1. Corporate reputation is gaining importance within company management and boards of directors. 2. Reputation impacts stock value, talent management, customer recommendations, and supplier relationships. 3. The communications management function has evolved to become the strategic manager of a company's perceptions from stakeholders.

1. STRATEGY DOCUMENTS
T01 / 2011 Trends
REPUTATION
Corporate reputation in the
company agenda
Despite the debate that still exists in the conceptual sphere and the difficulty to
quantify its true impact in the increase in value of organizations, it seems that
reputation is gaining in importance. Is room being made and is a prominent place
being found within a company’s management?
R
egardless of whether it should have a specific manager of the perceptions which are generated
and privileged location within the Board of around a company, of what its stakeholders think
Directors (integrating the corporate social about the company.
responsibility areas, Brand, Communications
and Reputation itself), or if it is a function that But this function is still swinging in the imagery of
fundamentally concerns the top executive of a many, between those story tellers more connected
company (be it the Chairman, Chief Executive to the areas of Advertising and Public Relations
Officer or General Director), the opinion and and the purely intangible elements of the function,
valuation which the various stakeholders have of and those other bean counters preoccupied by the
an organization is, increasingly, a key factor when more tangible aspects and connected to the areas
managing the business reality. of Administration and Finance, in the opinion
of Tomas Garicano, professor of finance at the
The impact of reputation in the stock exchange IE Business School and director of its Corporate
value of a company, in the improvement of talent Governance Center.
management, its attraction/bonding and subsequent
increase in productivity, in the recommendation Value Creation
of its products and services to third parties after According to a study carried out by Hesleden Partners,
a good shopping experience, or in facilitating the specialized in investigations on reputation, the role
process of suppliers’ conversion into true partners of Communications will not disappear from the
is undeniable, according to the data presented and management of reputation, but increasingly it will be
extracted from different studies and investigations asked to make a different contribution to the business,
developed in recent years. of greater reach and value; in short, more strategic.
The function of Communications Management or Aside from the digressions about the differences
also Corporate Affairs Management, on the other between perceptions and acknowledgments (a
hand, has been developing in large companies more emotional or rational character of opinion),
(especially those which are quoted in international between brand and reputation (the promise in
stock markets) eventually becoming the real strategic the hands of the company or the perception /
Document prepared by Ricardo Gomez Diez (director of the Observatory on Reputation) for the Corporate Reputation Forum
with reference to, among other sources, the intervention of Juan Cardona (director of the fRC), Basil Towers (director of
Hesleden Partners), and Tomas Garicano (professor IE Business School, director of the Corporate Governance Center) during the
sessions of the Corporate Reputation Program organized by the fRC and IE Business School in Madrid in February 2011.
fRC Trends - page 1

