Managing Reputation in New Zealand


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Managing Reputation in New Zealand

  1. 2. Managing Reputation in New Zealand An investigation into perceptions of reputation and risk management Neil Green, Managing Partner, Senate Communications Gary Lembit, Managing Director (New Zealand), TNS Global
  2. 3. Well known examples
  3. 4. Reputation management Internationally <ul><li>Recognised as a management discipline </li></ul><ul><li>Multinational high-profile scandals (e.g. Enron) – heightened awareness of reputation management </li></ul><ul><li>Economist Intelligence Unit (2005) research: </li></ul><ul><ul><li>Reputation now considered a top priority for global leaders </li></ul></ul><ul><ul><li>Reputation most important corporate asset … but most difficult to protect </li></ul></ul><ul><ul><li>Many organisations have integrated reputation management plans (not solely risk management) </li></ul></ul><ul><ul><li>Many organisations still struggling to quantify risk to reputation </li></ul></ul><ul><ul><li>Uncertainty over responsibility for owning reputation management within company </li></ul></ul><ul><li>Little known about New Zealand situation – until now … </li></ul>
  4. 5. Study design <ul><li>Letters were sent to senior managers in a wide range of organisations, including companies listed on the stock exchange, Government organisations, and private companies, introducing the survey in September </li></ul><ul><li>An email invitation was sent in October inviting senior managers from over 200 of New Zealand’s largest organisations to participate in a 15 minute online survey. </li></ul><ul><li>Fieldwork was conducted between October 2006 and January 2007 </li></ul><ul><li>54 organisations completed the survey comprising 17 CEOs and 37 Communications Managers or equivalent </li></ul>
  5. 6. Key findings Summary <ul><li>Reputation is considered the second biggest risk to any organisation </li></ul><ul><li>The things organisations most fear are all reputation issues </li></ul><ul><ul><li>Failure to deliver product or service to an expected standard </li></ul></ul><ul><ul><li>Exposure of unethical practices </li></ul></ul><ul><ul><li>Bad management of a crisis </li></ul></ul><ul><li>Reputation considered by only half of managers to be an organisational asset </li></ul><ul><li>Fewer than half of all Boards and executive teams consciously attempt to influence their organisation’s reputation </li></ul>
  6. 7. Key findings In more detail <ul><li>Few organisations conduct formal research with stakeholder groups </li></ul><ul><li>Reputation only on a quarter of the organisations’ monthly board agendas – 90% covered it annually; 27% on a quarterly/six monthly basis. </li></ul><ul><li>Responsibility a key issue – nearly every respondent claimed it was the CEO. </li></ul><ul><li>40% of organisations don’t plan how to handle communication in a crisis </li></ul><ul><li>Plans in place: </li></ul><ul><ul><li>Crisis management – 61% </li></ul></ul><ul><ul><li>Formally discuss corporate management at board level </li></ul></ul>
  7. 8. Perceptions of reputational risk CEO & Communications Manager Corporate reputation is harder to manage than other forms of risk Corporate reputation is the primary asset of any organisation Fifty-Fifty My organisation is proactive in enhancing and protecting its reputation There has been an increase over the past 5 years in risks involving an organisation's reputation Strong Agreement Communications Managers: Stronger Agreement CEOs: Stronger Agreement
  8. 9. What are the biggest risks? Scores of 9 or 10 out of 10 where 10 = very high risk <ul><li>Human capital risks </li></ul><ul><li>Reputational risks </li></ul><ul><li>IT network risks </li></ul><ul><li>Regulatory risk </li></ul><ul><li>Political risk </li></ul>But both groups rated reputational risk second biggest risk More CEOs rated regulatory risk 9 or 10 than any other risk More Communications Managers rated human capital risk 9 or 10 than any other risk
