InsightsStrategy DocumentsI18/2012CommunicationReputation: the Future ofCorporate Communication Understand the new circumstances, adapt to them and win: communication and public relations are now at a turning point, and if they are unable to understand the new rules of the game and adjust to them, they may lose their leading position. Paul Holmes, a journalist and editor of the A company with glass walls will soon become a prestigious The Holmes Report has never worked reality, because according to Holmes, everything in the communication sector or PR agencies, but is that is said, done and thought by an organisation very familiar with this industry: he has been writing is subject to close public scrutiny like never before. about the industry for more than 20 years, he saw it Managers responsible for Corporate Communication growing, transforming and superseding advertising and Public Relations of companies have to be aware in the task of building and defending brands – in the that any individual, the mass media or an NGO way advocated by the expert Al Ries–. can at any moment take interest in the activities of the company and that in the globalised world any However, the radical change in the digital action may have unexpected negative repercussions environment and the society brought about the need for the reputation of a brand. to understand its impact on brands and organisations, which puts the communications industry in a In the past, the financial press only reported about vulnerable position, forcing it to face the new the changes in the market value of listed companies challenge and turn it into an opportunity to survive. or employee actions against the employers due to a Otherwise, other important actors in companies, labour conﬂict. Nowadays, more attention is paid such as marketing, HR and advertising professionals to the environmental damage, treatment of the in large U.S. companies,will be promoted to the employees, the type of leaders in the management position of Communication Directors. This was committees, to the reports like, for example, an described by Holmes during a conference held by the advertising campaign carried out by this or that Association of Communication Directors in Madrid. brand that was misleading and/or insensitive to the feelings of social minorities. The era of transparency Daniel Goleman coined this term to refer to the The brand is not only what you say, current moment, when the need for open and but also what others say about you honest communication without borders is required The idea that important information about a by the society and different stakeholders, both in the company is provided by Communication Directors, business and political environments (a good proof of PR or advertising agencies stayed in the World this trend is the recent phenomenon of Wikileaks). 1.0, where the digital impact of communities,The document was prepared by Corporate Excellence and contains references to the statements made by Paul Holmes (journalist andexpert on the sectors of communication and public relations, author of The Holmes Report) during the conference organised by theAssociation of Communication Directors in Madrid, on February 21, 2012.
Reputation: the social networks and interconnectivity of different control the situation, and this is exactly what’sFuture of Corporate stakeholders was not yet present. happening in the World 2.0.Communication The number of stakeholders has increased, Consumers, employees and clients speak openly furnishing them with greater control – in terms of about brands because no one can control what opinion – over the companies. They share their they say. This means exactly the loss of control by experiences and views of companies – and slogans the brands. The rules and principles of the brand – are not sufficient any more – making their reactions stakeholder interaction are now different: they are unperceivable, quick and hard to monitor. In this about dialogue, integrity, transparency, authenticity, sense, the role of the employees comes to the fore, honesty, commitment… as they can evaluate their own experience with an organisation and compare their opinion with the reputation gained by the brand among external “A company with glass stakeholders: after all, they are responsible for walls will soon become fulfilling the promise made by the brand, because the behaviour and attitude of the employees has a reality, because more impact on the consumers’ opinion than any everything that is said, advertising campaign. done and thought by an The new social media are accelerating this trend, organisation is subject to at the same time becoming a source of important competitive advantage for the communication close public scrutiny like professionals in the sense that it enables them to never before”. expand their responsibilities, traditionally focused on relations and managing the dialogue. But this In order to achieve engagement and involvement may be possible only if they manage to generate of stakeholders, it’s necessary to establish a positive and attractive content with a social more direct, clear and transparent relationship impact, like the one achieved in the past with the with them. It is still important what brands say, help of advertising. but their actions are much more important for defending and determining the reputation. And Until recently, it was believed that the brand was stakeholders base their opinion and awareness on the only message made the by a company. And in the perceived reputation. such context it’s no wonder that advertising played such an important role. But everything has changed: now, the brand is not only what you say (intended Reputation Manager and Cutting projection of the identity or creation of an image), Across the Divisions it’s also what others say about you (unintended The implications of these changes for the companies projection of the identity or perception of the go far beyond communication and directly reputation), especially if the company does not affect the financial, legal, labour and operational Graph 1: Valid Metrics Framework Template Communications/Marketing Stages Key Area of Knowledge / Interest / Support / Communication Awareness Action Understanding Consideration Preference Communications Phases Public Relations Activity Intermediary Effect Target Audience Organization/ Effect Business results Source: Paul Holmes, Dircom, 2012. Insights 2
Reputation: the activities. That’s why some American companies of reputation management in order to attainFuture of Corporate start establishing a new role that reports directly corporate excellence.Communication to the CEO and is responsible for relations with all stakeholders and whose task is to tell the CEO what In order to ensure the implementation and to he or she sometimes doesn´t want to hear. demonstrate the impact of these activities, it is essential for the world of Public Relations This new function expands the role of the Chief to improve the mechanisms of measuring the Communication Officer in the sense that it no effectiveness. So far, only insignificant amounts longer covers only what the company says, but also of money were invested in the research on this what it does, its strategic decisions taken by the matter and development of the models apart from top management which affect the experience of the traditional evaluation of press clippings and different stakeholders at different points of contact monitoring comments on the Internet. that they have with the brand. That’s why persons in this role in addition to being professionals in communication, should have good knowledge of “The brand is not only what the business in general. you say (intended projection of the identity), it’s also Below are seven key responsibilities of this post: what others say about you 1. Develop synergies between different departments, (perceived reputation is the overcoming traditional divisional structure of the organisations. true identity)” 2. Ascertain that the values of the Brand are Holmes advocates a unified model of measurements shared and implemented by them in their daily focused on the business of the company - a standard communications and interactions with the similar to the one used by the Association for the stakeholders. Measurement and Evaluation of Communication 3. Transmit these values securely, naturally and (AMEC) – which would relate the impact of credibly together with the organisation and communication to business results. Holmes also outside its scope. supports the concept of the Net Promoter Score (NPS), 4. Contribute to understanding the market, the suggested a few years ago by the American expert Fred society and the expectations of stakeholders Riechheld. This index measures recommendations of in order to achieve their favourable judgement the brand made by persons in one´s immediate circle and support. (friends, relatives, colleagues, etc.) and correlation of 5. Align different messages and policies of the this index with the results of the enterprise. company in order to achieve full coherence. 6. Achieve alignment between the identity and corporate culture of the brand, the business Conclusion: the golden age of strategy and the reputation of the company. communication and public relations 7. Facilitate permanent improvement and The next ten years may become the golden age for transformation of the organisation by means corporate communication. Public Relations are now Graph 2: Leveraging Net Promoter Score On a scale of 0-10, How Willing Would You be to Recommend [GE Money] to a Colleague? 10 9-10 Promoters 9 8 7-8 Passively Satisfied 7 % Net 6 % Promoters – % Detractors = Promoters 5 4 0-6 Detractors 3 2 1 0 Source: Paul Holmes, Dircom, 2012. Insights 3
Reputation: the at a turning point, moving from the primitive role of Creation of value for the owners of companies hasFuture of Corporate a transmission channel for announcements made by to be compatible with creating greater value for theCommunication companies to a channel of communication between stakeholders and the rest of the society. the stakeholders and the brands that enables the company to monitor their concerns, suggestions, The era of business and life transparency and expectations and desires. ethics suggests a radical change in the interaction between organisations and their stakeholders, Clients, employees, shareholders, consumers and where sincerity, honesty, integrity, credibility users are now the new owners of the brands. The and engagement are key in the relationship most important issue now is their reputation and between the brands, their environment and the the opinion that these groups have of the brands. rest of the society. Insights 4