The Future of Reputation - People's Insights Magazine
 

The Future of Reputation - People's Insights Magazine

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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 ...

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

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The Future of Reputation - People's Insights Magazine The Future of Reputation - People's Insights Magazine Presentation Transcript

  • 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 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 Now&Next 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.
  • 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
  • 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 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
  • 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 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 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.
  • 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.
  • Reputation Journey: The Now & The Next
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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 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.
  • 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.”
  • 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
  • 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 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
  • 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.
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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?
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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.
  • 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.
  • 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 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
  • 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 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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 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
  • 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
  • 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
  • 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 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
  • 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 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
  • 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 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
  • 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.
  • 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 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 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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
  • 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 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.
  • 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
  • 4) You have to maintain the appeal of a shiny object. New social networks, gaming apps, gourmet burger joints and airlines launch every day and unless you maintain the aura of innovation in your business, you will lose much of what originally attracted users. Social media and media is a beast that requires constant feeding – you have to give people something to discuss or silence will follow. A new feature, new look and feel, new stunt. Just keep moving. Preferably in the direction that people are nudging you towards. 5) The world is now a 24-hour network. Reputation management has ceased to be an eight-hour, five-day-a-week exercise. You never know when a crisis will erupt on Twitter that will demand your attention (e.g. when an IAC PR executive tweeted a racist comment and then disappeared on a plane with no internet access for 12 hours) or a golden opportunity appears out of nowhere (e.g., Oreo’s brilliant “dunk in the dark” social media campaign during the Super Bowl blackout). Strategic brand campaigns still work but the spontaneous events can end up being far more important. Cutting edge communications teams are building always-on newsrooms not just to look hip but because they need them. Changes in the media and medium will continue to impact reputation management and brand control and today’s best practices will quickly become obsolete and nostalgically irrelevant. With everyone now having a voice, controlling your reputation is kind of like skiing – you can fool yourself into thinking you control the ride. But that’s half the fun. 82 The Future of Reputation
  • Tap into Big Data: The Transcript of your Reputation As trusted advisors of our clients, we are trusted to build, manage and protect our clients’ reputations. Reputation equals the licence to operate and the right to exist as a company. Reputation has never been harder to manage and protect than in the new communications landscape. The fundamental change in communications is the power of the individual. Every person is an influencer because they have the platforms and audience to express their opinion, experiences, facts, knowledge and visions. Which is terrifying and great at the same time. Frederike den Ottelander Head of Digital & Social, Netherlands, MSLGROUP 83REPUTATION MANAGEMENT | Tap into Big Data: The Transcript of your Reputation
  • 84 The Future of Reputation The devil is in the unknown. The first reason to tap into Big Data is the fact that Big Data can help you prevent crises from happening. A threat on Twitter. An increase of clients complaining about the same thing. A misunderstanding about your services. A product that needs to be recalled. An increase of adverse events. Issues are visible. Ahead of the game: Prevent crisis from happening 4 Reasons you should Tap into Big Data 1 Video: Google Flu Trends Overview An audience of 2.3 billion people has access to the information shared by 2.3 billion fellow individuals. This results in an impressive and endless collection of data from traditional and digital sources inside and outside your company that represents a source for on-going discovery and analysis: Big Data. The good news? You are one of those 2.3 billion people on this planet and therefore you can tap into this Big Data. Here are four reasons why you should. Big Data giant Google is already cleverly tracking a set of search terms to estimate flu activity and identify outbreaks. Any fire starting in even the darkest corner of the internet can now be found and handled before it turns into a crisis. If you missed the fire and the crisis does happen, big data can help you understand what the crisis is really about and what issues need to be addressed to take the sting out of the crisis.
