1. R e p u t a t i o n
c o m m u n i c a t i o n d i r e c t o r 2 / 2 0 1 622
Putting
reputation
on the
agenda
How global executives deal with today’s
reputation risks and opportunities
b y C a r s t e n W e g m a n n
and numbers that are hard to interpret.
Secondly, you need to have the appro-
priate forum internally in the company
to discuss and act on the evidence; more
often than not, it never gets out of the
drawers in the market intelligence unit.
Thirdly, the insight is often not anchored
in a concrete set of business problems
or opportunities; the knowledge base is
stand-alone in nature, and perhaps high-
ly accurate as such, but without a strong
link to the business strategy, it will re-
main under-leveraged.
When these challenges are mapped to
the reputation performance of the organ-
isations surveyed, it is evident that com-
panies with strong/excellent perceptions
have the foundation of measurement in
place and are focusing their efforts on
cross-stakeholder communication, CSR
and managing risks. At the same time,
companies with an average reputation
are still working on developing the busi-
ness case for this and experimenting with
the best approach to measure their brand
and reputation.
rom September 2015
to January 2016, Rep-
utation Institute sur-
veyed more than 150
global executives to gather insights on
today’s trends, practices and priorities re-
lated to their stakeholder management.
The companies were sized between $1
billion and $30 billion in revenues and
based in 20 countries across Europe, US/
Canada, Central and Latin America. The
key topics were the top-of-mind issues for
senior executives with corporate brand
and reputation responsibilities, activat-
ing the right strategies to capitalise on
growth opportunities, the link between
reputation and corporate purpose, the
organisational setup for success, commu-
nicating on corporate social responsibil-
ity (CSR), and the trends in stakeholder
measurement and communications.
The biggest challenge that compa-
nies are facing in this space is the lack
of a structured process for integrating
stakeholder views as a leadership prac-
tice in their business. Fewer than half
of the executives interviewed reported
their organisations have the right inter-
nal competencies, structures, processes
and methodologies in place to assess and
manage their reputation. Too often, com-
panies are tracking their stakeholders in
silo, meaning there is no consistent model
or comparable set of data, and no con-
sistent way to share the insight across
the various departments at headquarter
level (communications, marketing, HR,
investor relations, etc.), as well as between
the local markets.
The majority of global companies
seem to have understood the importance
of measuring stakeholder perceptions,
and many of them are doing it in a va-
riety of ways. The challenge at this point
is in moving to market-level integration
of the insights, and using the outside-in
perspectives for course-correction in the
business strategy.
Why is that not straightforward? For
one, there is a lot of tracking research
in the market that is not really actiona-
ble – basically, long reports with charts
D

2. c o m m u n i c a t i o n d i r e c t o r 2 / 2 0 1 6
R e p u t a t i o n
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At the high level, the business case
for reputation investment is simple: your
success as a company relies on people
supporting you, customers buying your
products, policy makers and regulators
giving you a license to operate, the fi-
nancial community investing in you, the
media reporting on your point of view,
employees delivering on your strategy.
For them to support your business, they
need to trust you as a company that will
deliver on its promises - we measure this
as stakeholder = business support.
The business case for
reputation
At the more operational level, you ei-
ther need endorsement from the very top
of the firm based on the company’s stra-
tegic ambitions, or a trigger point (which
often comes with a media storm) that
unleashes the mandate from the top, or
a very well-architected business ration-
ale that is firmly grounded in the views
and behaviour of the stakeholder groups
that matter the most to the success of
the company.
Our study confirms that the corpo-
rate communications/public affairs de-
partment continues to have the leading
role in reputation management (60 per
cent of functions represented), and the
trend is clearly that the bigger the com-
pany is in terms of revenues, the more
involved the corporate communications
office is in the management. This means
that this department has the responsibili-
ty to build and bring the case forward, un-
less they have sufficient mandate already.
Moreover, the study shows that com-
munications executives are still spending
most of their time on ‘classic’ matters,
rather than, say, using external stake-
holder views to validate business strate-
gies, company positioning, and providing
actionable market input for board-level
decisions. Less than 20 per cent of the
senior communications professionals are
really involved in board decisions, while
at the same time 45 per cent of them re-
port that reputation is a prominent agen-
da item for their board - so there is a gap
that needs to be closed.
For the most part, corporate commu-
nications officers (CCOs) have had direct
responsibility for communications-relat-
ed issues, and less so on broader strate-
gic business issues. One of the key find-
ings in this study is that there is now
a unique chance for senior communi-
cations officers to elevate their role and
contribute to the corporate agenda and
decision-making , taking a fact-driven
approach to providing that guidance.
