The Chief Communications Officer in the new reputation economy

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Current economic environment forces companies to move towards coherent and rigorous management of the corporate reputation. A new role titled the Chief Reputation Officer has emerged, with the responsibility to develop strong and durable relations with the stakeholders.

During the last decade, we have been observing a change in the paradigm of power in the corporate world. We have entered an era that can be labelled “the economy of reputation”.

This new paradigm is characterised by the understanding that power belongs to stakeholders and that the importance of their recommendations is increasing.

Document prepared for Corporate Excellence – Centre for Reputation Leadership quoting, among other sources, the interventions of Anthony Johndrow, Managing Director RI US, Partner and Kasper Nielsen, Managing Partner of RI Responsible for North America in the fifteenth International Conference on corporate reputation, brand, identity and competitiveness held in New Orleans, May 2011.

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The Chief Communications Officer in the new reputation economy

  1. 1. In the past, companies used to operate on an economy where the quality products and services were the most important thing for consumers. However, this has changed. Recently published by RepTrakTM Global Pulse2011, results suggest that 60% of purchasing decisions are based on the perception of the company over the product characteristics. Consumers want to know what there is behind the products and the services that they consume. Not consumers and consumers. All stakeholders have become aware that the behavior of enterprises has implications that go beyond their mere daily activity. This attitude towards companies translates into a growing demand for transparency on corporate activities. Corporate messages relevance focused on brands is diminishing. Consumers are becoming more power of decision and influence on brands that should get used to operate in an unstable environment. It is the new economy of the reputation that is characterized by: • Confidence does not buy, confidence has to win. • What is not measured cannot be managed. Models to measure intangible assets are needed. • Reputation management is a process from the inside out and it is part of the corporate identity. • Reputation should be considered in every business decision processes. • It is important a depth knowledge of the company stakeholders. In this new economy, reputation is the company most valuable asset. Reputation management, art and science to win, invest and develop relationships with its stakeholders are key and the direct benefits could be summarized in six points: 1. Favorable “Benefit of the doubt” and increased confidence during a crisis situation. 2. Recovery of the price of the shares after a crisis. 3. Clients recommendations increased. 4. Attracting the best talent. 5. Better products and services access than competitors. 6. An enhanced media coverage. For Anthony Johndrow, director of Reputation Institute in United States, the characteristic of this new economy, is that consumers look beyond what In today’s environment requires company’s consistent and rigorous management of its corporate reputation. The new figure of Chief Communications Officer emerges as responsible for cementing the strong and lasting relationships with the stakeholders. Strategy Documents I01/2012 Chief Communications Officer in the new ‘reputation economy’ Communication Insights Document prepared for Corporate Excellence – Centre for Reputation Leadership quoting, among other sources, the interventions of Anthony Johndrow, Managing Director RI US, Partner and Kasper Nielsen, Managing Partner of RI Responsible for North America in the fifteenth International Conference on corporate reputation, brand, identity and competitiveness held in New Orleans, May 2011.
  2. 2. Insights 2 Chief Communications Officer in the new ‘reputation economy’ the company claims to be, to focus on what others say about it. In a multistakeholder environment, a license to operate is not only a simple administrative authorization by the controller or a vote by proxy of a shareholder; but it implies a solid background of credible actions and good relationships resulting in confidence. Building trust In the reputation economy, the main challenge for companies is to have to face, it is to foster and to win the confidence of the stakeholders. To achieve this should strengthen the reputation management as a strategic factor that goes beyond the traditional parameters of marketing, public relations and communications and all of these elements affect all processes within the company. In contrast to the management of a brand, confidence may not be appropriate or buy, since perceptions belong to stakeholders and these are formed by multiple factors, not always controllable by the company. Not only that, nowadays the information technologies available allows that stakeholders may share their experiences, to verbalize their opinion, to influence and impact on a wider audience at breakneck speed. In days gone by, reputation took shape through the media opinion, as well as “by word of mouth” and brand names. Now reputation is built, at least in large part, in social networks (Twitter, Online shopping communities, news, forums, Facebook, blogs, among other sites) where clients and other stakeholders discuss the company behavior. The implementation of a coherent strategy for relations with the stakeholders must develop always starting from internal to external stakeholders, generating growing trust circles. Reputation is a process of confidence generation from the inside out, based on employees as the first “line of Defense” in the value construction. Who know better, who are closer of knowing the reality of the good that is done within an organization? They are the own employees. Therefore, the first confidence circle must build a company is with people who are closer to this company that they are the own employees. Thus, the employee satisfaction radiates customers, non-customers, and