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The 18 Immutable Laws Of Corp Reputation


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The 18 Immutable Laws Of Corp Reputation

  1. 2. The 18 Immutable Laws of Corporate Reputation Creating, Protecting, and Repairing Your Most Valuable Asset AUTHOR: Ronald J. Alsop PUBLISHER: Wall Street Journal Books DATE OF PUBLICATION: 2004 NUMBER OF PAGES: 320 pages
  2. 3. <ul><li>Everything an individual or company does or produces contributes to its reputation. Reputation is an intangible asset, but a very important one. In some ways it is even better than having money in the bank, but not as easily quantified. </li></ul><ul><li>A good reputation is its own advertising and quality seal. It can engender loyalty in customers that can cross several generations and time zones. A good reputation can bring in more customers in the good times, and be a protective buffer in the bad times. </li></ul><ul><li>The author has delineated what he calls the, “18 Immutable Laws of Corporate Reputation.” This book holistically deals with the topic of reputation management in three parts: establishing a good reputation, keeping that good reputation and repairing a damaged reputation </li></ul>THE BIG IDEA
  3. 4. Law One: Maximize Your Most Powerful Asset <ul><li>Reputation 101 </li></ul><ul><ul><li>Reputation is an intangible asset yet it is arguably the most valuable asset to manage and maximize. A good reputation can attract and keep customers, investors, and employees. </li></ul></ul><ul><li>Fostering a Reputation-Conscious Culture </li></ul><ul><ul><li>Because factors affecting reputation are so pervasive, it is necessary to have a concerted company effort to nurture and guard it. Reputation management can be handled by single managers or by whole departments. </li></ul></ul><ul><li>The Payoffs From A Positive Reputation </li></ul><ul><ul><li>A study of 216 companies related higher stock values for companies with reputations for strong social responsibility </li></ul></ul><ul><ul><li>A study of 10 portfolios attributed higher prices to investor confidence that these were less risky. </li></ul></ul><ul><ul><li>Customers will buy products known for good service and/or good quality </li></ul></ul><ul><ul><li>Boosts employee morale and performance </li></ul></ul><ul><ul><li>Attracts top talent (as managers, new graduates, etc.) </li></ul></ul>
  4. 5. Law Two: Know Thyself – Measure Your Reputation <ul><li>The Reputation Quotient by Harris Interactive </li></ul><ul><ul><li>Measures overall American sentiment not limited to opinions of corporate executives and investment analysis. </li></ul></ul><ul><ul><li>Identifies subgroups like investors, employees, and customers. </li></ul></ul><ul><ul><li>Rates emotional appeal, products, services, financial performance, social responsibility, workplace environment, and leadership. </li></ul></ul><ul><li>Fortune (Magazine)‘s Most Admired Companies </li></ul><ul><ul><li>Based on opinions of 10,000 executives, directors, and securities analysts surveyed by the Hay Group, a HR consulting firm. </li></ul></ul><ul><ul><li>Identifies “Top Ten” per industry </li></ul></ul><ul><ul><li>Rates social responsibility, innovation, investment value, corporate asset management, employees, financial well being, quality of products and services, and quality of management </li></ul></ul>
  5. 6. <ul><li>CoreBrand </li></ul><ul><ul><li>Focused on opinions of senior executives of large corporations </li></ul></ul><ul><ul><li>Rates familiarity and how favorable a company is, its quality of management, and investment potential </li></ul></ul><ul><ul><li>Innovated a “Brand Equity Methodology” that quantifies corporate brand and calculates it as part of the company’s market capitalization. </li></ul></ul><ul><li>New players in reputation measurement </li></ul><ul><ul><li>Rating Research </li></ul></ul><ul><ul><ul><li>Rates a company’s reputation based on its ability to weather controversies, scandals, etc. </li></ul></ul></ul><ul><ul><ul><li>Examines two dozen attributes plus specifics per industry </li></ul></ul></ul><ul><ul><li>Corporate Opinion, Reputation and Equity (CORE) Index by NFO World Group </li></ul></ul><ul><ul><ul><li>Examines twenty factors like customer satisfaction, fair and ethical business practices, quality of products and services, etc. </li></ul></ul></ul>Law Two: Know Thyself – Measure Your Reputation