The point is not for the CCO to seek
or take responsibility for the company’s
reputation performance at the stakehold-
er group level, but to influence or drive
the company’s stakeholder support and
behaviour in line with corporate objec-
tives a) through communications and b)
by means of business advice to the com-
pany’s executive team and line units on
the interactions with the company’s core
audiences. The CCO in the sole capacity
of the company’s spokesperson is a dying
species. Also, managing reputation risk
has become top-of-mind for almost half
of the executives interviewed, and two-
thirds of them are now involved in rep-
utation risk assessment and crisis man-
agement. However, less than half of them
report that their organisations have the
right internal competencies, structures,
processes and methodologies in place to
assess and manage reputation risks.
This is no surprise in today’s world,
where social media enables news to travel
around the world within minutes and the
perception of who you are as a company
has a direct impact on sales, stock price
and license to operate. However, assess-
ing the internal capability to manage the
reputation risk is as important as under-
standing the external impact of the risk
event materialising.
Study participants from companies
headquartered in the US and Canada are
clearly ahead of European companies in
implementing a “well-established struc-
ture for addressing and mitigating key
reputation risks” and “a cross-functional
governance structure to manage the key
reputation risks.” This is a significant
finding, given that 84 per cent of all of
the respondents worldwide acknowledge
their corporate communications is the
most responsible entity when it comes to
reputation risk management.
Budgets and resources
On the matter of budgets, one fifth of
the companies surveyed dedicate more
than 20 per cent of their annual commu-
nications budget to reputation-related
initiatives, one quarter spend between
five and 20 per cent, and one-third spend
five per cent or less. These numbers are
relatively moderate, and likely ties with
the observation that many are still work-
ing on developing the business case for
a structured approach to track and use
stakeholder insight. Until that case is in
place, the majority of funds will contin-
ue to flow into classic communications
which may not be where the business
impact is the greatest, or for that matter,
easy to measure.
This is important, given that our re-
searchshowsthetotalbudgetforcommu-
nications rarely exceeds 0.1 to 0.3 per cent
of the revenue line. Granted, some indus-
“There is a
unique chance
for senior
communications
officers to
elevate their role
and contribute
to the corporate
agenda.”

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tries are more convinced about the ne-
cessity to invest in communication than
others – for example airlines, financial
institutions, hotel chains, luxury brands
and retailers. Others are less inclined to
do so, and they include IT, building and
construction, or semi-public institutions
that hardly have competitors.
The top performers in reputation
management have sufficient resourc-
es aimed at building license to operate
among key stakeholders. The more com-
plex the relationships with stakeholders
are, the bigger the budget needs to be to
achieve the right level of professionalism;
and the higher the dependency on specif-
ic stakeholders, the greater the necessity
to have specialised communication man-
agers to serve their needs.
Sixty-seven per cent of the companies
in the study report current investment/
budget for improving communication
with stakeholders around CSR/sustain-
ability performance and initiatives. So
how do the companies then communi-
cate performance in the context of CSR
and sustainability? They mention CSR
initiatives in their annual report or ded-
icated annual CSR report and in corpo-
rate-level communications (press releas-
es, statements, executive interviews, etc.),
and they take public positions that are
communicated on social or environmen-
tal issues pertinent to their stakeholders.
When it comes to current budgets
for CSR and sustainability, the money
is mostly going into charitable contribu-
tions and philanthropy (donations) and
improving CSR and sustainability-re-
lated communications. Our take is that
these items may be necessary (‘check the
box’), but not sufficient.
Other global surveys of ours reveal
uncertainty in society when it comes to
the citizenship and governance dimen-
sions of even the biggest companies
around the world. Corporations invest
millions of dollars in being viewed more
favourably in the context of their social
footprint and shared values, however the
initiatives often do not seem to matter
much to their stakeholders; it is not that
they are not thought to be well-meant or
positive in nature, they just fail to res-
onate because they do not come across
as relevant for their business audiences.
Broadly speaking, our position is CSR
should be built into the core of the com-
panyasanintegratedstrategyratherthan
a separate function or set of activities. We
see a clear pattern in our research that
successfulsustainabilitystrategiesareful-
ly integrated into the business model, and
theyareexecutedingenuineprogrammes
that reflect corporate heritage and culture
– and when all is said and done, there is
reallynosuchthingasCSR/sustainability
strategy, there is just business strategy.