  9. 10. So what do they believe most impacts on reputation? Considerable impact % <ul><li>Failure to deliver minimum standards of service and product quality – 69% </li></ul><ul><li>Exposure of unethical practices – 63% </li></ul><ul><li>Poor crisis management – 52% </li></ul><ul><li>Non-compliance with regulations/ legal obligations – 48% </li></ul><ul><li>Category of business within which you operate – 46% </li></ul>CEOs had “whether the organisation is seen as a NZ one” in their top 5 but not “poor crisis management” Communications Managers had “exposure of unethical practices” as number 1
  10. 11. Is reputation a primary asset? <ul><li>54% say corporate reputation is the primary asset of their organisation </li></ul>Not all think of reputation as their primary asset Eight of 17 CEOs feel this way Eighteen of 31 Communications Managers feel this way
  11. 12. Managing reputation risk What organisations do Specific programme for corporate social responsibility in place – 36% Nothing – 11% <ul><li>Standards for environmental, human rights and labour practices set publicly – 41% </li></ul><ul><li>Crisis scenarios rehearsed annually – 39% </li></ul><ul><li>Crisis management plan – 61% </li></ul><ul><li>Discussion at board meetings – 61% </li></ul><ul><li>Form relationships with pressure groups and critics – 57% </li></ul><ul><li>Employees trained to identify and manage risk – 52% </li></ul><ul><li>Cross-functional team handles threats and crises – 52% </li></ul><ul><li>External perceptions rigorously measured – 52% </li></ul>Less than Half More than Half
  12. 13. Managing reputation risk When no planning for risks occurs, why is this so? <ul><ul><li>Not a priority 4 out of 10 </li></ul></ul><ul><ul><li>Lack of human resources 2 out of 10 </li></ul></ul><ul><ul><li>Never needed to 1 out of 10 </li></ul></ul><ul><ul><li>Lack of budget 1 out of 20 </li></ul></ul><ul><ul><li>Some other reason 4 out of 10 </li></ul></ul>
  13. 14. What is the Board’s involvement? <ul><li>Discussion at Board Meetings (61%) </li></ul><ul><li>Only 44% believe reputational risk management is well understood in the boardroom </li></ul><ul><li> </li></ul><ul><li>But 79% agree more should be done to address this primarily through training and case studies </li></ul>But only 51% quarterly or more often 
  14. 15. Measurement of stakeholder group perceptions Influence on reputation <ul><li>Greatest Influence </li></ul><ul><li>Government </li></ul><ul><li>Current Customers </li></ul><ul><li>Employees </li></ul><ul><li>Company Investors / Shareholders </li></ul><ul><li>Potential Customers </li></ul><ul><li>Regulators </li></ul><ul><li>Measure Perceptions at Least Annually </li></ul><ul><li>Employees – 72% </li></ul><ul><li>Current Customers – 61% </li></ul><ul><li>Company Investors / Shareholders – 44% </li></ul><ul><li>Government – 39% </li></ul><ul><li>General Public – 33% </li></ul><ul><li>Media Groups – 28% </li></ul>
  15. 16. Key findings Our interpretation <ul><li>Nowhere near enough discussion is taking place </li></ul><ul><li>Organisations are actively managing risk – key: integration of plans </li></ul><ul><li>All plans should be integrated to focus on the overall reputation of the organisation </li></ul><ul><li>Reputation is an organisation’s primary asset </li></ul><ul><li>What does this mean in a practical sense? </li></ul>
  16. 17. <ul><li>“ By failing to prepare, you are preparing to fail ” </li></ul><ul><li>Benjamin Franklin </li></ul>
  17. 18. Reputation management Solutions <ul><li>Stakeholders </li></ul><ul><li>Stakeholder engagement crucial </li></ul><ul><ul><li>Engage, discuss and monitor (regularly) </li></ul></ul><ul><li>Integration </li></ul><ul><li>Link risk mgmt / operational plans with reputation </li></ul><ul><li>Identify reputational drivers </li></ul><ul><ul><li>Monitor </li></ul></ul><ul><li>Responsibility </li></ul><ul><li>CEO </li></ul><ul><li>Board </li></ul><ul><li>Everybody </li></ul>Reputation “Guardians ”
  18. 19. Reputation management Next steps <ul><li>Challenge for organisations to build reputation management into day-to-day practice </li></ul><ul><li>Actively look to strengthen knowledge about reputation and risk management – CEOs, directors, board members. </li></ul><ul><li>Openly discuss reputation management </li></ul><ul><li>Seek advice on harmonising and integrating existing plans into a reputation management process. </li></ul>