Description
Describes the drivers of reputation and corporate governance. It explains the relationship between PR and reputation.
REPUTATION MANAGEMENT
1
Financial performance and capital
Customer benefits Tangible assets Business processes
Intangible assets
Human/Structural capital Stakeholder engagement
Culture values
2
R E P U T A T I O N :
• “If we picture a company as a living organism, say a tree,
then half of the mass or more of that tree is underground in the root system. And whereas the flavour of the fruit and the colour of the leaves provides evidence of how healthy that tree is right now, understanding what is going on in the roots is a far more effective way to learn how healthy that tree will be in years to come”
3
R E P U TAT I O N : A n o ve r v i e w
• What does reputation mean to you? • How much is your company’s reputation worth? • Can you measure and manage your reputation? • How much of your organisation is made up of intangible assets?
4
REPUTATION: An Overview
• What one mistake do businesses keep making? Answer: Asking the wrong questions • Issues facing business change little, but the answers do • Ask not what I should be doing, but WHAT NEEDS TO BE DONE
“We
must become the change we want to see”
5
R E P U TAT I O N : A n o ve r v i e w
• Corporate image can be created, but corporate reputation must be earned
• What exactly does reputation mean?
• Various perspectives and meaning, both in a business and cultural sense
6
WHO IS AT RISK?
You are at particular risk if you: • Offer life-saving or life threatening products – pharmaceuticals or arms • Enjoy high, global brand awareness –luxury brands • Are based on new technology – GM, mobiles • Confront changing social mores – fashion, alcohol, tobacco • Produce significant spill-over effects – mining, waste, oil
7
GLOBAL BUSINESS CONTEXT
• Pluralism: over time markets are inherently entropic • This leads to CREATIVE DESTRUCTION • Sustaining a competitive brand now relies more on reputation than it did a decade ago: reputation is one of the key sustaining factors
8
TRUST: the engineering of consent
Trust vs. Trustworthiness 1. Increased fraud – reward based incentives 2. Loss of authority from key institutions 3. Media distortion and anti-campaigning 4. Growth of urban decay and ant-social behaviour 5. Poor corporate governance and corporate behaviour – The Precautionary Principle
9
C H A N G E I N AT T I T U D ES
• In the Industrial age, the marketing model was driven by advertising • For knowledge-intensive products, inherent value cannot be as easily communicated in 5-10 sec commercial • Therefore, products and services rely more on reputation – the key vehicle for which is the BARND and its ability to create value
10
C H A N G I N G AT T I T U D E S
• Corporate value can no longer be determined by short-term profit and sales • Long-term, sustainability is the key Mobile phone industry is a classic example • Old systems deemed employees as cost factors, not as value creating elements and stakeholders
11
R E P U TAT I O N : A n O ve r v i e w
Reputation is the sum values that stakeholders attribute to a company, based on their perception and interpretation of the image that the company communicates over time
12
R E P U TAT I O N : A n O ve r v i e w
Reputation is the principal means through which a market economy deals with consumer ignorance
Professor John Kay
Reputation exists because of asymmetric information
13
REPUTATION: An Overview
Reputation is a collective term referring to all stakeholders’ views of corporate reputation, including identity and image
Professor Gary Davies –Manchester Business School
Reputation = experience - expectations
14
IT ALL ABOUT ISSUE MANAGEMENT
Good reputation management is based on issue management • Issue identification • Issue Analysis
• Issue Change Strategy Options
• Issue Action Programme
• Evaluation of Results
15
B R A N D S A N D R E P U TAT I O N
Phase I
Phase II Phase III
Corporat e Identity
Corporat e Image
Reputatio n
16
IMAGE
F O R M AT I O N
Communities Attitude & behaviour of employees
Communications Quality of goods & services
Organisation Structure & Culture Financial Performance
Corporate Image
Experience Corporate Social Responsibility
17
Physical Environment
ROYAL DUTCH SHELL: Corporate Communications
• Developed and pioneered scenario planning for crisis management • Corporate communications centralized • Significant alteration to organizational structure • Strategy of stakeholder engagement
18
TELECOMS: Vodafone
• Vodafone is the world’s largest mobile telecommunications community, employing over 65,000 staff and over 130 million customers • Success and reputation because of its brand: brand driven
19
TELECOMS: Vodafone
Brand strategy – key to its success
• • • • •
Operates over 300 of its own stores Sells through independent retailers Extensive sponsorship Advertising - high profile-celebrity endorsement Extensive below the line promotion
20
GUINNESS: A REPUTABLE DRINK
