Insight: Reputation is more than skin deep

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THE pandemic has accelerated a trend of organisations being more transparently ethical and engaged with the communities in which they operate than in the past, writes Steven Shepperson-Smith.

Organisational reputation now has tangible value in determining who consumers buy from, who particularly younger employees choose to work for, where investors will place their money and which industries government will feel it can support or might require interventions. 

This makes it more important than ever for PR teams to have a strategic role in understanding and synchronising the needs of stakeholders and working with leadership teams to find an authentic way for their organisation to address those needs and enhance organisational reputation.     

Why reputation matters 

Research from Teneo indicates that corporate boards are moving from an implicit to an explicit approach for managing reputation, taking time in their agenda annually to debate corporate reputation and understand how system-wide decisions around strategy, operations and culture can impact the perceptions of stakeholder audiences. 

In the digital age, intangible assets like reputation, brand and human capital are increasing in value far more quickly than tangible assets such as plant and machinery.

There is an important opportunity for public relations practitioners to contribute to this conversation, but they must do so using the same quantitative language as many in the boardroom and not rely upon the more nebulous ways of estimating stakeholder opinions based on conversations and gut feel. 

The art of reputation measurement

Reputation measurement has progressed significantly in recent years and there are now a number of respected studies which can benchmark organisations. These studies often use similar measures, and will usually include something akin to the level of trustworthiness. 

A number of reputation studies can now show statistical correlation to business and share price performance, giving them credibility when presented to leadership teams.  

Reputation is driving stakeholder action

According to the Edelman Trust Barometer – an annual reputation survey of more than 36,000 people across 28 countries –  58 per cent of consumers buy or advocate for brands based on their beliefs; 60 per cent of employees want their CEO to speak out on controversial issues they care about; and 88 per cent of institutional investors subject Environmental, Social and Governance (ESG) measures to the same level of scrutiny as operational and financial considerations.  

RepTrak’s Global 100 report – which assesses > 243,000 views on the 100 companies trading in the world’s top 15 economies with the strongest reputations – found that younger respondents, Generation Z in particular, were more cynical about corporate reputations. That suggests this is going to be a growing problem for brands over time. 

Businesses are responding to this change with Britain’s Most Admired Companies – the UK’s longest running survey of corporate reputation – noting that 73 per cent of business leaders have changed the way they address corporate governance in response to recent shifts in societal attitudes.

The three major reputational issues of our time 

The pandemic continues to have an impact on the corporate reputation landscape. Fortune Magazine’s World’s Most Admired Companies survey – a poll of 37,000 corporate executives, directors and analysts – saw companies on the front line of medical research gain significantly in reputation this year, with Pfizer rising to 4th on its list and joining Fortune’s All-Stars company list for the first time in 16 years.

Both Edelman and RepTrak also highlight a Covid hangover. RepTrak noted that corporate reputations have declined in a number of countries like Australia, India and the UK which have seen greater restrictions and disruptions to supply chains over the past couple of years. Product and service delivery remains the bedrock of corporate reputation, so the impact of Covid-19 on businesses will still be felt for the time being. 

While the impact of Covid-19 is receding though the world is now faced with a new challenge around the cost of living. This is being exacerbated and fuelled (no pun intended) by the ground war in Ukraine. 

In 2022, RepTrak saw reputations for its Global 100 decline for the first time since 2018 as the public worried about whether businesses would remain affordable and keep people in jobs through a second global crisis so soon after the pandemic. The right way for brands to respond is in a similar way that they did to Covid – creating targeted and tangible actions to help those experiencing the greatest hardship. 

The final major reputational headwind currently facing organisations is the climate crisis. This is only going to keep growing in importance as a definer of reputation as the physical impacts of climate change become undeniable. 

There has, however, been increasing criticism of companies trying to engage in ‘greenwashing’ to the extent that some regulators are now stepping in to address the issue. It is a reminder that many companies still need help to do the right thing from a public relations standpoint. 

Public relations professionals need to evolve their role beyond communication delivery to be strategically positioned as the organisation’s ethical conscience and mentor. To do so, reputation measurement needs to become central to the measures that we use within our industry.    

Steven Shepperson-Smith is president-elect of the Chartered Institute of Public Relations (CIPR).