  6. 7. <ul><li>The Balancing Act </li></ul><ul><ul><li>No company is an island. Everyone has opinion on everything. You can never please everybody. Stakeholders are everybody involved with the corporation. </li></ul></ul><ul><ul><li>Know who are important and play to them. It is helpful to think of stakeholders in terms of a hierarchy or, graphically, as a pyramid with the most influential at the peak and others following in descending order. </li></ul></ul><ul><li>Getting To Know You </li></ul><ul><ul><li>Some companies, like Proctor & Gamble, General Electric, or DuPont, manufacture products sold under different names or different groups and are not easily identified with their parent company. </li></ul></ul><ul><ul><li>This may weaken the product’s reputation and affect sales or acceptance. This becomes a problem especially with products sold internationally. In fact, many companies are unaware they have weak reputations with foreign stakeholders. </li></ul></ul>Law Three: Learn to Play to Many Audiences
  7. 8. Law Four: Live Your Values and Ethics <ul><li>Creating A Culture Of Morality </li></ul><ul><li>Some practices for indoctrinating employees are: </li></ul><ul><ul><li>Forming an ethics program with an ethics officer </li></ul></ul><ul><ul><li>Annual refresher courses on ethics </li></ul></ul><ul><ul><li>Posted values statements and ethics codes at the workplace </li></ul></ul><ul><ul><li>Ethics and values indicators integrated into performance appraisals and compensation packages </li></ul></ul><ul><li>Three R’s for building your culture of morality: </li></ul><ul><ul><li>Reaffirm </li></ul></ul><ul><ul><li>Reinforce </li></ul></ul><ul><ul><li>Revise </li></ul></ul><ul><li>As a final note, ethics can be a very boring subject. Some companies like General Electric and Altria Group (formerly Philip Morris) produce programs and entertaining skits to keep employees engaged. </li></ul>
  8. 9. Law Five: Be a Model Citizen <ul><li>Heart and soul </li></ul><ul><ul><li>At Timberland, social responsibility is an integral part of the company’s identity and is a significant component of its reputation. </li></ul></ul><ul><li>Own The Cause </li></ul><ul><ul><li>Other companies build their reputation for social responsibility by heavily supporting their “favorite” causes, to the point that their company becomes synonymous with it. </li></ul></ul><ul><li>Actions Speak Louder Than Money </li></ul><ul><ul><li>Get involved. At Ground Zero in the aftermath of the September 11, 2001 terrorist attacks; McDonald’s supplied burgers and chicken nuggets round the clock to rescue and medical workers. </li></ul></ul><ul><li>The Perils Of Promoting Philanthropy </li></ul><ul><ul><li>Many people tend to be cynical about corporate philanthropy. An altruistic gesture may be seen as just another fancy marketing or publicity ploy. </li></ul></ul>
  9. 10. <ul><li>Vision And Leadership </li></ul><ul><ul><li>What is this corporation trying to do? That is the question answered by the Corporate Vision and the guiding principle of its leaders and personified by the CEO. The vision and the leaders motivate the stakeholders, who in turn have enormous impact on reputation. </li></ul></ul><ul><li>Practical and Poetic </li></ul><ul><ul><li>The corporate vision cannot be something as mundane as “We strive to maximize profits.” It should be ambitious, challenging, and yet emotional. </li></ul></ul><ul><ul><li>As a corporation grows it also evolves. Sometimes, the corporation loses sight of its mission and its reputation weakens; but change is not essentially bad. Careful consideration must be made if it is necessary to: return to the original vision OR refocus the vision. </li></ul></ul>Law Six: Convey a Compelling Corporate Vision
  10. 11. Law Seven: Create Emotional Appeal <ul><li>Igniting The Emotional Spark </li></ul><ul><ul><li>Emotional appeal is difficult to quantify or define; but it is what engenders passionate customer loyalty and strengthens reputations. It is mostly shaped by the sum of people’s long-term interactions with the company’s employees, products, services, and even advertisements. </li></ul></ul><ul><ul><li>Establishing emotional appeal is more than just satisfying customers. It is also about getting the customer to identify happiness or contentment with the product. In the fast paced electronic world it is also helped by a personal touch or special treatment. </li></ul></ul>
  11. 12. Law Eight: Recognize Your Shortcomings <ul><li>Facing Your Follies </li></ul><ul><ul><li>Examine your reputation and assess if your current business practices still build that reputation. Only by first recognizing discrepancies and problems can you take steps to fix them. The sooner you come clean, the sooner you can fix them and do “damage control” before it reaches a crisis situation. </li></ul></ul><ul><ul><li>Sometimes lapses in communication or alienation from customers are the causes of problems. For more serious faults, a public apology is almost essential to strengthening your reputation. </li></ul></ul>
  12. 13. <ul><li>Damages to reputation can happen suddenly and over time. Managers must be vigilant and act quickly on either instance because both can be equally damaging and have long-term effects. </li></ul><ul><li>Someone should always be watching… and thinking. In the age of the Internet even local news can be known globally in minutes. But not all news is true news. </li></ul><ul><li>A sudden or instinctive and unconsidered response (like an inadvertent admission of guilt with an apology) is just as potentially damaging as doing nothing in the hope a situation will abate. </li></ul>Law Nine: Stay Vigilant
  13. 14. <ul><li>Corporate Ambassadors </li></ul><ul><ul><li>Employees are the first direct contact between a corporation and its customers. Naturally, employee behavior has a large impact on the company’s reputation both on and off the job, from how they service the customer to how they talk about the corporation with friends, relatives, etc. </li></ul></ul><ul><ul><li>Culture is important to shaping employee behavior but more so is frank, frequent, and sincere dialogue with upper management. It is up to managers to indoctrinate, encourage, and empower the employees about the corporation. The employee’s attitude is an intangible that customers will recognize and act on. </li></ul></ul><ul><ul><li>Corporate ambassadors can work both ways. Just as an enthusiastic worker is a reputation builder, so is a disgruntled employee a reputation wrecker. </li></ul></ul>Law Ten: Make Your Employees Your Reputation Champions
  14. 15. <ul><li>Caution: Entering Hostile Territory </li></ul><ul><ul><li>The World Wide Web is an extraordinary tool and can be a boon or bane to your reputation. The World Wide Web has no regulatory body to separate the truth from the lies. It is estimated over 730 million people are able to interact with each other – by 2006 it could be over 1 billion. </li></ul></ul><ul><li>Plan Your Internet Strategy </li></ul><ul><ul><li>There is no guaranteed strategy for dealing with the Internet based attacks on reputation. </li></ul></ul><ul><ul><li>Actual response to Internet attacks varies; but some response is necessary. </li></ul></ul><ul><ul><li>Not all written on the Internet about your corporation is bad. </li></ul></ul><ul><ul><li>The unregulated Internet also provides a venue for corporations to put positive spin on many issues: for instance, Nike, has videos of its factories in Asia and talks about their social programs for their workers like schooling, etc. </li></ul></ul>Law Eleven: Control the Internet Before It Controls You
  15. 16. Law Twelve: Speak with a Single Voice <ul><li>Consistency and Clarity </li></ul><ul><ul><li>Corporations allocate major funding towards building their brand. As a corporation grows and diversifies its products, there is a tendency to stray from the corporate brand. The result of this is weakening of the corporate brand and weakening of their reputation. A startling example comes from IBM, which in 1993 had more than 800 different logos! </li></ul></ul><ul><ul><li>Consistency does not mean that the corporate brand never changes, sometimes a fresh look is necessary to adapt to changing times or refocusing of its vision. It is important to distinguish between following short-lived trends and evolving long-term goals. </li></ul></ul><ul><ul><li>Customers identify with a strong corporate brand. When customers enter Starbucks in a new region, they expect the same experience as the Starbucks back home. The same is true for products and services. The corporate brand becomes an assurance of quality and is backed by their reputation. </li></ul></ul>
  16. 17. Law Thirteen: Beware the Dangers of Reputation Rub-off <ul><li>Guilt By Association </li></ul><ul><ul><li>There is a saying that goes, “Birds of the same feather flock together.” When two or more corporations enter into a partnership or work together; their reputations may be attributed to each other. Sometimes this is desirable and is intentional. It is important to keep in mind the intention doesn’t necessarily translate to the desired effect. </li></ul></ul><ul><ul><li>Ideally the new partnership performs better than the sum of its parts and each one’s reputation enhances the other. Sometimes unforeseen actions or events by one or another party drags everyone down. Just like marriage, a partnership is difficult to dissolve and the after effects of the union may extend long after everyone has gone their separate ways. History is replete with examples of both the successful and failed. </li></ul></ul>
