Maintaining Reputation In a Time of Global Change
Corporate Communication InstituteDecember 1, 2006
Gary F. GratesPresident & Global Managing DirectorEdelman Change and Employee Engagement
“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that,
you'll do things differently.”
— Warren Buffett
“If you have no reputation, you have no business.”
— Dr. Guruswami RaghavanProfessor of Finance
SDM Institute for Management Development
Why is reputation so important today?
59% of organizations surveyed state that corporate reputation is becoming a key source of competitive advantage as
products/services become less differentiated
Source: “Reputation: Risk of Risks”
Economist Intelligence Unit 2005 Survey
Reputation is the A-1 priority
84% of companies surveyed state that the CEO/President/Chairman takes personal
responsibility for their organization’s reputation…
Source: “Reputation: Risk of Risks”Economist Intelligence Unit 2005 Survey
…because nearly 97% of them understand the linkage between reputation and financial performance.
Source: “Return on Reputation”Corporate Reputation Watch 2006, Hill & Knowlton
And it starts inside
Building reputation begins inside with engaged employees because they…
Embody the organizational values that reputation is built on
Fulfill the company expectations every day
Shape the company’s reputation, for better or worse
Reputation represents who a company is
The summation of the people who work for it every day
Their understanding of customer expectations
Their commitment to fulfilling those expectations – everyday
FedEx’s on-time delivery
McDonald’s dependable flavors
Nordstroms’ consistent customer service and support
Apple’s innovation
How do you build reputation in today’s complex business environment?
The Age of Transparency Customers, employees, shareholders, investor community are privy to
higher levels of product information and company knowledge
A New Corporate Ecosystem The lines between stakeholders are blurred; all are integral parts of one
organization
Growing Sense of Distrust Recent events have elevated concern about corporate governance
A New Balance of Power Balance is shifting away from management to employees, suppliers,
distributors, customers, business partners and other stakeholders
The Reputation Challenged
The Reputation Challenged
Continuous global change
Truths…
Technology will always advance
The world will get smaller every day
Relationships becoming more important
Trust impacting internal and external relationships
New business models forcing major changes in employer-employee compact and organization-customer dynamic
Leaders must act fast to change
The impact on business
The purpose, premise, rationale and viability of every organization are under attack because of anenvironment that is increasingly:
Global
Complex
Chaotic “Loud”
Commoditized
The impact on constituents
There’s a breakdown in relationships and trust:
Organizations v. employees
Organizations v. communities
Organizations v. stakeholders
Inside:Paralysis – employee confusion about their purpose and role
Outside:Loss of credibility – reputation plummets
The impact on employees
Only 25% of employees understand personal accountability
84% don’t believe information flows freely in their companies, depriving them of critical, job-related info
Majority of employees of large companies believe their size makes them less nimble
Wide gap between senior executive and employee perceptions on the functionality and health of their organization
Study: A Global Check-Up Diagnosing the Health of Today’s Organizations Booz/Allen/Hamilton (2005)
2004 Employee Engagement Index
Gallup Management Journal
The impact on employees
29% of employees are actively engaged in their jobs
54% are not engaged, distracted
17% are actively disengaged
Employees are working with the “volume off”
Noise – people are inundated with so much information – most of it irrelevant and conflicting – that it overwhelms and confuses them
Creates cynicism instead of enthusiasm, like watching a sports event with the volume turned off
Employees determine truth and reality by watching behavior -- they are watching but choosing not to listen…
Outside the company
If people do not trust your company they will…
Refuse to buy your products or services (84%)
Refuse to invest in your company (74%)
Refuse to do business with you (75%)
Ignore your attempts to communicate with them (54%)
Edelman’s 2006 Trust Barometer
People gravitate to institutions that are…
…such as: Apple, Citigroup, Goldman-Sachs, Coca-Cola, JP Morgan Chase, Intel, Nokia, Motorola, GE, Duke Power
Solid
Stable
Consistent
Trustworthy
Credible
Secure
What defines them…
Organizational Trust: leadership does what it says
Organizational Consistency: organizational performance/service meets or exceeds standards
Organizational Accessibility: is available to internal and external stakeholders – is transparent
Organizational Responsiveness: organization senses and responds to internal and external issues, inquiries, etc.
Organizational Commitment: organization meets/exceeds stakeholder wants/needs
Organizational Affinity: organization gives stakeholders a reason to care about and identify with the organization’s mission
Case in point
Apple Computer — a new product dynamoLives up to its reputation
Known as iconoclastic risk-taker
Stood PC industry on its head with Macintosh
Constantly breaking new ground
iMac, eMac, Mac OS X, reinvented iMac (multiple times)
Revolution: iPod and iTunes Music Store
Reinvented Apple and the music industry
Changes the game in other industries
Drew out new competitors
Everyone else is playing catch-up — Sony, Dell, Microsoft, Time-Warner, Yahoo, et al.
Case in point
CEO Steve Jobs’ vision is key
Invites people along for the ride with cutting-edge products that define and enhance their “digital lifestyle”
Put Apple at the forefront of new lifestyle trend
Apple’s reputation is built on its unique ability to communicate that vision effectively to its many constituencies
Customers, investors, employees, media, etc.
Traditional Approach(Disciplined Process)
Progressive Approach(Organizational Priority)
Purpose Messaging; Convey information Build/strengthen relationships
RoleProduce/distribute info on
initiatives, programs, industry awards/recognition
Provide context, interpretation, relevancy
Perspective Reactive Anticipative, creative
Integration w/Strategy
Little, sporadic Extensive, well-planned
Approach Push Holistic
Skills JournalisticHuman behavior: Sense what people
need to know, feel, do
Information Flow
Top-down Two-way, lateral
Measures “Clips/clicks/hits” Business success
From a communication perspective, managing reputation in today’s business environment requires a different approach
What effective communication can accomplish
It can is provide a path for people outside the company to rediscover a company’s positive aspects…
It can teach and lead employees to what’s important regarding reputation…
…what to do, to stop doing, to think and talk about
Key strategy: Discover vs. Sell (Promoting vs. Doing)
If the organization’s goals are understood, then communications can help stakeholders to experience the changes needed and the benefits of initiatives
Communications can provide context and relevance, helping people to “connect the dots”
Discovery carries far more credibility than something that has been spoon-fed (“sold”)
Discover vs. Sell
Asks the right questions
Drives business strategy
Establishes the right mindset
Influences desirable behavior
Unleashes competitive advantage
Shapes the organizational challenge
Builds relationships
Maintaining Reputation In a Time of Global Change
Key takeaways…
Companies need to acknowledge there is a gap between how they perceive their own reputations and what its stakeholders believe and experience.
Companies must take an “outside in” approach to reputation management.
Communication can strengthen relationships with internal and external stakeholders. Effectiveness must be measured in communication “outcomes” rather than communication “outputs.”
Maintaining Reputation In a Time of Global Change
…in a world of constant change and constant information, you can't control reputation globally.
What can be managed:
management protocols and decision making
issues management and crisis management
open, clear communications internally
employee engagement and involvement
“The way to gain a good reputation is to endeavor to be what you desire to appear.”
— Socrates
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