Corporate Reputation:  Emergence of difficult times puts focus on the role of strategic public relations

Published 2008 

Corporate reputation is emerging as a key business parameter for Australian companies in 2008. After a decade or more of economic and business sunshine, and comparatively benign conditions, clouds are gathering on the horizon. 

It’s time for CEO’s and E-suites to begin to prepare for rougher conditions and to focus their attention on how to reinforce, or strengthen, their organisation’s reputations.  One of the key tools to help them do this is PR.

Here are some principals:

1. There is a difference between image and reputation.  

Image can be bought through advertising, corporate hospitality and other activities; and after years of the ‘good times’ it’s likely the image of many Australian companies is superficially strong.  After all, an image is created by what you say about yourself and in good times it’s often not difficult to say a lot and generally impress.

But reputation is different. It’s about relationships, business practices and whatever respect the organisation demonstrates towards the community.  It’s largely what others say, and think, about you.  And it has a longer time-frame.

As with personal circumstances, it’s when times turn tough that you often find who your true friends and supporters are, and what your reputation really is worth!

2. Today’s share price, good or bad, is not a measure of reputation.

Many at the helm of companies mistakenly believe that a high share price means they are highly regarded and they have a strong reputation; in fact sharemarket values for most (except the most revered) companies are more weighted to financial performance (although non-financial factors are much more important than they used to be).

Why is this?  Simply because they become fixated by their share price, and they fall into the trap of believing that communicating with ‘the market’ is all that matters.

A high share price can be related to many factors not directly related to the company or how it is regarded.  For some organisations, a higher share price than seems justified by performance might actually be because they are seen as vulnerable, i.e. not performing and therefore ripe to be acquired! 

3. An organisation’s reputation increasingly depends on the CEO’s reputation.

Some US research - mainly related to major brands and/or Stock Exchange listed organisations - rates the CEO’s reputation as contributing to over 50 percent of an organisation’s reputation.

These days a significant part of a CEO’s role is to ‘front’ the organisation - reaching out to the investment community, Government and media.  And being a key motivator of staff.

For many high profile companies with strong consumer brands, the personaly, demeanour and style of the CEO can influence both image and reputation. 

However, the role can change when times get tougher, requiring the CEO to be prepared to personally play a major, and dominant role, in protecting key relationships and communicating with the key stakeholders.

So what are some of the key impediments to ensuring that an organisation is giving the attention it should to corporate reputation?

1.      Communication ‘doers’ rather than ‘strategists’.

Given a decade of good times, many organisations have staffed their communications departments with ‘good times’ implementers whose job it is to organise events, produce corporate literature, write media releases and generally ‘get stuff done’.  The result is that few organisations have the internal resources to seriously address corporate reputation!

2.      Problem CEO’s

CEO’s often fall into two extremes - communication ‘extroverts’ or communication ‘introverts’. The former do it by sheer force of personality and are great when times are good, but are more reluctant when the going gets tough. Communication introverts, are great on the numbers but are simply not comfortable when it comes to communicating.  The ‘extroverts’ often communicate well to consumer audiences, while the ‘introverts’ tend to focus on ‘shareholder value’ messages.

3.      The Investor Disease

Many companies become investor driven (or obsessed!).  Stock Exchange requirement rule supreme.  All announcements must be dictated by SX requirements.  Legal disclosure comes above all else.  Market analysts must be briefed before any other audience - and the language and style can’t be altered for other audiences.

It’s rare that companies face all three of these hurdles - but it’s not uncommon. And those that do are in such a ‘dog chase tail’ situation that they will need to find a circuit breaker before they can begin to make any progress with broader audiences.

The bottom line is that organisations that have the best approach to corporate reputation/  communication/PR are generally those that have top class, senior communications professionals in-house, or have access to external specialist communications counsel - or a combination of both. 

Unless this is in place, senior management, and especially the CEO, won’t be persuaded that corporate reputation is about serious relationship building, rather than short-term promotions and puffery.