  17. 18. Law Fourteen: Manage Crises with Finesse <ul><li>Crises are inevitable – reputation damage isn’t </li></ul><ul><ul><li>No one and no corporation is immune from crises. Crises can be in due to corporate transgressions, natural calamities, malicious intent, a private remark taken out of context, etc. </li></ul></ul><ul><li>Crises Can Be Managed, Not Controlled </li></ul><ul><ul><li>The most critical period to reputation damage control happens in the first few days. It is the tendency of companies to go quiet. This is a mistake because critics will quickly use the time to give their worst-case scenario and put out a negative spin. </li></ul></ul><ul><ul><li>The corporation should quickly gather all the facts then make a public statement. The first statements must be swift and sure. A mistake at this time will taint all other succeeding statements. Customers and/or the public need to be assured the right and responsible action is being taken. </li></ul></ul><ul><ul><li>Reassure also your employees because they may be demoralized and you will need their help. . </li></ul></ul>
  18. 19. Law Fifteen: Fix It Right the First Time <ul><li>Three Strikes, You’re Out! </li></ul><ul><ul><li>There are many ways a company can try to fix its reputation. Some companies may try put on a fresh image by reinventing themselves with a refocused vision or business restructuring. Other companies will try reworking an old formula. Others still will be working against their successful, dated reputation that actually holds them back from making a more contemporary image. </li></ul></ul><ul><ul><li>But it is not enough to want the change. The leader is key. The leader has to be dynamic and focused to guide the company along the new way and against old habits or instincts. </li></ul></ul><ul><ul><li>Repairing a reputation is difficult enough at best. Every effort must be taken to plan and get it right the first time. Empty promises and unrealized reforms will only further damage the company’s credibility and reputation. </li></ul></ul>
  19. 20. <ul><li>A Cynical New Century </li></ul><ul><ul><li>People have become more wary of companies. Claims and statements are normally met with skepticism. Debacles like Enron have worsened the loss of confidence. </li></ul></ul><ul><ul><li>Ingrained cynicism makes it very difficult to repair a negative reputation. This doesn’t mean to say that companies should stop trying to change people’s attitude. Companies won’t be able to convert everybody; but maybe they can lessen the animosity. </li></ul></ul><ul><li>A Seat At The Table </li></ul><ul><ul><li>Better communications is key to improving relationships. One company’s standard “no comment” response affirmed the public’s belief of their guilt. </li></ul></ul><ul><ul><li>A better relationship could mean winning concessions for the company’s interests with favorable legislature or more community support.. </li></ul></ul>Law Sixteen: Never Underestimate the Public’s Cynicism
  20. 21. <ul><li>The Straight Story </li></ul><ul><ul><li>People appreciate forthrightness and contrition. Being defensive is more likely to offend them. The public needs to hear an apology and needs to know what is being done to end the crisis. Often the best way to diffuse a crisis is with a timely and sincere apology. </li></ul></ul><ul><li>Take the Offensive </li></ul><ul><ul><li>There is a saying that goes, “The best defense is a good offense.” The saying is also applicable to reputation repair. The alert company who predicts a coming crisis can move first and put a favorable spin on it. PepsiCo’s unhealthy snacks and sodas are termed, “fun, indulgence food.” </li></ul></ul>Law Seventeen: Remember – Being Defensive Is Offensive
  21. 22. <ul><li>It’s All In The Name </li></ul><ul><ul><li>Sometimes the best way to get rid of a bad reputation is to build a new one with a new name. But name changes shouldn’t be entered into lightly. The large expense aside, a name change is confusing and causes loss of brand equity. You could lose all the good, and you’re not guaranteed to be free of the bad. </li></ul></ul><ul><li>The Name Game Is Not An Amateur Sport </li></ul><ul><ul><li>Choosing a new name should be a carefully considered decision. You will need professional brand strategists and communications experts: PR agencies, lawyers proficient in trademark law, linguists, copywriters, graphic designers, and corporate identity specialists. </li></ul></ul><ul><ul><li>Finally, be prepared for a long evaluation process and an expensive name launch. Andersen Consulting worked through 5,000 suggestions before they settled on Accenture. They then spent approximately $175 million in advertising to launch the new identity. </li></ul></ul>Law Eighteen: If All Else Fails, Change Your Name
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