  • 85 Video-streaming provider Netflix learnt this the hard way when it announced a new pricing strategy. Customers posted over 15,000 comments to explain their outrage at this decision on the company’s blog itself – and countless more across social networks and other websites. Goodbye optimism bias: Bridging the perception– reality gap 2 Organizations typically struggle with forming an unbiased and accurate picture of their reputation and the combination of factors that impacts the reputation per stakeholder. The danger is in thinking you know the target audiences after working at the organization for a few years and thus having a sugar coated perception of the reputation you so proudly work to build. An organization can use Big Data to rid themselves of optimism bias and bridge the gap between their perception of their reputation and the real reputation. Collecting data on how your stakeholders feel about you has never been easier and more confronting at the same time. Unlike a panel of happy-to-give-feedback-and-get-paid consumers, Big Data offers a cross-section of how people really feel about you. And about your competitors. And the industry. And so on. Big Data is a transcript of conversations real people have in real life and therefore it’s the transcript of your reputation. REPUTATION MANAGEMENT | Tap into Big Data: The Transcript of your Reputation
  • Video: Introducing the Newsroom by Publicis Consultants 86 The Future of Reputation Knowing that information spreads with the speed of light and that any bit of information can have a huge impact on a reputation, it seems only fair to say that a reputation can turn 180 degrees within minutes. An annual, monthly or even daily reputation report is only an organization’s own reassurance. To really be able to manage your reputation, you need real-time reputation monitoring and even more importantly the ability to interpret what the monitoring tells you. Who is saying what, and why? What are people saying across specific target groups, regions, genders, political backgrounds and so on? Big Data can also be used to measure the impact of an organization’s response to an issue or crisis. How is your target audience responding to your statements? Who are the influencers and why do they say what they say? Managing a reputation has never been more exciting and transparent before: all this data almost literally enables corporates & brands to be the fly on the wall. More and more companies today are creating social newsrooms to monitor social data 24/7. (Watch this introduction to newsrooms by Publicis Consultants). The fly on the wall: Real time reputation3
  • Video: Samsung Galaxy S II (The Next Big Thing) Commercial 87 A 2.3 billion person R&D department: Improve your products & services 4 Not only does Big Data help you prevent a crisis from happening and manage your reputation real-time, it also helps you build your reputation. You have an extended R&D department out there. Hidden in jokes, sarcasm, complaints, praises and wishes is your room for improvement. Improvements that will take away the advantage of your main competitors. Improvements that will make your target audience feel appreciated and take ownership in your brand. From changing the cap of the bottle because it is too hard to open, to training your staff to answer questions in a friendlier manner. From adding a feature to your app because people asked for it, to providing answers to the simple questions your stakeholders ask. These are small changes, easy to identify by analysing Big Data, and can have a large impact on your reputation. Samsung analysed social conversations to identify what people liked most in the Samsung SII smartphone, and featured these in it’s Next Big Thing commercial. Samsung also used this data-driven approach to guide its Super Bowl ad to launch the Galaxy Note in 2013. Based on 2.14 billion search results on Google for ‘Big Data’, I am confident to say we are aware of the phenomenon Big Data. However, a quick research on ‘Big Data’ shows the topic is strongly related to technology, research software, business and analytics. It seems we only consider Big Data to be an analytics and research tool, while actually it is bigger that that. Big Data helps you manage your reputation. Increasingly, it is your licence to operate and your right to exist. REPUTATION MANAGEMENT | Tap into Big Data: The Transcript of your Reputation
  • The global financial crisis and an on-going drumbeat of corporate, government and other institutional scandals have served to weaken the already flagging reputations of many leading institutions and companies around the world. And, while the global economy appears to be slowly mending, prospects seem slim for any sort of near-term reputation recovery for many of our most important institutions and leading companies. 88 The Future of Reputation Brad Wilks MD, Midwest, North America, MSLGROUP The Evolving Role of the Board in Reputation Management
  • Prospects seem slim for any sort of near-term reputation recovery for many of our most important institutions and leading companies. What can be done to rebuild stakeholder trust when public skepticism of business stands at its highest levels in years? Unfortunately, for many companies, the answer seems to be to redouble communications efforts about their CSR, sustainability and charitable initiatives as a means of recovering their reputation. And, while certainly such initiatives should be universally applauded, reputation is more complex than this – it is an amalgam of many perceptions across a wide spectrum of stakeholders. Communications alone will never be successful in reversing a poor reputation that’s the result of underlying poor behavior or unsavory business practices, unless it is accompanied by behavior change. 89REPUTATION MANAGEMENT | The Evolving Role of the Board in Reputation Management
  • Launching a New Paradigm So perhaps it’s time to push for more fundamental change in how reputation is managed within our enterprises. Maybe we should be challenging our organizations to reevaluate their core values and behaviors and make changes in organizational governance, which may over time have greater credibility in rebuilding trust and reputation. One model for addressing this issue would be to establish a separate Reputation Committee of the Board, which would have responsibility for reporting back at each board meeting the current status of the organization’s reputation, along with an assessment of emerging reputational risks which must be addressed. By elevating reputation oversight to the Board of Directors, leaders will begin to grasp the existential importance of reputation, and shift their perspective 90 The Future of Reputation from that of purely risk mitigation to seeing reputation as a strategic business imperative which can drive competitive advantage. Having the topic of reputation elevated to the boardroom might also encourage other important governance decisions to be taken within the context of their potential impact on reputation – for example, controversial sourcing decisions or executive compensation packages.