• • • • • • • • • • • • 250 year-old beer brand Well know and identifiable Irish provenance Made from nature ingredients Owned by Diageo- UK Sold in 150 countries & brewed in 49 Brewed for local tastes In UK, Europe, USA – Guinness Draught In Africa, Asia and Caribbean – Foreign Extra Stout Nigeria – largest overseas market A pint of Guinness has less calories than equivalent Semi-skinned milk In Muslim countries –sold as Malta Guinness – non-alcoholic
21
I N TA N G I B L E S
• The last two decades have witnessed a revolution - transfer from industrial capitalism to a new knowledge-based economy • Industrial capital based mainly on physical assets
• New economy based on intangible assets and value creation
22
I N T A N G I B L E S
Market Capitalisation Brand Reputation IP Customers Employees Innovation Organisational structure Book value ___________ $ * The above would also be affected by other variables including macroeconomic factors, shareholder sentiment and market speculation
23
I N TA N G I B L E S
• A company’s market value is driven by its anticipated earning potential – the net present value of its future economic profit
• Intangibles are systematically underreported within existing accounting practice
24
I N T E L L E C T U A L C A P I TA L
Market Value MARKET VALUE
Financial Capital
Intellectual Capital
Human Capital Customer Capital Structural Capital Organisational Capital
25
I N T A N G I B L E S
Welcome to the world of intellectual capital
• Human capital
• Structural and organisational capital
• Customer or stakeholder capital
26
I N T A N G I B L E S
Brand capital
Sales “push” focus Customer “pull” focus
NEW ECONOMY
Human capital
Production focus Customer focus
Working capital
High Low
OLD ECONOMY
(WIP, finished goods)
Physical capital
(direct delivery to customers)
27
I N TA N G I B L E S
Intangible assets Tangible assets
16% 38%
Market value
62% 84% 62% 38% 1982 1992 1999
Development of the value of intangible assets as a percentage of total market value of S & P 500 companies between 1982 and 1999. – Intangible Assets; J. Daum (1999); Wiley, p4
28
I N TA N G I B L ES
Utility Transportation Technology Services
Retail
Pharmaceuticals
Media
Financial services
Food and drink
Engineering
Engergy
Construction
Chemicals
Auto
Other
0 5 10 15 20 25 30 35
Market value as a multiple of net book value: Taken from eCFO, Wiley 2001, p95
29
I N T A N G I B L E S AND ACCOUTNING
• Off the balance sheet • Problems with global accounting - do not properly allow the inclusion of internally generated assets, except those obtained by acquisition • The issue of “goodwill” • REPUTATION IS AN INTANGIBLE ASSET IN ITS OWN RIGHT
30
REPUTATION AND METRICS
Vital Attributes: • Corporate Governance • Shareholder value • Innovation • Corporate responsibility (CSR) • Role and leadership of CEO • Satisfied employees! Value creation that is sustainable
31
DRIVERS OF CHANGE
• Increased specialisation – outsourcing and disintermediation • Relationship marketing – one-to-one customer relationship • Business is increasingly customer-led rather than production driven • Alliances and partnerships • Vulnerability of brand equity • Decline in trust – especially institutional
32
D R I V E R S O F R E P U TAT I O N
• • • • • • • Financial performance and shareholder value Corporate responsibility Corporate governance: compliance and regulation Technology – Internet and wireless Weblogs (blogs) over 5 m web journals Investor engagement (SRI) and NGOs Stakeholder convergence and managing stakeholders’ expectations • Employee expectations • Brand and operational risk
33
D R I V E R S O F R E P U TAT I O N
Indicators Indicators
• • • • • Cash flow Earnings Costs Capital expenditure Market growth Shareholders • Number of shareholder resolutions • Results of shareholder satisfaction survey Customers • Satisfaction survey • Customer complaints • Third-party ratings and awards Employees • Employee turnover • Employee profiles (ability, gender, race) • Employee satisfaction Society • Boycotts, marches, incidents • License to operate • Direct action • Media reports Partners • Quantity of partnerships accepted, sanctioned or rejected on basis of stewardship criteria 34 • Health and safety records of partners
Financial performance Sustainability
Indicators of reputational value taken adapted from: eCFO; C. Read et al, p115, Wiley, 2001
D R I V E R S O F R E P U TAT I O N
A more intrusive and sensational media – media amplification Need for transparency (disclosure) and accountability Companies as social institutions Globalization and the rise of corporate brands Notion that ethics counts Historical – Enron and WorldCom Reputation as an asset in its own right - $ Victim culture – insurance claims
• • • • • • •
35
CORPORATE GOVERNANCE
• Good corporate governance and compliance are seen by many as the primary force behind reputation management • FSA in (UK) • Basel II • Sarbanes Oxley (USA) • Role of compliance officers
36
R E P U TAT I O N : a n e n a b l e r ?