the wider society as a whole through the extension of growing trust circles. Chief Communications Officer In order to build trust and obtaining the direct benefits of reputation management, the most advanced companies in the world have already put into operation within their organizations the Chief Communications Officer (CCO) role, as highest authority to manage the reputation with different stakeholders. The CCO is a Senior Executive that reports directly to the Board of Directors and he/she is responsible to analyze the impact of reputation in the company business. The CCO is responsible of managing corporate reputation, branding, public relations, Public Affairs. In the reputation economy the success and value of a company depends on the support of its ‘stakeholders’. CCO is also responsible for integrated, coherent, effective and efficient management of all internal and external communications through all points of contact, virtual and physical, in order to create a favorable base for strong and lasting relationships with stakeholders which depends on the organization. For Professor Charles Fombrun, Chairman of Reputation Institute, “as well as the companies appoint Chief Financial Officer even to protect the financial capital and a Chief Operating Officer to oversee operations, the companies must also designate an Officer to watch over the tangible intangible assets”. According to Johndrow, without this figure a company’s reputation could be boosted of conjuncture way, either by accident (like what happened in the recent financial crisis), or by the conversations that occur in the markets. The CCO figure can help point out the importance and make explicit the hidden value of the company’s reputation and boost competitive advantage that represent the reputation improving the connection between the Corporation and its stakeholders. Priority in purchasing decisions Source: Reputation Institute; 2011. Based on the product characteristics Based on the company perceptions 40% 60%
  3. 3. Insights 3 Chief Communications Officer in the new ‘reputation economy’ Among others, the Chief Communications Officer performs the following functions: 1. Development and implementation of a communication policy integrated into the global strategy of the organization. 2. To Assist the Organization to have a deeper understanding of the market and stakeholders and to provide knowledge and management tools on how to transform this knowledge into differentiation, the attractiveness perception and behaviors of support. 3. To help the organization in building and maintaining strong relationships with key stakeholders at all levels of society. 4. To support the organization in the creation of the strategic global alignment through the company Vision, Mission and Values, as the starting point for internal and external organization alignment. 5. To aid the organization in the creation and strengthening of a strong corporate brand. 6. To evaluate the organization to create and improve a sustainable corporate reputation. 7. To support the organization in identifying and mitigating all reputacional risks. 8. Senior executives training in corporate reputation management. 9. To advice the CEO in the construction and the maintenance of her/his reputation as a leader. 10. Development of a balanced scorecard to measure the impact of the intangibles assets in the profit and loss statement. New skills According to Johndrow, the necessary knowledge that reputation managers need to thrive in the current context could be summed up in five skills: 1. Cognitive skills: knowledge of commercial and communication functions and management of stakeholders. 2. Analytical skills: causal thinking and carrying out inferences, as well as thought systems and context analysis. 3. Process skills: change management, as well as facilitate the coordination and implementation. 4. Communication skills: writing, speaking, presenting, in addition to comparative dynamics between the old and new media. 5. Organizational skills: persuading the others and the backup mobilization, as well as organize and lead high performance teams. The discipline of rigorous analysis, what matters for the company to its customers, opens new competitive scenarios. Conclusions In the course of last decade has been a change in the paradigm of power in the business world and we have entered completely in an era which we call the reputation economy. This new paradigm is characterized by understand that stakeholders have the power in hands and their recommendations are a growing value. Reputation has become the real territory where competing companies, institutions, cities and countries. The new figure of the Chief Communicactions Officer (CCO) emerges as a response to this new paradigm. Chief Communications Officer place and functions Source: Reputation Institute, 2011. Brand, public relations, Public Affairs, internal communication, external communication Board of Directors Chief Operating Officer Chief Financial Officer Chief Communications Officer
  4. 4. ©2012, Corporate Excellence – Centre for Reputation Leadership Business foundation created by large companies to professionalize the management of intangible assets and contribute to the development of strong brands, with good reputation and able to compete in the global market. Its mission is to be the driver which leads and consolidates the professional management of reputation as a strategic resource that guides and creates value for companies throughout the world. Legal Notice This document is property of the Corporate Excellence – Centre for Reputation Leadership and has as its objective to share business knowledge about Brand, Reputation, Communication and Public Affairs Management. Corporate Excellence – Centre for Reputation Leadership is the owner of all the intellectual property rights of the images, texts, designs and any other content or elements of this product and has the necessary permission for its use, and therefore, its copy, distribution, public release or transformation is prohibited, without express authorization from the owner. Leading by reputation

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