Narrative and purpose
The biggest reported area of focus
for the companies to make progress
over the next 12 months is in articulat-
ing a cross-stakeholder, cross-market
narrative. However, only 59 per cent
of respondents overall “strongly” agree
that their organisations have a credible
and compelling narrative that address-
es cross-stakeholder expectations and
aligns with corporate purpose.
When asked about the mechanisms
that are in place to ensure that the com-
pany’s purpose and values are clearly
and consistently demonstrated in how it
acts and does business, the answers are
mostly about internal policies and codes
of conduct, company marketing mate-
rials and core value/vision statements.
Significantly fewer have corporate or per-
sonal performance metrics tied to their
core values, or for that matter, internal
processes and controls set up to ensure
employee adherence to their values.
But how do you know you have a
powerful purpose that can enhance your
reputation and therefore your business
results? There are many components
60 %
52 %
44 %
43 %
39 %
35 %
60 %
52 %
38 %
43 %
48 %
45 %
58 %
56 %
42 %
39 %
28 %
32 %
70%
30 %
40 %
50 %
45 %
20 %
Communicating: Articulating a cross-stakeholder, cross-market
company narrative
Measuring our reputation across key steakholders
Managing reputational risk: improving our ability to effectively man-
age reputational crises
Corporate Social Responsibility (CSR): Improving our reputation for
CSR and sustainability
Knowledge: Improving our organizational competency in reputation
management/corporate communication
Business case for reputation management; including quantityfing
Return of Investment (ROI) of specific initiatives
Where must your com-
pany make progress over
the next 12 months to
improve its reputation?
Overall USA Europe Latin America

4. c o m m u n i c a t i o n d i r e c t o r 2 / 2 0 1 6
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to the answer, but our strategic ‘health
check’ for the corporate brand purpose
typically includes that it embodies vision
and mission, imbues enterprise legacy, is
central to core competencies, aligns with
organisational identity, has distinctive-
ness versus competition, identifies with
stakeholder expectations, inspires uni-
versal engagement, and drives metrics of
enterprise success.
Historically, it’s been difficult to
measure the positive financial impact of
the corporate communications depart-
ment, and therefore ask for more re-
sources to do more. Generally speaking,
chief marketing officers have had more
quantitative tools at their disposal than
CCOs. Now, 73 per cent of the respondents
report that they use reputation scores to
evaluate the effectiveness of their corpo-
rate communications initiatives.
The point is, reputation metrics are
becoming much more widely used as
proof points that corporate communi-
cations actually contribute to shifts in
supportive behaviour in the marketplace
and thus the results of the company,
specifically in regards to the question of
whether its key stakeholders intend to
buy the products/services, recommend
the company, invest in the stock, work
for the company, and give the company
the benefit of doubt in the case of a crisis.
Once the company’s stakeholders are
mapped out and prioritised depending
on which ones have the greatest impact
on goals and ambitions, and once their
perceptions and expectations are meas-
ured in the core markets on a regular
basis, then you have the basis for an ef-
fective communications strategy. With
this foundation in place, the CCO can
establish the necessary credibility at the
executive team level in the role of the
steward of the company’s reputation. •
49 %
54 %
41 %
47 %
42 %
63 %
41 %
35%
59 %
65 %
65 %
50 %
60 %
55 %
55 %
50 %
45 %
65 %
49 %
47 %
40 %
40 %
33 %
63 %
32 %
26 %
51 %
50%
60 %
55 %
67 %
57 %
83 %
60 %
43 %
76 %
Proactively communicating externally on
company’s core values
Company marketing materials and corporate
communications reflect its core values/visions
Internal processes and controls set up to ensure
employee adherence to core values
Core values emphasized in recruitment materials/activities
Training provided to employees on company’s core values
Internal policies and codes of conduct developed
to articulate company’s core values
Personal performance metrics tied to core values
Corporate performance metrics tied to core values
Consistent commitment and reiteration of core
value by senior leadership
Carsten Wegmann
Director, Reputation Institute
Carsten Wegmann is director
with Reputation Institute, the
research and advisory firm on
corporate reputation. He leads
client relationship manage-
ment in Europe and the Far
East. His professional services
experience spans more than
20 years of executive positions
worldwide in the tech, media
and finance sectors. Prior to
joining Reputation Institute,
he was director for the Nordic
region at Taylor Rafferty, a New
York-based capital markets
advisory firm.
What mechanisms are
in place to ensure the
company’s purpose and
values are clearly and
consistently demonstra-
ted in how it acts and
does business?
Overall Latin America Europe USA