  • It’s difficult to be an effective steward of corporate reputation when oftentimes actions that negatively impact reputation emanate from higher within the organization. The Problem of Who Owns Reputation For although conventional wisdom says that reputation is a critical asset that needs to be invested in, nurtured and protected, the truth is that for most companies, reputation is too often an asset that everyone owns, which usually means that nobody owns it. Reputation is also difficult to measure, although more and more attempts are being made to measure and ascribe a value to corporate reputation. One such example is the Reputation Institute’s RepTrak® model, which quantifies and analyzes reputation across stakeholders, allowing for predictive analytics and integrated management dashboards. Most of us tend to think of the Chief Communications Officer as the primary steward of corporate reputation, but it’s often unclear who, if anyone truly owns corporate reputation, has the ability to influence it, or is held accountable when it is impaired. It’s difficult to be an effective steward of corporate reputation when oftentimes actions that negatively impact reputation emanate from higher within the organization. For example, in 2010, when Johnson and Johnson was involved in at least 11 major product recalls, CEO William Weldon maintained the company’s quality control issues were not “a systemic problem”, an assertion that damaged the company’s credibility with stakeholders, including regulators. 91REPUTATION MANAGEMENT | The Evolving Role of the Board in Reputation Management
  • In 2012, when it began to emerge that a trader in JPMorgan Chase’s London office had taken a huge bet on credit derivatives, CEO Jamie Dimon initially pooh poohed the incident, saying the Whale had been “harpooned,” and predicting that no one would be talking a year later about what turned out to be a $6.2 billion loss, one of the largest in Wall Street history. When first confronted over the traffic scandal involving the shutdown of the George Washington Bridge, New Jersey Governor Chris Christie went from joking, “I worked the cones, actually. Unbeknownst to everybody, I was actually the guy out there. I was in overalls and hat,” to public contrition and “I am embarrassed and humiliated,” within just a matter of weeks, while seeing his prospects fade as the GOP Presidential front-runner in 2016. 92 The Future of Reputation In each of these instances, those responsible for communications served under the individual or group whose actions or comments resulted in reputational damage. So it seems clear that reputation needs to be championed at a higher level within the organization.
  • The Role of Directors One of the biggest barriers to gaining Board acceptance of reputation as part of their oversight responsibility is that most directors see their primary responsibilities as fiduciary oversight – to drive value creation for shareholders. Reputation is too often seen as an intangible asset that’s great to strive for, but impossible to measure or value. In this model, the board’s primary focus is setting the strategy, and then ensuring that management is executing that strategy to drive value while protecting and growing tangible assets such as cash, property, plant and equipment, accounts receivables, IP and other things that can be easily monetized for claimholders in a bankruptcy. Reputation, and its twin sister, human capital, while priceless assets, are viewed as impossible to value or transfer, which means they often get relegated to lower levels of priority. One of the great ironies of reputation, both personal and institutional, is that we take it for granted when things are going well. Like the air we breathe – our reputation is absolutely essential to our health and wellbeing, yet only in its absence when we’re left breathless and gasping do we truly come to appreciate it. A key lesson of recent years is that corporate reputation is fragile and ethereal – something that can evaporate in minutes like dew with the rising sun. Reputation is also not entirely within our control – subject to behaviors by groups and individuals outside the corporate walls and 93 beyond our day-to-day sphere of influence - part-time employees, freelance consultants, outsourced departments, our global supply chain and network of business partners, or even trusted colleagues and employees with mal intent. What’s also true is that recovering from a reputation collapse is much more difficult and time consuming than it is to build and maintain that reputation in the first place. So the challenge in reputation management is how do we build and preserve it so as to mitigate damage when things go poorly. REPUTATION MANAGEMENT | The Evolving Role of the Board in Reputation Management
  • How do we build and preserve reputation? So how do we develop a paradigm to both nurture and value reputation in this new world, where the world’s most successful companies can spring to life as multi-billion dollar enterprises – think Facebook, Twitter, Snapchat and WhatsApp – and yet have few of the traditional measures of value such as revenues, employees, or manufacturing plants. Clearly a disproportionate piece of the value ascribed to these emerging behemoths must be ascribed to human capital, IP, a unique (and often untested) business model and reputation. How can companies or their boards possibly place a value on, protect and preserve these most vital of assets, whose worth can evaporate in an instant? As more and more of the global economy is built upon this knowledge – based foundation, reputation management is increasingly top of mind within the C-Suite and in boardrooms around the globe. Surveys show that reputation risk is viewed by the majority of executives and investors as the most significant threat posed to a company’s global business operations. A favorable reputation can translate into higher sales, profits, the ability to recruit the best and brightest, and a premium share price multiple. Studies confirm there is a favorable correlation between reputation and share price – in the M&A world, premiums are paid for companies with strong reputational capital. Google’s $3.2 billion acquisition of Nest, a three-year old unprofitable company with just 200 employees, is a case in point. By creating a Board-level committee tasked with reputation management, companies can demonstrate how important this issue is to those entrusted with its oversight. However, to be successful, such a committee would need to receive regular information about the company’s performance as measured not only by profits, but also in terms of how it is perceived by key stakeholders. The committee would have the ability to solicit input from key stakeholders including employees, customers, shareholders, as well as have access to updates about conventional and social media coverage of the company. The Future of Reputation94
  • In instances where the news is bad, performance goals should be established that the board holds management and the rest of the organization accountable for achieving. Such performance goals would result in actions to address not only the communications surrounding the reputational risk, but the underlying root causes of the problem in terms of operations, human resources, sales and marketing or supply chain management. In this way, the entire board of directors can remain updated as to the current status of the company’s reputation based on a regular survey of key stakeholders to identify strengths and material weaknesses in the company’s reputation. Some companies are already moving closer to this model by establishing corporate social responsibility or reputation committees appointed by the Board which are charged with the oversight of their social obligations and reputation as responsible corporate citizens. Other leading companies are expanding the discussion of reputation within the context of their current board committee structure. However, making the commitment to reputation as an issue that warrants its own Board Committee remains an elusive goal. If we’ve learned anything from the past few years it is that only by regularly assessing the state of a company’s reputation, auditing its reputational assets and potential liabilities, and defining a course of action to stave off actions which might damage reputation, can Boards of Directors truly demonstrate a model of good corporate governance which will help their organizations begin to regain trust. 95REPUTATION MANAGEMENT | The Evolving Role of the Board in Reputation Management
  • Perspectives: Reputation Around The Globe
  • China: Facing the Challenges of a Low-Trust Society France: Social Performance Comes First India: The Awakening Poland: Invaluable Reputation - Protects, Motivates, Sells! Fabrice Fries, President, France, MSLGROUP Par Uhlin, MD, MSLGROUP in Hong Kong and Vice Chair, MSLGROUP China Jaideep Shergill, CEO, India, MSLGROUP Katarzyna Stamatel, Head of Law & Consulting, Poland, MSLGROUP VOLUME 3, ISSUE 1
  • France: Social Performance Comes First Fabrice Fries President, France, MSLGROUP The Future of Reputation98 In France, the question of corporate reputation is invariably seen in an ideological context and historically one that is wary, if not critical, of anything to do with business. Surely the digital age, in a country particularly connected to the internet, is changing the way we engage, or disengage with brands. But their perception of their presumed utility in economic, social and environmental progress remains a matter of debate. To measure reputation, the French, more than others, give greater importance to aspects such as “corporate governance” or “good corporate citizenship”. Inversely, the quality of products and services is substantially underweighted.
  • PERSPECTIVES | France: Social Performance Comes First 99 In France, a company’s reputation is often hit by politics: in 2012, Arcelor Mittal came under fire during the election campaign. To measure reputation, the French, more than others, give greater importance to aspects such as “corporate governance” or “good corporate citizenship”. Inversely, the quality of products and services is underweighted. In other words, companies are expected to be equally efficient in their working methods as in what they do. Social challenges meet commercial challenges. The different barometers used to measure corporate reputation in France demonstrate this specificity. As such, the correlation is immediately made between the role given to any industrial sector during a particular economic crisis, and the score it will be given by the general public.
  • The Future of Reputation100 Over the past few years, banks have been generally ranked poorly. Most recently, following a series of restructuring and redundancy plans, the automobile industry has suffered as a whole. In a more insidious manner and despite undeniable progress in product and How do different industries fare in France service offerings, two sectors are traditionally low in reputation rankings. On one hand, the pharmaceutical industry, suspected of putting private financial interests before the interest of public health. And on the other hand, the telecom industry, accused implicitly of taking advantage of the consumer in price fixing and collusion on offers.
  • Which companies are ahead of the rest? Finally, companies that have gained the respect of the French, present three characteristics: 1 They are historical industrial powerhouses, intimately linked to the image of French excellence. 2 They are brands from the digital era, encompassing the positive attributes of a connected society. 3 And they are brands that communicate heavily on their commitments, particularly in relation to the environment. In a recent poll published by a leading economic newspaper in partnership with public relations agencies, three major names made it to the top of the list. 101 Danone’s commitment in emerging countries via the “Danone Communities” initiative is a key factor of Danone’s reputation. Danone, a global leader in the food industry benefits from a policy patiently built around major social issues. This strategy is largely based on the brand’s strong commitment to two issues of great social importance: health and sustainable development. Until now, this commitment has allowed Danone to avoid the collateral damage of food and health related crises that often challenge other industry players. First, Google, the symbol of promise in the digital wave. Its products and services, and its overall management style and employability, generate enthusiasm, especially among younger generations. PERSPECTIVES | France: Social Performance Comes First
  • Nevertheless, the French remain more reserved than the rest of the world when judging corporate performance. In fact, this is the last criteria considered in developing an opinion. Despite the generally positive performance ratings of bigger companies, the French are substantially more interested in the more social and societal aspects of reputation; for example, employment is considered as important as innovation. In essence, the French consider that performance is not a means to an end but The Future of Reputation102 Finally, and somewhat unexpectedly, Michelin, the global leader in tires, is perceived by the French public as a particularly efficient brand in terms of innovation, quality and sustainability, and safety of their products. The company’s financial results, reflecting its focus on social dialogue in a context where competitors are brutally cutting jobs in France, also explains its high ranking in public opinion. Yves Rocher has built its marketing upon the respect of nature for decades. This key component of its reputation is now developed on social networks. rather that it should be part of the shared vision of all stakeholders. For example, the French are unfazed by the spectacular financial performance of Total, because the company’s image is engulfed in accusations of “bad practices” in some developing countries. Inversely, the excellent reputation of Yves Rocher is fundamentally based on the company’s longstanding commitment to sustainable development.
  • Engaging the French Consumer: Getting the message and the medium right This French approach to reputation has consequences on how consumers impact brand reputations in the era of “digital conversation.” Thus, only one third of consumers base their decision to “follow” a brand on market related criteria such as products, services and innovation. For all others, what is essential are matters of ethics, the way the company operates, or in other words its immaterial dimension. This observation requires that agencies which, like Publicis Consultants, claim an expertise in “sustainable” reputation, create long-lasting and comprehensive strategies with their clients. Audiences are indeed increasingly multifaceted and less segmented. There is no use of developing the “employability” on one side, without taking into account social utility on the other. Transparency means being unquestionable in all aspects of the game. Especially since leaders, in France and elsewhere, are well aware that reputation constitutes the number one risk. This change of mind is more clearly visible in areas directly impacted by public debate, such as health and energy, but nevertheless applies to all brands. The speed with which respected brands have been tarnished, such as happened to Barilla in 2013, sends an important signal. Obviously amongst the leading risk factors is social media. Beyond the necessary technological agility, the expertise of our network is judged by our clients on the quality of our offer of content creation to build a sustainable reputation. “Consumer content” and “Corporate content” are not so distant from one another. In fact, it is their seamless articulation that can generate reputational impact. 103PERSPECTIVES | France: Social Performance Comes First
  • China: Facing the Challenges of a Low-trust Society Par Uhlin MD, MSLGROUP in Hong Kong and Vice Chair, MSLGROUP China The Future of Reputation The State of Trust in China Chinese society is suffering from a trust crisis. This is partly due to recurring scandals over the last decades, where companies, government and even the media themselves have tried to cover up the truth. The best known examples include the SARS epidemic and the melamine milk scandal, where farmers, dairy companies and local officials all tried to avoid taking responsibility for their part in a tragedy which caused the death or hospitalization of hundreds of infants. Numerous food safety and healthcare incidents have involved everything from water to pharmaceuticals to international fast food chains. 104
  • COUNTRY PERSPECTIVES | Corporate Reputation in China– Facing the Challenges of a Low-trust SocietyPERSPECTIVES | China: Facing the Challenges of a Low-Trust Society The central government faces a general trust crisis both because of its role in censoring media reports on these issues, and the general perception of vested interests and widespread corruption. Even the crackdown on corruption initiated in the beginning of 2013 is often seen as “only touching the tip of the iceberg”. Chinese people seem to be asking themselves: “is there anyone left to trust, apart from my family and closest friends?” At the same time, Chinese citizens have become better informed, and tend to be more critical and questioning than they were just ten years ago. This is partly thanks to increased openness and transparency from the government itself, but also due to the emergence of social media and the consequent access to information and forums for debate that simply did not exist previously in China. The paradox is that social media has also brought a high level of misguidance and false information. Rumours are being spread and believed, as people do not trust official sources of information the way they used to. Against this background, building a strong corporate reputation in China is more important than ever. 105
  • Corporate Image is crucial to stakeholder relations The Future of Reputation The days when Chinese authorities welcomed any kind of foreign investment with open arms are long gone. Corporate brand is seen by Chinese consumers as a guarantee for quality and honesty. With overcapacity in many areas of the economy, a rapidly increasing cost level and an higher environmental awareness, the Chinese government is trying to transform the economy from labour intensive manufacturing to knowledge and technology intense areas. The approval of permits and licenses needed for entry or expansion of the business in China will of course be based on the business case presented. But corporate reputation is also playing an increasingly important role, with priority given to organizations with a reputation for sustainable investments in R&D and innovation, ethical business conduct and social contribution. Consumers in China are extremely concerned about getting value for money and to buy products that are safe to use. Much time and effort is spent to find products and services that actually deliver what has been promised, and a strong corporate brand and reputation that backs up specific product claims is a huge asset. This has been confirmed by a number of research projects conducted in the past few years. The importance of corporate brand is also clear from the unique branding strategy for China applied by leading multinationals starting with P&G. The corporate brand has a strong presence on product packaging and is used in communication, as a guarantee of quality and trustworthiness. This way of highlighting the corporate brand for consumer marketing is very different from communication in other parts of the world. 106
  • The competition for talent is one of the most crucial challenges facing any company in China. Compensation and career opportunities remain important factors when people in China evaluate a job opportunity. Other factors like job safety, company values and the overall corporate reputation are also becoming increasingly important. People want to work for reputable large companies that have clearly articulated values, and companies making a contribution to Chinese society. 107PERSPECTIVES | China: Facing the Challenges of a Low-Trust Society
  • Companies are waking up to this challenge, but often launch initiatives before being clear on objectives and expectations When it comes to proactively building a corporate reputation, the situation is somewhat different. Compared to a decade ago, the time and effort invested in building up corporate reputation has increased immensely. In the past, companies were not expected to contribute to society, and there was a low awareness of environmental damage and product safety. This has changed, and today both politicians and the general public expect companies to give back to society. Many companies are implementing some form of corporate citizen program, but many of the programs are put in place “because we are expected to,” without a long-term strategy and clearly defined objectives. Other programs conducted are modelled based on global initiatives, with little relevance to China. There is a need to become more aware of the purpose behind these initiatives, to anchor the purpose and direction within the organization, and to develop and execute programs for a Chinese context. Today, most large international companies in China have systems and capabilities to protect their reputation and handle communications issues and crisis. Chinese media mainly target foreign companies when writing negative articles. Sometimes the scrutiny and criticism is well deserved, sometimes not. Seeing the way industry peers are treated in the press, or sometimes learning first hand, has made the necessity of investing in these capabilities obvious. The Future of Reputation108
  • 109 3 China specifics one must have in mind when building corporate reputation in China Of course, every market is different, but some aspects of China’s past, present and future direction make the challenge of building corporate reputation in China unique. The speed of development in China is sometimes overwhelming – build long-term platforms, frequently activated to stay relevant. The transformation of China has taken place at a pace never before seen in history. Hundreds of millions of people have been taken out of poverty, and the country has gone from isolation to being a truly global society in areas ranging from business to fashion. Life in China is extremely fast, and this has strong implications on how a reputation can be built over time. With all this change, it is of course important to have a long term strategy and direction that can guide company activities and communication. That said, activities must be carried out at a much higher frequency to stay relevant, and to be remembered. What was done six months ago is easily flushed away in the constant stream of news and developments. You have to earn your reputation every day, and every week, and you cannot put much reliance on a foundation built up in the past. With a limited number of long-term platforms and programs that can be activated frequently, one can ensure that the communication is consistent and clear but also conducted with the intensity needed to stay relevant. 1 PERSPECTIVES | China: Facing the Challenges of a Low-Trust Society
  • Manage shared values despite high staff turnover – Create strong systems for knowledge management and internal knowledge sharing. An organization’s character is reflected by the people within, and the values and vision behind corporate reputation must be anchored internally. With an average staff turnover at around 20% for private companies in China, this becomes complicated. It is important to work systematically to keep employees informed, involved and believing. If at any given time, one out of four employees are new to the company, an internal knowledge management and sharing program needs to be strictly enforced. A reputation is built on actions. How the company acts in critical situations as well as in day-to-day operations. Actions are decided by policies and habits, and these are decided by the values the company embraces. Creating a system to clearly articulate, document, share and inseminate these values will decide if the organization can act as one unified entity or just a group of individuals working together. This will have a large impact on the degree of success the organization will have in creating a coherent, well-founded reputation. The Future of Reputation110
  • 111 Keep it personal, and use media that allow for this. In a low trust environment in constant change, people trust other people, not faceless “media” or “authorities”. Taking into consideration the increasing scepticism towards government controlled media in recent years, it becomes even more important that communication can be traced back to a credible sender - preferably a person that people can relate to. Alternatives to traditional media including company owned media platforms and social media channels become more important. Having a strong presence in mainstream media is necessary to support awareness and a wide exposure of company activities. But given the credibility issues facing Chinese media, a strong presence on social media and other “owned” media channels like web based magazines, internal and external newsletters will increase the credibility of the communication, and allow for more complex and in-depth messages. Word of mouth with own employees as ambassadors is a convincing way to build corporate reputation in a low-trust society like China. Regardless of whether the objective is sales, recruitment or crisis management, testimonials and endorsement from company employees is highly trusted, while the opposite situation where employees are confused about company values and actions can be extremely damaging to reputation. PERSPECTIVES | China: Facing the Challenges of a Low-Trust Society
  • India: The Awakening Jaideep Shergill CEO, India, MSLGROUP Reputation is a growing concern A New York Stock Exchange (NYSE) study a few years ago of 205 CEOs reported that 75% of them track their firm’s reputations through surveys, 44% said that their firms’ reputations were more important then than three years earlier, and 84% said that they were taking action to protect their firms’ reputations. The Future of Reputation112
  • More than 80% of these CEOs undertook informal discussions with relevant stakeholders, 70% either held regular interactions with employees or commissioned surveys of them. About 65% regularly tracked their rankings in surveys published by credible sources. It’s clear, then, that reputation is a serious business concern. The modern business environment is complex in the best of times, let alone during a global economic downturn such as the one we’re grappling with. PERSPECTIVES | India: The Awakening 113 There are few markets as complex as India, and corporations are discovering that traditional models of reputation management are crumbling.
  • The Future of Reputation114 of CEOs track their firms’ reputations through surveys said that their firms’ reputations were more important then than three years earlier According to an NYSE Study of 205 CEOs This makes reputation even more important because it is a priority for internal and external stakeholders. Loss of reputation can adversely impact share price, the ability to attract and retain talent, customer acquisition and retention, and government and community relations. This is as true in India as elsewhere. There are few markets as complex as India, and corporations are discovering that traditional models of reputation management are crumbling. Stakeholders – both internal and external – want real engagement and actions that match their value systems and expectations. Stakeholders today are empowered because of the information explosion, and they are not satisfied with merely information about products or services. They instead want a 360-degree perspective that includes value for money, product lineage, corporate philosophy, credibility, ethics and sustainability. Sadly, in most corporate messages, the factors that build belief are missing.
  • Businesses are beginning to revisit communications strategies For the public relations (PR) industry, this is a huge opportunity. Across the world, advertising’s role as a brand custodian is losing firmness. Today, businesses need help through integrated communications. However, businesses have been slow to recognise that PR is perfect for this role. There is an urgent need to showcase the role it can play in reputation management. The good news is that businesses are beginning to revisit communications plans. Apart from synchronising paid and unpaid communications, they are evaluating how activation can lead to reputation building and not be limited to media coverage. Corporations and PR agencies need to work on a partnership that is mutually beneficial. If reputation management is to make a genuine impact, the client and the agency have to establish a sustained partnership in which media coverage is incidental and the primary focus is on achieving business goals. According to an NYSE Study of 205 CEOs Said that they were taking action to protect their firms’ reputations. 115PERSPECTIVES | India: The Awakening
  • Already, we are witnessing important changes within organisations: • Firstly, while marketing communication is driven by the marketing team, corporate communications is becoming an increasingly important voice in the business set-up. Corporate communications desks are spending more time with CEOs, who should ideally be the business’ chief corporate communicators. • Communications plans are being aligned with business calendars and discussed against a set of corporate objectives. Media relations are being used to ensure traction and long-term loyalty from various stakeholders rather than merely for exposure. • Communication to build reputation is becoming part of top managements’ key result areas. Again, the key is the use of strategic communication to achieve business objectives. • This is accompanied by the establishment of stringent yardsticks to gauge the effectiveness of communication. For instance, in some organisations where recruitment advertising budgets have been slashed, the function heads are being asked to use PR instead. • Communications teams are being linked to central research desks – an indicator that for the first time PR is being acknowledged as a brand building tool on par with other tools. The Future of Reputation116
  • The Indian PR Industry must rise to meet these demands As an industry, however, PR needs to effect some quick changes. First of all, it needs better measurement systems. Our stress on advertising value equivalents is hurting us. We must focus instead on research-based measurement of impact on reputation and the achievement of business goals. Audits, measurements, monitoring, accountability, research and insights are missing from the PR lexicon. Our inability to project ourselves into the bigger picture is primarily why bigger budgets have eluded us. Lastly, there is no substitute for robust client engagement. In order to play the central role in reputation management, PR consultants must initiate a constructive education campaign within the client organisation and show it the path to long-term organic and symbiotic growth. If we can do all of this, there is no reason why PR won’t take its rightful place at the forefront of the reputation business. 117PERSPECTIVES | India: The Awakening
  • Poland: Invaluable Reputation - Protects, Motivates, Sells! Katarzyna Stamatel Head of Law & Consulting, Poland, MSLGROUP The Future of Reputation118 “What is reputation, and what is its value for Polish companies and organizations?” We asked this question to representatives of Polish and international companies, financial institutions and industry organizations during our conference “Invaluable reputation - protects, motivates, sales!” The conference was organized by MSLGROUP and Harvard Business Review Polska and took place on December 10th 2013 in association with the Warsaw Stock Exchange, the National Depository for Securities and the Polish Institute of Directors.