2. Trends Corporate reputation in the company agenda Corporate reputation in the company agenda Trends
acknowledgement owned by the stakeholders), or te reputation. We can also frame company responsibility 2. Another more likely to fix its attention on the reducing risks) and quantitative valuation (with the
even between image and reputation (with a more as one of the dimensions of reputation, linked directly to management, without allowing the obsession difficulty that is still involved to isolate it and see it
circumstantial or more structural character of the variables such as corporate citizenship and ethics in ma- for its quantification to push aside this impor- as the only measure of value of a company).
valuation), for Juan Cardona, director of the Foro de nagement. tant aspect.
Reputación Corporativa, reputation A model which can be described and organized ac-
is advancing in the agenda of ‘The function has been Together with competitiveness and Increasing the importance of cording to the following workflow
priorities for organizations and for developing eventually reputation as a whole, the corporate reputation ‘We have to define a and strategic decision-making:
their own leaders with the common
becoming the strategic social responsibility forms with For Basil Towers, director of Hesleden
model of reputational
objective of achieving a high
performance function and which
manager of the perceptions them the three fundamental axes
of the process of value creation, in
partners, the way forward to make
reputation a real lever of company
management which 1. Definition of the vision,
establishment of the challenges and
adds value to the company.
which are generated which we can increasingly speak management includes two ways:
contributes to plan, objectives.
around a company’ of a circle of value (an organic taking into account
One of the factors which also vision of the relationship between 1. To locate the management of perceptions’ 2. Carrying out of analyses,
contributes to the awareness of its importance are the company and community) and not only of a chain reputation at the top of the determination of the options and
crises and the associated reputational risks (be they (linear vision). organization. drawing of scenarios.
pure or operational), since, as noted by Garicano, it
costs more to win than to lose it, even though it is not The reputation agenda 2. To generate an internal debate on the subject. 3. Development of the business plan and the
easy to lose it completely in a short space of time, as In the following years there will be three fundamental strategic plan.
Cardona also stated. scenarios of the corporate reputation road map: In the first case, it is important to link reputation
to the management of corporate governance, 4. Realization of annual performance objectives.
The reputation and corporate responsibility 1. A more explicit contribution, structured generating models and value creating systems
Another of the controversial aspects is found in relation and anticipatory of reputation to company through reputation. 5. Execution of the previously fixed strategy.
to the distinction and relationship between corporate management, through information and quality
reputation and the corporate social responsibility, disas- data which reinforce the confidence in the In the second case, increase the close relationship 6. Regular and periodic evaluation of performance.
sociated from past conceptions which linked it solely to function, as well as helping the senior management with the different areas and functions of the
corporate philanthropy. to define strategy, aligning reputation with the company, constantly exchanging and sharing 7. Feedback and rectification/adaptation of the process.
company’s values. information, data and comparatives.
The first is placed more in the scope of internal politics Conclusion: the future of reputation
and procedures, whereas the second is situated in the 2. A key support when driving and strengthening But to do all this, it is crucial to also establish and Warren Buffet once said the following to his
scope of public positioning. the risk management policy within organizations, define a model of reputational management within professional team: “If you lose dollars due to
identifying risks which would not have been de- organizations which contributes to plan, taking into wrong decisions I will understand it, but if you lose
Likewise, corporate social responsibility looks more for tected without a “reputational look”, applying account perceptions and their measurement, and reputation I will be ruthless.”
the connection with stakeholders and reputation for metrics and indicators which allow the decision on the basis of a model of constant improvement
their support. Dialogue forms part of the corporate so- making according to the appetite or aversion to of the behavior of the organization and its subse- The reputed and most currently renowned investor,
cial responsibility management tool with stakeholders, acceptable risk. quent qualitative evaluation (a basis to identify ex- financier and philanthropist pointed at reputation
while research and communications are that of corpora- pectations, taking advantage of opportunities and as an asset more valuable than money itself,
3. An awareness of the importance of reputation in reaffirming the arguments set out until now which
company management, bringing the relationship point to reputation as the most important resource
> The impact of reputation on stock prices to surface between the decision making and > Measuring reputation or intangible asset in the company agenda of the
(Stock prices of companies with the best reputation v. damage to reputation, as well as focusing on the new 21st century.
Measure Analysis Planning
S&P500 general index) values which surface after this type of behavior,
60% seeing as the most important source of reputational Overall Plan
And it is this agenda that is going to be increasingly
40% risks often comes from aspects related to Corporate Indicators of marked by the value of talent linked intimately to
Behavior Management
20% Culture (depending on the values experienced, so + Diagnostic Plan daily innovation, the risks derived from constant
0% will it affect the behavior produced). Risks and
+ change, the ethical and sustainability challenges
Perception
-20%
surveys
opportunities
Communications in relation to the environment, as well as the
-40% In the case of reputational risks, it is necessary to Plan exponential expansion of society on the net and
-60%
Jan 00 Jan 02 Jan 04 Jan 06 Jan 08 Jan 10 Jul 10
note the existence of two schools of thought: Actions
the new 2.0 environment, fields in which reputation
RI portfolio of companies with best reputation S&P 500
is playing and will play a central role. Because, as
Process of continuous improvement
1. One more centered on its economic quantifica- Shakespeare wrote, “the purest treasure mortal times
Source: Reputation Institute; 2010. Source: José Carlos Martínez, 2010.
tion and valuation. afford, is spotless reputation.”
fRC Trends - page 2 fRC Trends - page 3

3. Knowledge Center
g
for Corporate Reputation
www.reputacioncorporativa.org
©2011, Corporate Reputation Forum
The Corporate Reputation Forum (fRC) is an association made up of 15 companies present in more than 105 countries, with more than 700,000
employees and 1,500 million clients and end users. Its mission is to serve as a place to meet and circulate trends, tools and corporate reputation
management models; and increase the value of its members by supporting the management of intangible assets. This document forms part of the
Strategy Documents series, produced by the fRC to share company knowledge on corporate reputation management. The fRC’s objectives are: to
analyze corporate reputation management methodologies in order to facilitate their introduction into companies; to share investigation and circulate
knowledge on reputation; and, finally, to study the influence and the interrelations between the principal variables of corporate reputation.
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