• • • • • • • Gain control and anticipate events Avoid long-term brand equity damage Avoid boycotts or sale losses Ensure compliance and shareholder value Better stakeholder relations – NGOs Better media relations and issue management Understand your risk exposure and allow easier entry into new markets and brand extensions • Improved investor relations and profile
37
R E P U TAT I O N : a n e n a b l e r ?
• Better employee output, retention and internal communications • Better understanding of issues • Preparation for crisis situation • Alignment of strategy with key stakeholders’ expectations • Sustainable wealth and value creation • Development of alert systems and a “radar”
38
REPUTATION: an enabler?
• Positive influence on regulators when issuing licenses • Local authorities may take it into account when considering planning applications • In the financial markets more likely to raise capital • Reduce the cost of entry into new markets, thereby securing a price advantage
39
MEDIA MANAGEMENT
Good and diligent management of the media is central to reputation management: media profile
• Learn which media are the most influential within your target group • Supply the press with information that is accurate and useful • Build relationship with journalists • Look for triggers within issues – monitor the media and other users groups • Use media intelligence agencies
40
P R A N D R E P U TAT I O N
World of confusing terms • Public relations: a discipline in transition
• Public affairs and lobbying
• Corporate affairs • Corporate communications • Reputation management What’s the difference?
41
PR AND REPUTATION
PR
BRAND REPUTATION
Desired image
Vehicle of promise
Delivery of promise
42
CORPORATE COMMUNICATIONS
Marketing Management Communications Communications
Organisation Communications
- Van Riel (1995)
43
REPUTAION: An Overview
Organisational Reputation
Brand Reputation
Stakeholder Reputation
Reputational “Radar”
44
Relationship between PR and Reputation
• Public relations and reputation are intricately linked: • PR – more specific issues: media relations, public affairs, crisis management, event management and branding • Reputation management is more holistic in its approach and involves all employees.
45
Traditional PR
Reputational Management
• • • • • • • • • • • • • • Strategic in nature Integrated Holistic - long-term Involves all employees Aims to deliver an image and brand promise Uses all forms and opportunities to communicate policy and values Greater emphasis on multiple stakeholder relationships
Less strategic Non-integrated Focus - short-term Key people involved Aims to give the best possible image Media relations focused Focus on transactional stakeholders
1980, 1990s, 2000
2010 46
Some Traditional PR functions
Crisis Management
Assessing stakeholders’ opinions
Stakeholder conflict
Events & Exhibitions
CSR
Change Management
PR
Media profile, monitoring
Sponsorship
Internal Communications Corporate Publications: Annual reports
47
Corporate Affairs & Lobbying
Investor Relations
Some Key Tools For PR Practitioners
Viral
Features
Photography Stunts E-mail Press Release
Launch Events
Hospitality Events
Webcasting
PR
Corporate Structure
Interviews
Websites & Portals Case Studies Editorial Coverage VNRs
48
Advertorials
Direct marketing Advertising
Packaging
Sponsorships
FILTER
PR
Exhibitions
Point of sale Internet/ wireless
Word-ofmouth
Events
Integrated marketing communications
49
BRAND AND REPUTATION
What is the difference between brand and reputation – are they the same? Brand = promise
Reputation = delivery on the promise
50
THE BUSINESS CASE F O R R E P U TAT I O N ?
• Links between reputation and financial performance are not easy to generalize about – evidence to-date unclear and inconsistent • Question – how do you measure and what? • