loudly claimed in Davos: “You don’t get attacked for doing the right things!” Polman claimed that if profits were necessary, they shouldn’t be placed above purpose. He also claimed that Unilever had a “moral obligation” to help address the world’s problems: “If we don’t work in transparency, we undermine trust.” He admitted that this was not an easy transition for companies to make: “To get these values into the company is awfully hard work and takes a long time.” However, he used the example of Edward Snowden to highlight what can go wrong when companies come under attack in an environment where “individuals can put you out of business.” This is the dominant trend today. Philanthropy was the norm: giving back discretely and without necessary links between the business and the causes the firm was supporting. Citizenship is the new normal: it’s about putting the firm’s Citizenship engagement at the heart of its purpose and business strategy. The Future of Reputation30
  31. 31. When the winds of change blow, some people build walls and others build windmills. - a Chinese saying 31 VOLUME 3, ISSUE 1 REPUTATION JOURNEY | The Reputation Complex: Seeking Sustainability in a Liquid World
  32. 32. Purpose Led Company Reputation Complex Employer of Choice Corporate Citizen Social Squared Body At this point, in most markets and industries, it seems that the “protection” mindset is more widespread than the “projection” one. It is our mission to help our clients go for the windmill option, as projection is the key for building a sustainable Reputation in the liquid age. The windmill will create a lot of value, if corporations are genuinely purpose-led, acting as respected Corporate Citizens and being seen as proven Employers of Choice, and if they behave as well-connected and fully-engaged organizations. And by the way, let’s remember that “Purpose” and “Propose” have the same etymology: a company with a solid Reputation is thus the one which has a relevant purpose, translating into a robust value proposition for all stakeholders. 32 So, should we build walls, or windmills? The Future of Reputation32
  33. 33. At the dawn of capitalism half a millennium ago, a business’s reputation depended on the skill of its owner to display himself in mansions designed by the foremost architects, where he received people in Faustian style under the gaze of family portraits, preferably signed by great masters. Corporate image in the mid-16th century changed in direct proportion to luxury, in a figurative attempt to use abundance as a means of facing down any economic catastrophe. And the method made sense, because high risk businesses – trade, banking or manufacturing – could keel over at a moment’s notice as they suffered the side effect of long-running and inconclusive wars, plagues, piracy or the planned bankruptcy of monarchs who underwrote bills of exchange with no backing in order to patch up their royal coffers. Paulo Andreoli Chairman, Latin America, MSLGROUP Origins of Corporate Image REPUTATION JOURNEY | Reputation and Corporate Image Today 33 Reputation and Corporate Image Today
  34. 34. Human intuition has always defined social hierarchy through material possessions. With the triumph of capitalism, respect also became a major factor and rapidly grew in importance as trade expanded and the Industrial Revolution and globalization came about. Sumptuous pomp as a seal of legitimacy was the driving idea that had developed through the Middle Ages and had its roots as far back as the Greek and Roman empires. Ostentatious symbolism was so deeply rooted that Europe embraced it, setting aside the modesty and charity it preached. Human intuition has always defined social hierarchy through material possessions. With the triumph of capitalism, respect also became a major factor and rapidly grew in importance as trade expanded and the Industrial Revolution and globalization came about. The Future of Reputation34
  35. 35. From healthy balance- sheets to ‘Doing the Right Thing’ However, a sudden and important change recently occurred; this change became increasingly clear during the last decade of the past century when competition broke out of national boundaries and gave consumers an increasing number of choices – and when faced with products or services presenting similar attributes, these consumers are showing a growing disposition to select the supplier who “does the right thing.” The result of this outpouring of citizenship is the profusion of vegetables grown without pesticides, organic wines, veal from cattle slaughtered painlessly, lead- free lipstick, the launch of hybrid cars, green banks, delivery systems which pay fines if deliveries are delayed as well as investment funds which only purchase stock in companies that do not use child labour – among many other examples of the imaginative methods used to tug on a customer’s heartstrings. In the wake of this crusade, the number of executives responsible for Sustainability has multiplied. These executives report directly to the CEO and their actions are specifically targeted at increasing the company’s reputation (and bottom-line) by giving their full attention to a wide variety of interests intertwined with their everyday business activities. Initiatives and other measures along these lines have inspired corporate communications, which have sought to nurture empathy and engagement. In the 21st century, modesty and good behaviour now rival healthy balance sheets as a means of developing a strong reputation, part of an attempt to draw a dualistic and implausible contrast with direct competitors who hesitate to adopt the same approach. 35REPUTATION JOURNEY | Reputation and Corporate Image Today
  36. 36. The Future of Reputation36 Challenges of this new approach Companies that decide to take this approach face at least two challenges. A commonplace one is that every prosperous and long-lasting company must adopt best practices, pay its bills on time, comply with regulations, be ethical, respect their employees, provide their shareholders with adequate returns and take their customers opinion seriously – basically, doing the right thing, just without the quotation marks. For a company like this, a flashy Sustainability Department is simply redundancy; or rather, a modern variation of the luxury that primitive capitalism used to communicate solidity. The second problem is a subtler one. It is born out of the investment needed to confirm that the Sustainability area has an important and powerful role to play in crucial company decisions. We used to have just Social Responsibility, now we also have Sustainability. Company executives are finding themselves increasingly compelled to incorporate new practices, which are actually nothing more than simply doing the right thing – an inherent value for all successful companies.
  37. 37. 37REPUTATION JOURNEY | Reputation and Corporate Image Today The speed with which information spreads over social infrastructure has made companies vulnerable and managers need to be constantly aware of what their companies are doing and how the public perceives their products and services. They need to realize that online interaction will be a benefit but also that public exposure – from which they will not be able to hide – will make them more vulnerable. Being present is no longer a choice but a reality. Reputation has become an asset which is at the same time essential for success and also the greatest threat to that success – one more challenge for managers who, until recently, needed only to concentrate on producing healthy financial performance indicators. Today, an attitude or a gesture by an irritable employee can undermine several years of positive reputation and can have a direct effect on the company’s results and the way it is perceived. Crisis management processes are now online and a component of strategic business management. Like marketing, corporate communications will increasingly depend on more accurate information and analysis. This means that the challenge is to anticipate trends based on “Big Data” and depends on our ability to interpret the “collective unconscious” and provide companies with guidance when taking decisions.
  38. 38. Every company’s sales, products, human resources and corporate image face highs and lows. In the real world, business brings with it unexpected fluctuations. This makes it all the more important to keep doing – and re-defining – the right thing. The Future of Reputation38
  39. 39. 39 CLICK TO SHARE Walk the talk: The need for Rational and Long-lasting Action The era of institutional hypocrisy has ended. There is little point sponsoring a film, a winning team, spending millions on advertising if, for example, social media challenges the poorly managed acquisition of a foreign oil refinery. The worst type of problem for a company’s reputation is caused by incorrectly defining its objectives and the way in which this message will be translated into a language capable of expressing it to non-specialists. For example, if oil begins its life as a pollutant, anyone who works with oil runs an inordinate risk if they try and present themselves as a producer of clean energy. Companies that make statements in an attempt to change the facts are only creating problems for themselves. It is surprising to see so many capable people being tripped up by this approach, because 500 years of experience should by now have taught business managers how to build value and generate results through rational and long-lasting action. These experiences clearly showed that a company’s reputation has intrinsic weaknesses tied to its business, it can be affected by natural disasters, by a poorly concluded transaction, by a gesture, an attitude and when hypocritical and/or prideful statements are laid bare, often at great cost. This does not mean that corporate image only comes in two colours: black or white, without any grey. Legitimacy is a long- lasting asset, it can stand up to abuse and can be restored provided that every negative experience is treated transparently, openly, intelligently and with great professionalism. 39REPUTATION JOURNEY | Reputation and Corporate Image Today
  40. 40. Today’s Stakeholders: Demanding but open to collaboration
  41. 41. Your Corporate Brand Reputation is Now in the Hands of Millennials The Future of Reputation is about Building from the Inside Out Reputation Building by Influencer Collaboration Scott Beaudoin, Global Practice Director, Corporate Brand Citizenship/ PurPle, MSLGROUP Jason Frank and Brian Burgess Global Co-leaders, Employee Practice, MSLGROUP Martin Dohmen, Germany Director, Corporate Brand Citizenship/PurPle, and Chief Strategy Officer, MSL Germany VOLUME 3, ISSUE 1
  42. 42. Scott Beaudoin Global Practice Director, Corporate Brand Citizenship/PurPle, MSLGROUP For companies to win in the new reputation economy, they need people to believe in what they stand for and engage them in their citizenship efforts. That is never truer than it is with today’s Millennials who will be roughly 75% of the global workforce by 2030. Millennials are not only our current and future employees (and bosses) but they are our current and future customers. Understanding their personal views and ideals will be the only critical way to help us manage corporate reputation now and well into the future. The Future of Reputation42 Your Corporate Brand Reputation is Now in the Hands of Millennials
  43. 43. While most Millennials (74%) believe business is having a positive impact on society, by generating jobs (48%) and increasing prosperity (71%), they think business can do much more to address society’s challenges. What Millennials Want and Expect According to Deloitte’s third annual Millennial Survey, while most Millennials (74%) believe business is having a positive impact on society, by generating jobs (48%) and increasing prosperity (71%), they think business can do much more to address society’s challenges in the areas of most concern: resource scarcity (68%), climate change (65%) and income equality (64%). Additionally, 50% of Millennials surveyed want to work for a business with ethical practices. TODAY’S STAKEHOLDERS | Your Corporate Brand Reputation is Now in the Hands of Millennials 43
  44. 44. Deloitte’s third annual Millennial Survey surveyed nearly 7,800 Millennials from 28 countries across Western Europe, North America, Latin America, BRICS and Asia-Pacific about business, government and innovation. The questionnaire focused on the role business plays in society; its objectives, impact and outcomes; the responsibility of business and government and how well each is addressing the challenges faced by society. Deloitte’s Millennial Survey also found that Millennials are eager to make a difference. Millennials believe the success of a business should be measured in terms of more than just its financial performance, with a focus on improving society among the most important things it should seek to achieve. Millennials are also charitable and keen to participate in ‘public life’: 63% of Millennials donate to charities, 43 percent actively volunteer or are a member of a community organization, and 52% have signed petitions. This intersection of Millennials’ expectations and their eagerness to make a difference provides an opportunity for companies and brands if they are smart enough to seize it. You don’t have to look far to find some companies already maximizing this opportunity and a closer look will show you that these are the companies and brands whose reputations are benefiting from it. 60% 40% The study discovered that people’s willingness to buy, recommend, work for, and invest in a company is driven 60% by their perceptions of the company And only 40% by their perceptions of the products The Future of Reputation44
  45. 45. Three of the seven dimensions that drive reputation (citizenship, governance, and workplace) fall into the CSR category—and analysis shows that 42% of how people feel about a company is based on their perceptions of the firm’s corporate social responsibility practices. In June of 2013, Reputation Institute, a private global consulting firm based in New York, invited about 47,000 consumers across 15 markets to participate in a study that ranked the world’s 100 most reputable companies–all multinational businesses with a global presence. In addition to finding the companies with the best reputations, the study discovered that people’s willingness to buy, recommend, work for, and invest in a company is driven 60% by their perceptions of the company, and only 40% by their perceptions of the products, says Kasper Ulf Nielsen, Reputation Institute’s executive partner. Each company earned a “RepTrak™ Pulse” score representing an average measure of people’s feelings for it. The scores were statistically derived from four emotional indicators: trust, esteem, admiration, and good feeling. Reputation Institute then analyzed what it calls the seven dimensions of corporate reputation, including workplace, governance, citizenship, financial performance, leadership, products and services, and innovation. 45TODAY’S STAKEHOLDERS | Your Corporate Brand Reputation is Now in the Hands of Millennials
  46. 46. It turns out the corporation with the very best CSR reputation is Microsoft, the Washington state-based software giant. Being a responsible global corporate citizen is a commitment made at all levels of Microsoft. It’s not a top-down effort, but rather bottom-up. It’s a testament to the company’s worldwide employees and the difference they are making in their local communities. While the company has a small citizenship team at the corporate level, they have citizenship champions across the globe and they work daily in collaboration with a wide range of stakeholders on a range of issues important to local communities. In September 2012, Microsoft refocused much of their efforts around creating opportunities for youth by launching Microsoft YouthSpark, a major initiative to connect hundreds of millions of youth with opportunities for education, employment and entrepreneurship. The company is working to bridge the opportunity divide that separates youth who have opportunities from those who don’t, with the goal of helping young people secure their individual futures and also the future of society. Most reputable corporates brands: The Future of Reputation46
  47. 47. Most reputable corporates brands: Google is also at the top of the list and continues to be seen as the best company to work for in the world. Google’s strong workplace perception helps secure its strong reputation overall and within CSR. In the Reputation Institute’s study, fifty percent of consumers across the 15 countries say they definitely think that Google treats its employees fairly and takes their well being into consideration. Google knows how to put caring in the hands of the younger generation. “Google China Social Innovation Cup for College Students” is a nationwide competition that aims to empower China’s youth to become agents of social change. By soliciting project ideas from college students and funding viable proposals, the company hopes to instill in China’s future leaders the values of social responsibility, the importance of community welfare, and the spirit of self-empowerment. Among all colleges and universities that participate in the competition, the 100 that top in the number of proposal submission will share 500 Google “Campus Volunteer Stars” Scholarships every year. 47TODAY’S STAKEHOLDERS | Your Corporate Brand Reputation is Now in the Hands of Millennials
  48. 48. The Future of Reputation48 a sense of fulfillment. So why would we put our company’s reputation in their hands? It’s easy. They have the potential to be a company’s most ardent supporter and their voices are heard and their messages will travel. Creating opportunities for Millennials to engage in social purpose is critical. This could be anything from surveying employees on where to donate a portion of the company’s charitable funds to creating a volunteer program. Millennials are already open to engaging with brands and look for purposeful work. It’s time to start leveraging their potential and incorporating employees into the planning and implementation of purpose goals. With research indicating that 88 percent of Millennials make employment choices based on a company’s CSR values and 86 percent consider leaving a company if its Corporate Citizenship values no longer met expectations, it’s clear that to lead in the new reputation economy, businesses must have strong voices when it comes to their values and initiatives. The impact of citizenship on the future of reputation is crystal clear. Engaging Millennials around Social Purpose End of Trust Rise of Shared value Quest for meaning Power to people The Millennial generation has a reputation of being entitled, but this is part of the result of their desire to engage with the world around them. They feel responsible to themselves, their neighbors, their communities and the planet. They grew up learning that their actions directly affect the world around them. In return, they believe companies should act the same way. The tension lies in the fact that Millennials are notorious for having high employee turnover rate, particularly if their job does not provide
  49. 49. 49 The human truth beyond the theory You’ve managed people, and led them – so have we. We don’t need convincing of the impact of ‘employee engagement’ because we experience it first hand almost every day. Forget the terse business definitions, you can see ‘engagement’ in someone’s eyes, their body language, the things they say; and you can measure it in anything from their attendance record to their sales figures. These tangible outcomes of ‘employee engagement’ have equally tangible implications for corporate reputations. As shared personal experiences become the dominant currency of reputation, so the shared experiences of employees, and the people they interact with, continue to grow in value. The Future of Reputation is about Building from the Inside Out Jason Frank Brian burgess Global Co-leaders, Employee Practice, MSLGROUP TODAY’S STAKEHOLDERS | The Future of Reputation is about Building from the Inside Out
  50. 50. Take just one large cross-industry survey from the US (TARP), which suggests that almost 70% of customers who leave a business or brand will do so because of a negative experience with one of their employees – not for a lower price or better product. In our increasingly knowledge and service- based economies we’re moving quickly from valuing our people’s IQ to their Emotional Quotient (EQ) and now their Social Quotient (SQ). Success is about ‘how’ we do things, not ‘what’ we do. In that context the things your people say and do define reputations more and more - not least because their words and actions can be amplified across global digital networks of influence in an instant – either by them or someone else. The Future of Reputation50
  51. 51. Unprecedented risk and Opportunity From the Goldman Sachs ‘Vampire Squid’ saga on one hand, to the famous smiling service of Pret-a-Manger fast food staff on the other, it doesn’t take a genius to appreciate the growing risk and return that lies in taking employees more and more seriously as builders or destroyers of reputations. So, what are the implications for all of us? How do we as corporate communicators harness the power of employees to build credible, sustainable reputations, and how do we mitigate against the risks? Here are five tips to help you ensure that your employees become a force for good in your on-going quest to build and protect reputations in today’s conversation age. Make Them Part of The Plan Think Embrance Networks Re-prioritise to Reflect The New Normal Unleash The Power of Content Influence Cross The Functional Divide steps to success in building reputations from the inside out 51TODAY’S STAKEHOLDERS | The Future of Reputation is about Building from the Inside Out
  52. 52. Too often we see corporate communications briefs with employees identified as a ‘secondary’ audience, receiving little if any strategic consideration. Too many opportunities to add greater reach, power and credibility to our communications are being missed by thinking in traditional, largely external broadcast terms. Whether it’s from a risk mitigation point of view, or a more positive standpoint, we need to move employees up the priority list when devising communications strategies. Dependent on the nature of the challenge any of the following questions can be useful to ask: How would employees react to this? The growing reputational power of the employee is evident in the number of Corporate Communications Directors assuming responsibility for communicating with employees. This makes sense, but it’s incredibly important that Corporate Communicators are in regular conversation with HR and other employee specialists How can they help us by validating this or adding credibility in some way? How can they help us to ensure that the messages reach more people? How could they derail this? It may be that when you ask yourself these questions you draw a blank, but those instances are becoming increasingly rare for our clients. within the organisation. The value of working together goes both ways. HR can provide employee insight and expertise, whilst Corporate Communications can bring their expertise to support the function that has such a profound impact on employee engagement levels. At the most basic level Corporate and more HR focused employee communications need to be planned in a coherent, joined-up way to avoid contradictions, duplications and wastage. At a more sophisticated level the Corporate Communications Director needs to be fully in tune with the Talent / HR agenda (and vice-versa). It’s essential that Corporate Communications are in tune with the ebbs and flows of employee engagement – whether that’s through formal annual employee surveys or more informal observations and feedback. The relationship and mutual support between HR and Corporate Communications is more fundamental than ever to the art and science of building and managing reputations. Time spent in making it work is time well invested. The Future of Reputation52 Make them part of the plan Cross the functional divide
  53. 53. As the power of almost every available transmission mechanism for corporate messages wanes, the importance of personal networks and shared experiences continues to grow. The reputational mathematics are crude but powerful. Take a global services organization of 160,000 people, typically something like 75,000 people would have left the organization in the last three years. If we take a conservative figure of just twenty relevant people in each of the 235,000 past and present employees’ personal and professional networks, we quickly come to a direct ‘tier’ 1 network figure of 4.7 million. Moreover, the reality is that many of these people move to the ‘other side of the fence’ and become clients or potential clients. It’s little wonder that many of the world’s leading services organisations are investing heavily in alumni programmes, designed specifically to ‘engage’ former employees, maintain relationships, and build networks. Above all this is an opportunity. With the right content, education and simple software tools we can massively enhance the reach and credibility of our communications through our employees’ networks. We’ve seen it first hand through our own experiments with simple social media plans, education and amplification tools – a 140% increase in website traffic in two weeks speaks for itself. We’re now doing it for clients. 2,35,000 20 4.7mN 160,000 75,000 EmploYees (Past And pResent) Tier 1 networKRelevAnt sOcial ConneCtions 53 Think embrace networks TODAY’S STAKEHOLDERS | The Future of Reputation is about Building from the Inside Out
  54. 54. Almost every single organization we’re working with is grappling with the issue of how they effectively and efficiently source, curate, store and distribute compelling content that will enable them to sustain valuable and meaningful dialogue with their stakeholders. If organisations can create a culture that empowers people to create content, by making it easy and by rewarding it, the job of corporate communicators will become that much easier. So much time is wasted tracking down great people and their stories. Imagine having a culture where people were queuing up to share their amazing personal and professional stories with you – adding depth, credibility and emotion to your corporate narrative and messages. If you can go some way towards fostering that sort of culture in a controlled and focused way you’ll become so much more effective and efficient in satisfying the insatiable demand for conversation and content from your audiences. Every time we work with clients to tap into the vast storytelling power of their employees we’re amazed by what we bring to the surface. If only that could be sustained the practice of corporate reputation building could be transformed. The second part of this equation is identifying and empowering the real influencers. One of my social media experts sent me a fascinating article just a few days ago. It told the story of a major organization that had recently conducted a social network analysis exercise to identify which employees were most influential – who had the most social ‘Klout’. Unsurprisingly the influencers weren’t at the top of the organization. The lesson for all of us is that lurking within our organisations are people with huge untapped potential to be really authentic and powerful advocates and influencers. Of course we need to be mindful of not compromising their authenticity, and think very carefully about how we can support their activities, but what an exciting opportunity. A call to arms The relationship between employee engagement and corporate reputation is a massive topic and we’ve barely scratched the surface but its importance is clearly on the rise, and the possibilities are largely untapped. In a world where the corporate voice is falling on deaf ears and where the grip of traditional channels is weakening, the imperative to tap into this massive opportunity is growing every day. Which brings us neatly to step 5: 54 Unleash the power of content influence The Future of Reputation
  55. 55. In virtually every organization expenditure and effort on communicating externally vastly outstrips efforts focused on employees. But all the advertising, glossy films, websites, and corporate spin in the world can’t paper over the cracks of a bad customer experience, or drown out the noise of negativity from employees. Our learning from experience is simple, and it applies equally to the TV-obsessed Marketing Director as it does to the Corporate Communications Director: If organisations re-oriented just a small percentage of that external spend and effort to engaging employees with their visions, values, and purpose, then overall reputation building efforts would be more effective and ultimately less costly. And the effects of higher engagement levels will be multiplied if you can really empower your people to share their stories and enthusiasm. 55 Re-prioritise to reflect the new normal TODAY’S STAKEHOLDERS | The Future of Reputation is about Building from the Inside Out
  56. 56. The Future of Reputation56 Reputation Building by Stakeholder Collaboration Numerous companies and brands have recently recognized the sign of the times and moved on to create a new dimension of interaction with their external and internal stakeholders. New opportunities open up due to the arrival of new media, channels and platforms – as new challenges arise in the wake of eroding trust, and the growing demand for participation in the always-on conversation economy. Which are the key factors of success, then, in turning corporate and brand relations into a lasting and mutually beneficial stakeholder engagement? What are the most promising choices in setting up “Purpose + People” programs meant to effectively involve customers and consumers, employees and influencers, thought leaders and citizens? How to best establish communications platforms and programs to add to an attractive “citizen brand” profile? Who could be the audiences participating in the evolution of corporate and brand reputation - through sustained and constructive dialogue, productive ideation and sustained co-innovation? Martin Dohmen Germany Director, Corporate Brand Citizenship/PurPle, Chief Strategy Officer, MSL Germany
  57. 57. 57 The Why: stay close to your brand purpose but follow the conversation. An inquiry into the purpose-related communications of major global companies – like MSLGROUP’s PurPle (Purpose + People) Index – reveals that most key topics around which brands choose to initiate a dialogue fall into four categories: health, environment, education or human potential. Ideally, a brand purpose forms a bridge between the brand’s DNA and its most significant overall promise to stakeholders and society alike. Hence, pharmaceutical firms like Janssen tend to collaboratively address health issues, a global energy player like Shell is most credible as thought leader and conversation host on energy matters etc. Increasingly, reputation hinges on stakeholders’ trust in a brand’s future ability to address, and successfully cope with, upcoming demands, challenges and opportunities. Beyond competence and responsibility, this belief makes a decisive difference in securing brand competitiveness and appeal. TODAY’S STAKEHOLDERS | Reputation Building by Influencer Collaboration
  58. 58. Video: Future Influencers: Unlocking the Energy Challenge IBM’s Smarter Cities initiative has been a good example for a company focusing on a future agenda outside of its comfort zone. The Future Influencers think tank initiated by Siemens equally proves that current business and technological expertise can be made to bear fruit in collaborating with decision-makers and influencers on larger topics, like urban mobility and urgent global sustainability issues. Remaining flexible matters too: if fracking in the United States turns part of the global energy agenda upside down, brands should be willing to follow and inspire the meandering energy conversation. IBM challenged people to build a smarter planet The Future of Reputation58
  59. 59. The What: if you are not up for a long-runner, do not start to walk (and talk). Format options for collaborations range from open crowdsourcing of ideas to exclusive conceptual debate and from controversial dialogue to collective co-creation. When teaming up with some of the most imaginative and inventive talents and start- up entrepreneurs, GE’s Ecomagination Challenge offers a model for collecting and rewarding innovative (business) ideas. If the aim is to empower consumers to co-direct the brand’s cause-related engagement activities, the Pepsi Refresh Project still offers a bold pioneer model, even though it has not been continued. Open collaboration formats are challenging, not only in keeping out non-productive participants. It is by no means less complex to initiate, manage and stimulate more exclusive or closed collaboration communities. A well-planned and intense moderation (with 24/7 capabilities) is key in an external debate for ideation or concept development, as in any advanced corporate social intranet drive. 59TODAY’S STAKEHOLDERS | Reputation Building by Influencer Collaboration
  60. 60. The Future of Reputation60 The How: networking and own visibility beat platform technology as attractors. State-of-the-art multi-media event experiences and digital collaborative tools indeed make a big difference to create attractive environments for advanced interaction. Yet, communicators tend to overrate the technological platform factor. Experience indicates that a strong conversational agenda fuelled by authentic and engaging storytelling has a much stronger effect in attracting audiences to become initially involved in collaborative communications. A high-level peer-group offering new networking opportunities beyond the actual dialogue, a chance to personally contribute to a ground-breaking content production, exclusive access to brand ambassadors and thought-leading personalities, and, last not least, added visibility as opinion-leaders and influencers. These are key benefits potential collaborators will be looking for and appreciate – as the build-up and evolution of the Future Influencers community has demonstrated. Monetary or commercial incentives are also able to drive participation, especially in idea competitions. In the long run, however, the trust and reputation brands can gain from intensified, more direct communications and relations with their stakeholders will only come through benefits beyond money – and only with a credible commitment to make purpose-related collaborations last and grow.
  61. 61. 61 The Who: talking with “my” generation – if it has influence. Some general learnings apply, regardless of whether company managers or analysts, employees or environmental activists, brand followers or academic experts are to be involved in a collaboration. Stakeholder communications grow outside in: the 90 (invitees) / 9 (inactive members) / 1 (active participant) community principle roughly holds true. This makes it necessary to initially address a much larger group than the one the collaboration is planned to be eventually carried out with. At the same time, community engagement grows inside out. This makes it an imperative to nurture the most active players in the conversation - because they are the ones spreading the collaborative impulse to non-active collaborators and to larger audiences outside of the collaboration. The need for initial awareness and attention makes it highly desirable for a brand to focus collaborations on those parts of its audience which have the biggest influence - be it through their professional authority (and publishing track record) on “my” topic or through their social media clout. Whoever is capable and likely to spread the news about the collaboration and the brand’s role in it is a relevant candidate. Finally, external stakeholders and audiences – including critical institutions like NGOs and citizen advocates - have repeatedly made it clear that they are not shy about facing companies and brands which explicitly follow their respective business rationale. It makes sense to plan for multi-party collaborations involving managers and employees, customers and consumers, experts and candidates at the same time. A diverse mix will not only make the collaboration more colourful and inspiring beyond conventional audience wisdom, it can also help to create and amplify conversational and reputational interplay, inside and outside of the collaboration. 90Invitees 9inactive 1active TODAY’S STAKEHOLDERS | Reputation Building by Influencer Collaboration
  62. 62. The Future of Reputation62 Siemens Future Influencers Future Influencers is an online community initiated by Siemens as a global and exclusive think tank with more than 180 international young thought leaders – and it is still growing. Everyone taking part must demonstrate an expertise and passion for sustainability subjects and possess a strong “digital presence”. In several collaborations per year, the Future Influencers pitch ideas, discuss them and evaluate the most promising concepts. The creators of the best ideas are invited to appear at, and participate in, major global events connected with Siemens, like the World Climate Summits. Project partners include the World Resource Institute and the Harvard Business Review. MSL Germany and Publicis Munich are supporting Siemens in managing collaborations and building the community. Return on Collaboration: shared value + share value An authoritative set of Global KPIs for collaborative stakeholder communications is not yet available due to the early evolutionary stage of the shared value paradigm. Projects like Siemens Future Influencers have produced some first insights on the benefits for companies and brands investing in long-term collaboration platforms and programs. Siemens Future Influencers Community futureinfluencers.com
  63. 63. 63 Learning from the Future Influencers initiative Companies and brands can gain access to “real” conversations not tainted or distorted by push communications and wishful thinking. They can gain valuable insights and ideas not available otherwise from more superficial forms of interaction and dialogue. Listen and learn. Co-produce content. Share and enlarge visibility. Conversational conversion rate. Connect and attract. Gain access to top talent and future decision-makers. Debates, ideas, concepts, research, positions, publications etc. – whether as direct community output or as a result of a larger cooperation, well-planned and thoroughly managed collaborations lead to relevant, interesting data, stories and intelligence. The co-produced content is an excellent addition to corporate and brand communications and content marketing. Collaborations are about talking to each other and, most of all, about working together to co-produce results. The higher the number of collaborators involved in this kind of conversational community building, the higher the brand attraction. Any high-quality collaboration is a vehicle and booster to spread the news on the brand’s thought-leading and conversation-leading competence and contributions. The traceable multiplier effect created by the collaborators indicates the collaboration’s relevance and attractiveness. The combination of all other effects will lend to an enhanced reputation, create an increased interest from target audiences and, eventually, more leads and demand. As a sustained working relationship is more reliable than mere “followship,” the engagement created with present or future high potentials, influencers, opinion- leaders and decision-makers (internally or externally) also leads to a competitive advantage in brand reach and clout. TODAY’S STAKEHOLDERS | Reputation Building by Influencer Collaboration
  64. 64. Reputation Management: From Risk Mitigation to Competitive Advantage
  65. 65. From Ignition to Recovery: The Components of Today’s Crises Nidhi Makhija, Senior Manager – Insights, MSLGROUP The Evolving Role of the Board in Reputation Management Brad Wilks, MD, Midwest, North America, MSLGROUP How to Manage Your Reputation in the Social Age Tap into Big Data: The Transcript of your Reputation Merrill Freund, MD, San Francisco, MSLGROUP Frederike den Ottelander, Head of Digital Social, Netherlands, MSLGROUP VOLUME 3, ISSUE 1
  66. 66. Nidhi Makhija Senior Manager - Insights, MSLGROUP From Ignition to Recovery: The Components of Today’s Reputation Crises 66 The Future of Reputation In our hyper-connected globalized world, we are seeing that reputation crises have the potential to grow faster, spread wider and hit harder than any time before. There are two simple reasons for this: 1) People are well-connected on social platforms, and actively share information and opinions with their networks in real-time. It’s easier for people to organize themselves and apply pressure to both regulators and companies. 2) Companies are larger and widely extended, with suppliers, employees and customers spread out across culturally diverse regions. As a result, both products and news extend over a wider geography at a faster pace. An analysis of recent corporate and brand crises - events that were buzzing in international news sites and social conversations in the last two years – provides us with a broad idea of the issues that stakeholders care most about today.
  67. 67. A look at recent brand crises reveals that people care most about 67REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises FAULTY PRODUCTS MISCONDUCT LEADERSHIP DATA SECURITY COMPANY’S CONDUCT ECONOMY ENVIRONMENT HUMAN RIGHTS TAX AVOIDANCE LOW WAGES/ UNPAID SALARIES MAN-MADE DISASTERS EXPLOITATION DISCRIMINATION HIRING BIAS A company’s conduct and its impact on the economy, environment and human rights.
  68. 68. 68 The majority of crises fall into this category, as several brands struggled to deliver on their basic offer (e.g. the horse-meat scandal that affected food manufacturers in Europe), and as several companies, leaders or employees misbehaved (e.g. Lululemon CEO’s comments after the see-through yoga pants scandal). Today, people are holding brands to deliver on the product offer (as we saw in China, when a celebrity blogger smashed a defective Siemens fridge), and they are expanding their expectations to include data security (as catalyzed both by the NSA-snooping scandal and the Target security breach which compromised payment details of 40 million customers in the US). People also expect more out of corporate leaders, and are not shy of punishing the organization for its leaders’ actions or The Future of Reputation Company’s Conduct: Before and After Crises1 comments (as in the case of Barilla CEO, whose anti-gay remarks on a local Italian radio sparked a global boycott). Regulators are becoming more demanding as well, especially in the financial services sector, and are raising the severity of fines to match the scale of misconduct (as auditing firms such as PwC and Deloitte are finding in the UK, and banks such as JP Morgan and Bank of America are finding in the US).
  69. 69. 69 Company’s conduct Armstrong doping scandal Cyclist Lance Armstrong’s doping confession led to a drop in support for his charity Livestrong and an end to it’s partnership with Nike See-through pants Lululemon’s black yoga pants were recalled for being too ‘sheer’ and its CEO was ousted for later pushing the blame on ‘unfit’ customers Security breach Target’s data security was breached by hackers over 19 days; credit and debit card information of 40 million US customers were stolen Loan modification delays Bank of America’s home loan modification delays came under the regulatory scanner as customers and employees alleged that the delays were intentional Jimmy Savile sexual abuse scandal BBC’s decision to shelve a report about their late employee’s criminal past led to the organization’s ‘worst crisis in 50 years’ and resignation of its Director General Horse-meat scandal Traces of horse-meat appeared in beef products in the UK, France and Sweden, enraging the public and regulators Anti-gay comment Barilla chairman’s comment that he would never feature a same-sex couple in his ads sparked a boycott and backlash in several countries Defective fridges Siemens’ inaction to address complaints inspired a Chinese internet-celebrity to smash a fridge outside the company’s HQ in Beijing Astroturfing Samsung was fined by regulators for posting fake reviews and comments against competitors Cruise mishaps Carnival’s safety record took a hit as the Costa Concordia sank, killing 32, and Carnival Triumph suffered from an engine failure the next year Auditing failures PwC and the Big 4 face increasing pressure and larger penalties from UK regulators for their broader role in the financial crises London Whale A single JP Morgan trader lost more than $6.2 billion on derivative trades, reigniting regulators’ concerns about the banking industry's practices and risk appetite FAULTY PRODUCTS MISCONDUCT LEADERSHIP DATA SECURITY REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises
  70. 70. Increasingly, people are paying attention to a company’s contribution to state coffers and its strain on public services. Companies, especially in the US and UK, are coming under the public and legal scanner for avoiding corporate taxes (as Google, Amazon and Starbucks saw in the UK) or for having too many employees dependent on tax-funded welfare programs (as is the case with Walmart and McDonald’s in the US). People are becoming more and more aware of the larger picture – they are looking past organizational structures and holding profitable parties at the top responsible for the losses at the bottom. This was well-illustrated in the case of Kingfisher Airlines in India, whose wealthy promoters have been heavily criticized for delays in employee salaries. Four years after the BP oil spill and three years after the Fukushima nuclear reactor meltdown, people seem determined to avoid similar man-made disasters. Oil companies are facing heat from activist groups and regulators in new drilling projects (as in the case of Shell, which has had to shelve its 2014 arctic drilling plans). Nuclear energy companies are facing similar resistance following the Tokyo Electric Power Company’s inadequacies in preventing and alleviating the Fukushima disaster. 70 The Future of Reputation Impact on the Economy: Seeking Sustainable Growth2 Impact on the Environment: Prevention before Cure3
  71. 71. Economy and Environment TAX AVOIDANCE LOW WAGES / UNPAID SALARIES MAN-MADE DISASTERS Welfare queens Walmart and McDonald’s employees rely heavily on taxpayer funded welfare programs, fuelling the debate around minimum wages Tax avoidance Google, Starbucks, Amazon faced public and regulator outrage in the UK over low-to-zero tax payments in the past decade Unpaid salaries Kingfisher Airlines failed to pay employees for months before going bankrupt, angering public and regulators and hurting the reputation of its successful parent company and millionaire owner Nuclear hazards TEPCO, the operator of the Fukushima nuclear plant, was criticized for a lack of safety precautions and the way it handled the meltdown, escalating global concerns around nuclear energy Arctic drilling Shell and Gazprom’s drilling programs have been targeted by Greenpeace activists, who are concerned that weather conditions would make any disaster response efforts impossible 71REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises
  72. 72. A large number of brand crises revolve around human rights, as people continue to fight gender inequality and demand equal rights for the gay community and for workers of different socioeconomic backgrounds. The fight for gay-rights is a global one, with tremors felt at the Barilla headquarters in Italy, at the Supreme Court in India, and at Sochi 2014. People are sensitive about gay rights and it is common for activists to publicly shame companies that fund anti-gay organizations (as in the case of US fast food chain Chick-fil-a, which witnessed national boycotts and appreciation-days as ideologies clashed). Exploitation of low wage workers has recently emerged as a global issue as well. People are unwilling to be a part of a system based on exploitation, and are demanding brands be accountable for all workers: including those across the supply chain and temporary workers. Companies that have been publicly shamed include the fashion industry for allowing unsafe working conditions in factories in Bangladesh, Amazon for demanding too much out of its warehouse workers, and FIFA for doing little to safeguard labour rights in Qatar. There’s heat at the opposite end of the spectrum as well, with US regulators clamping down on companies that hire people from wealthy backgrounds in exchange for new business contracts (as in the case of JP Morgan which is under investigation for hiring ‘Chinese princelings’). 72 The Future of Reputation Impact on Human Rights: Equality for All4
  73. 73. Human Rights EXPLOITATION DISCRIMINATION HIRING BIAS Chinese princelings JP Morgan’s practice of hiring sons and daughters of elite Chinese in return for business contracts led to legal troubles in the US Hiring based on looks Abercrombie Fitch’s biased hiring practices came under scanner as activists argued that sales staff are not models and should not be discriminated against for their looks Exploitation of migrant workers Qatar 2022 and FIFA are facing pressure from international human rights bodies to improve treatment of migrant workers and to address the steep number of casualties Exploitation of low-wage workers Global fashion brands were targeted by activists after a clothing factory collapsed in Bangladesh. Many European brands were quick to sign a legally binding safety accord, while American brands refused and faced much negative news coverage. Brands such as Mango were also criticized for inadequate compensation to victims’ families Scam ads Ford was embroiled in controversy when its ad agency released unapproved and distasteful scam ads that depicted women tied up in the boot of the Ford Figo ‘Slave camps’ Amazon warehouses were likened to slave camps as journalists criticized the physical demands and excessive performance targets placed on warehouse workers Same-sex marriage controversy Chick-fil-a’s donations to anti-LGBT rights political organizations led to a public debacle; with Chick-fil-a boycotts clashing against Chick-fil-a appreciation days Lack of diversity Twitter became the poster boy of the lack of diversity in Silicon Valley when it revealed, in its pre-IPO filings, that it had an all-white all-male board 73REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises
  74. 74. WHAT BOFA DID PEOPLE’S RESPONSE IMPACT Crisis Catalysts: Three things to watch out for In addition to the issues themselves, corporates and brands should also be prepared for three trends that can fuel crises: steady stream of negative stories on social media and calls to rally against the bank. The impact? American Banker’s 2013 Survey of Bank Reputations shows that Bank of America scored lowest amongst customers and ‘even worse’ among non-customers. Bank of America’s reputation took a hit during the financial crisis of 2007-08 and continues to stay low because of the company’s non-empathetic response and the profit-first attitude it continues to portray. In the last few years, angry Bank of America’s customers and employees reacted to delays and new ‘unjust’ policies with a 74 The Future of Reputation Power of Individuals: the Bank of America case1 Unjustified Interest Hikes to 30% - even for customers in good standing Customers shared stories on YouTube, and one woman called for a Debtor’s Revolt Media picked up these stories BofA resolved individual cases, thus inspiring others to follow suit Why Bank of America Fired Me video received over 560,000 views BofA ranks poorest in customer service studies (ASCI, MSN) Credit Unions received 1 million additional new customers and over $4.5 billion in funds in 2011-12 Employees customers shared stories and created a “Banking Bad” mockumentary on YouTube One customer created a Facebook event that sparked a national Bank Transfer Day movement Intentional delays in modifying loans – leading to preventable foreclosures demoralized staff First to introduce a $5 Debit Card Fee – to preserve high profits
  75. 75. In April 2013, the global fashion industry was accused of labour exploitation after the collapse of the Rana factory in Bangladesh killed a thousand workers and injured two thousand more. Activists and the media quickly revealed the brands whose apparel was manufactured at the factory and mobilized people to petition the brands involved to sign The Accord on Fire and Building Safety in Bangladesh – a five year legally binding agreement to fund and uphold minimum safety standards in the Bangladesh textile industry. Less than a month after the collapse, 90,000 people signed the petition, pressuring 42 brands to sign the agreement. Today, over 100 brands have signed the accord, and 26 additional brands have created their own independent five-year safety plan. As the one year anniversary looms ahead, activists and the media are pressuring the industry to contribute to a $40 million compensation fund for victims. In January 2013, horse DNA was found in frozen beef products in a British supermarket and triggered a ‘major breakdown in the traceability of the food supply chain.’ Adulterated meat was found in 13 EU countries and millions of pounds of food was recalled across Europe. Several hundred companies had received adulterated supplies of meat which was later traced to slaughterhouses in Romania and Poland. Further tests detected traces of the veterinary drug phenylbutazone, sparking fears for human safety. Consumer-facing brands like Tesco and Findus suffered large drops in sales and changed suppliers. Frozen meat products as a category witnessed a decline, and people in the UK are opting instead for fresh traceable food and shopping at local butchers and farmer’s markets. 75 Speed of Activism: Bangladesh Safety Accord2 Challenges of Scale: Horse-meat scandal in Europe3 REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises
  76. 76. Recovering from crisis: Leading the Conversation In times of crisis, people expect corporates and brands to step up and lead the conversation. Tired of denials, people want companies to acknowledge their mistakes, implement quick solutions, and prevent similar events from occurring again. Power of a Strong Offense: Target While Target could have done more to prevent the data breach in late 2013, the company has staged a strong offense to restore customer trust. The company was a victim of a 19 day security breach in which credit and debit card information of 40 million customers and personal information of 70 million customers was stolen. A day after the breach was announced, the company released an acknowledgement and has since been working with federal investigators, investing in cybersecurity education and offering customers free credit monitoring and identity theft protection. In addition, Target is speeding up its plans to introduce chip-enabled technology in stores to boost security. A section of its website is dedicated to explaining the event to customers. Power of a Clear Positioning: PwC PwC’s reputation with UK regulators took a dip in 2011, when a House of Lords criticized the auditor for its role in the financial crisis. The firm responded by acknowledging the lack of trust in the industry, appointing a head of reputation strategy and positioning itself as a part of the conversation - and the solution. Already a strong content creator and thought leader, PwC is using these strengths to position itself as leader in addressing the lack of trust plaguing its own industry and its clients. 76 The Future of Reputation
  77. 77. Power of Cultural Leadership: GE A decade ago, GE was known as a leading polluter. The company has since transformed itself to a leading clean technology provider. Since 2005, GE has committed large investments to building ecomagination and Healthymagination – ranges of sustainable eco products and affordable health products. GE also launched open innovation challenges and entrepreneurship programs to support innovation internally and externally. The company engages people around these programs with short visual content packets, optimized for quick consumption on social networks. GE has an audience of 1 million on Facebook. Strong leadership, open innovation, philanthropy efforts and participatory programs have boosted GE to one of today’s leading global brands. 77REPUTATION MANAGEMENT | From Ignition to Recovery: The Components of Today’s Crises
  78. 78. Components of a Reputation Recovered When it comes to crisis, it’s not a question of just ‘if’ and ‘when,’ but also ‘how.’ How will you diminish the chances of a reputation crisis? How will you respond when one hits? From the many cases mentioned above, it’s clear that strengthening and recovering reputation is about… • Changing the system – doing the right thing, standing for a purpose, from the start. • Realizing that everything is connected – and that people already know it. • Being empathetic – people are not numbers, they’re individuals. • Being mindful – some people may not be influencers today, but they very well could be tomorrow. It’s also about being realistic and knowing when to give in to people’s demands. As Ellen DeGeneres poignantly observed at the Oscars: Tonight, there are so many different possibilities. Possibility number one: 12 Years a Slave wins Best Picture. Possibility number two: You’re all racists! 78 The Future of Reputation
  79. 79. How to Manage your Reputation in the Social Age Establishing a great reputation used to be a slow moving exercise – it was more akin to the turtle than the hare. Sure, there have always been extreme instances in which respected brands have taken major hits from huge crises – think the Tylenol scare of the 1980s – but by and large it has been possible to control and sustain reputations if a company had a great product and a consistent and compelling branding and communications strategy. Merrill Freund MD, San Francisco, MSLGROUP 79REPUTATION MANAGEMENT | How to Manage Your Reputation in the Social Age
  80. 80. 80 The Future of Reputation In the era of social media, short attention spans and one click hops, this isn’t the case anymore. With 500 channels, thousands of blogs and billions of Tweets, how important do the New York Times, CNN or Advertising Age remain for maintaining a pristine image? For example, a few years ago, Internet and cable TV provider Comcast received notoriety and fame when service problems on its network were the subject of on-going attacks on Twitter after which they developed a rapid response to address these damaging tweets. Companies are adopting influencer programs to drive greater user integration into communications programs. While not overtly co-opting users, it demonstrates the new focus on “Dave the Geek from Orlando” rather than David Pogue as the taste masters driving the brand and reputation.
  81. 81. 1) Don’t throw out the baby (let alone the bathtub) with the bathwater Unless 2 million readers a day mean nothing, The New York Times is going nowhere (even if they are giving away millions of dollars a year due to a lack of a cohesive online monetization strategy) and what they publish still matters. Ignore them at your peril. 2) But it’s not just a game of volume – focus counts. A review of an online coupon site on the Huffington Post is great but a mention in a mommy blog with only thousands of subscribers can be even better since they are all socially vocal. 81 3) Whether Verizon wants to hear this or not, churn is inevitable in almost every industry. Losing a customer happens in less time than it takes to read this sentence. It’s the price you pay in an online world – your competitor is only one click away so any micro-change to your brand, reputation or experience and a loyal customer could be gone. Learn to take this in stride and better anticipate your customers’ expectations and reactions. 5 Rules to Managing your Reputation in the Social Age So given this new state of conventional wisdom, what rules should you apply to maintain, improve or change your reputation or brand? Here are five to consider. REPUTATION MANAGEMENT | How to Manage Your Reputation in the Social Age
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×