  • PERSPECTIVES | Poland: Invaluable Reputation - Protects, Motivates, Sells! 119 Corporate reputation is increasing in importance in Poland, as organizations experience the positive impact of a strong reputation on growth and as the country’s youth begins to realize the power of social media in driving change. At the conference, MSLGROUP experts Roland Klein, head of the CNC Communications office in London, Andrew MacDougall, Senior Executive Consultant at MSLGROUP London, and Anders Lindberg, head of JKL, discussed the components of reputation, methods of effective public relations and new norms for responding to the ‘perfect storm.’ Here are the points that resonated most with the conference attendants. Corporate reputation is increasing in importance in Poland, as organizations experience the positive impact of a strong reputation on growth
  • Key takeaways from the conference • Reputation is a credit of trust that allows companies to establish relationships, conduct activities and lead development of the organization. After all, “without trust the business cannot grow, without reputation we cannot trust the business.” • Reputation begins with employees Only when they become ambassadors of the company and its products or ideas will the company reach a wider audience. • Cultural specificities matter Even though we live in a global world of information and values, there are some specific cultural circles, specific places where you need to be especially careful with your selection of approach tools and the type of communication. • Reputation leads to customer loyalty In the B2C sector, in financial markets or in open industries, reputation enforces sales and helps to attract and to keep customers. • Reputation provides a “license to grow” In the B2B sector, a strong reputation carries slightly different benefits. It can provide access to capital, enable better collaboration with business partners and ensure a stronger relationship with market regulators. Reputation gives companies the “license to operate” and the “license to grow.” • Companies and the Polish government must be more transparent and co-operative Regardless of the industry, the most important aspects are: maintaining full transparency and clear communication from both sides. Moreover, both the government and the business partner must act on long-term action plans to realize valuable projects in a win-win model. • Companies should be more transparent in projects they lead with the government, and realize their work supports their economy and impacts their own market situation. From the other side, governments can benefit from international companies’ expertise and good practices from other markets. • Governments should maintain balance in newly introduced regulations, especially within the banking sector, as excessive liabilities may restrict their ability to finance the economy. 120 The Future of Reputation
  • • Polish youth are embracing social media The young generation is a few years behind their global counterparts in setting new norms and in their attention to human rights and corruption. However, on issues such as tolerance and openness, Polish consumers have changed significantly and are verbal about their views. In Poland there are currently over 8 million active users on social media and that number is growing rapidly. Veracity, good intentions, transparency and honesty are important elements when communicating with this group over social media. • Polish customers are also becoming more aware They are no longer just at the end of the chain, but want to actively create products and affect companies’ offer. Increasingly, they use social media, especially during crises, to improve their negotiating power or position. Companies need to be structured for speed Today’s crises are quicker and know no boundaries. The “perfect storm,” a crisis with significant consequences for both reputation as well as the organization’s business activity, is more common and demands real-tile responses. Today, crises spread with lightning speed and often have a global impact. 121 When managing crises, companies must communicate true information a rate reflecting the social media reality. Speed is of essence in crisis communication activities and often requires new, more effective processes within the organization. PERSPECTIVES | Poland: Invaluable Reputation - Protects, Motivates, Sells!
  • PEOPLE’S LAB The Future of Reputation People’s Lab is MSLGROUP’s proprietary crowdsourcing platform and approach that helps organizations tap into people’s insights for innovation, storytelling and change. The People’s Lab crowdsourcing platform helps organizations build and nurture public or private, web or mobile, hosted or white label communities around four pre-configured application areas: Expertise Request Network, Innovation Challenge Network, Research & Insights Network and Contest & Activation Network. Our community and gaming features encourage people to share rich content, vote / comment on other people’s content and collaborate to find innovative solutions. The People’s Lab crowdsourcing platform and approach forms the core of our distinctive insights and foresight approach, which consists of four elements: organic conversation analysis, MSLGROUP’s own insight communities, clientspecific insights communities, and ethnographic deep dives into these communities. The People’s Insights Quarterly Magazines showcase our capability in crowdsourcing and analyzing insights from conversations and communities. Learn more about us at: peopleslab.mslgroup.com/peoplesinsights | twitter.com/peopleslab Contest and Activation Network: Pearl Academy In 2013, Indian fashion school Pearl Academy used the People’s Lab platform to create Portfolio 2013 - a contest where graduates could upload their work for public voting. In 10 days, 10,000 people visited the site, generating 100,000 impressions, and cast 7,000 votes – with NO media spend. Research & Insights Network: P&G Asia - Thank You Mom In 2012, P&G Asia and MSL Singapore used the People’s Lab platform to create a Social Media Regional Center, a secure, private community where 100+ P&G stakeholders and agency partners shared content and best practices for the “Thank You, Mom” campaign at the London 2012 Olympics. 122
  • Write to us to start a conversation on how we can help you distill actionable insights and foresights from conversations and communities: Pascal Beucler, SVP & Chief Strategy Officer (pascal.beucler@mslgroup.com) Nidhi Makhija, Senior Manager - Insights (nidhi.makhija@mslgroup.com) peopleslab.mslgroup.com/peoplesinsights/ DesignedbyMSLGROUPCREATIVE+ mslgroup.com MSLGROUP is Publicis Groupe’s strategic communications and engagement group, advisors in all aspects of communication strategy: from consumer PR to financial communications, from public affairs to reputation management and from crisis communications to experiential marketing and events. With more than 3,500 people across close to 100 offices worldwide, MSLGROUP is also the largest PR network in Europe, fast-growing China and India. The group offers strategic planning and counsel, insight- guided thinking and big, compelling ideas – followed by thorough execution.