Because a good reputation takes years to build and only minutes to destroy, it is vital that a business manage it’s reputation carefully. Here, Wes Upchurch, outlines the four key areas that executives must concern themselves with when managing reputational risk.
With nowadays’s digital and social media, the news cycle reporting at the downward spiral of a once well-respected enterprise that has suffered severe reputational harm is not a nice one to watch. Unfortunately, such information events seize our attention all too often, leaving an indelible impression around the companies reputational image.
Applied to a enterprise, “reputation” represents the interpretation or perceived value of an firm’s trustworthiness or integrity. While the truth ultimate prevails, reputation can be based on false understandings in the short term. When accurate over time, the overall reputation of a company can indicate how the firm will manage any particular given situation or state of affairs. However you define recognition, the experts concur that it reputation is a precious corporation asset and the public recognizes when a reputation is irreparably damaged. Maybe it’s a sign of the cancel culture we live in, but reputation often determines public response.
We take “reputational risk” to mean the current and potential impact on income and share values arising from changing opinions of stakeholders. Bottom line, reputation can change. It can be a fragile thing. What takes many years to build can come unraveled in just days. Below, we uncover 10 important keys for executives and administrators to contemplate for managing reputational risk. We classify them in four important categories – strategic alignment, cultural alignment, a commitment to quality, and organizational resiliency.
Key Number 1: Strategic Alignment
Reputation risk management starts at the top. Strong board oversight on matters of strategy, policy, execution and transparent reporting is vital to effective corporate governance, a powerful contributor to sustaining reputation and the ultimate checkpoint on CEO performance. For example, the board’s oversight of risk is important because effective identification and management of risk can identify major threats to reputation and ensure they are reduced to an acceptable level.
Managing reputation hazards begins at the pinnacle part of an organization. Strong board oversight on subjects of approach, response policies, tactical execution means, and information reporting is all important to effective corporate governance. These management roles are a powerful contributor to maintaining positive reputation and serve as a benchmark of CEO performance.
The board and management ought to ensure that reputational risk isn’t just an afterthought to in their commercial enterprise planning. Integrating their reputation strategies with their management philosophy from the beginning makes it a relevant factor at the decision-making table, and enables a strategic view to assessing dangers. Intersecting risk management with performance monitoring, helps to control damage and even gets one ahead. In an attempt to make the strengthen the strategy, administrators and managers should understand the essential assumptions underlying the approach, ask questions about assumptions, and consider eventualities that might render the assumptions invalid. It is critical for management to identify weaknesses,
Building a brand image specific to an enterprise is crucial to business success and, while all supports reputation. An informative story is straightforward, however most brand managers are well aware that some businesses are better at telling their story than others. Therefore, managers and other executives will want to place focus on their brand improvement strategies. The best means of building a brand image are customer-focused, over value, and develop distinct messaging. The best companies listen well and take action to improve their customer experience. Establishing accountability in all aspects of business from marketing to fulfillment, and quality to customer satisfaction, is essential. The messages promoted by the press, marketers and advertising, communicate the companies brand and can influence the public perceptions. These should align with the identified strategies.
Key Number 2: Cultural Alignment
A company needs strong corporate values, supported by performance initiatives and a positive culture with regards to compliance. The notion that, if moral at the top of the company is strong, then the organization’s culture must be good isn’t always true. Lower-level employees often pay higher regards to the behavior of their supervisors than the messages communicated by the organizations highest leaders. So executives need to ensure that middle and lower level management implements the right message across the board. For that, the executive team must ensure that performance initiatives align with the corporate values in all areas. This includes across the organization, with partners, and suppliers.
There are few things that can undermine reputation more than publicized compliance violations or the brand being damaged by negative news in the media. Senior executives should implement controls over compliance matters and conduct themselves in a manner worth of their role. They must “walk the talk” with respect to compliance, meaning they should maintain compliance and oversight across the organization, conduct risk assessments, and revise programs to align with new regulatory developments. Training programs can help prevent problems and encourage the reporting of suspected violations so they can be addressed in house before it makes it to the press. Another key aspect of cultural alignment includes insuring that the company culture conforms to cultural expectations and changes. The court of public opinion can be difficult as customs and norms change over time. Proactive companies embrace these changes without sacrificing tradition.
Key Number 3: Commitment to Quality
There must be a focus on ensuring that there are overwhelmingly positive interaction with involved stakeholders and quality assurance in public reporting. The management teams and directors should seek to improve stakeholder experiences. These include the daily interactions with customers, employees, suppliers, shareholders, lenders, and regulators. The branding and marketing impact and influence the opinions of all those who interact with the company. The messages can be a powerful driving force for improving and sustaining reputation. This is particularly true in the highly technical world we live in where anyone can leave a review online. Organizations that understand their customers, serve their best interests, and actively work to deliver a better experience for everyone will be noticed in the marketplace. Quality assurance initiatives for the final delivered product work, likewise, work to ensure satisfaction.
When public companies revise previously issued financial statements for egregious errors in the application of accounting principles or omissions, investors notice. When considering an IPO, effectively functioning internal financial reporting controls and an understanding of what not to say when talking with the press and the investor community are paramount. For established firms, internal financial controls matter. Once a company loses the public’s confidence in its reporting, it’s tough to earn it back. This emphasizes the importance of strong internal audits.
Key Number 4: Organizational Resiliency
Eventually, every company is tested. As a crisis event is a severe manifestation of risk. Preparation pays off, particularly for high-impact risk events with high-persistence. A companies readiness to respond can make or break it, so the companies leadership should
ensure that the risk assessment process is identifies areas where more preparedness is is needed. Planning is absolutely helpful as it allows the company to react quickly and decisively. Fires cannot be quenched by forming committees. Public relations professionals and other members of your response teams should have robust communications plans that emphasize the importance of transparency and the effective use of social media.
The best companies can respond to a crisis with openness and genuine concern. They emerge stronger afterwords. A poor response though can be devastating to the companies reputation and bottom line. Assessment of risk is important and must take in to account the company’s culture, vision, and mission. A standard reputation action plan does not exist, so attention to the four keys laid out here, will shape the firms reputation over time. From the standpoint of executive management and the board’s oversight, these keys are a road-map to understanding what’s really important when managing reputation risk.
About Wes Upchurch
Wesley Upchurch is the key visionary behind SearchResults.repair a company who’s sole focus is managing and repairing individual online reputation. His clients include white collar criminal defendants and key business executives. He is an expert in improving reputation on social media and how reputational risk translates to public opinion online.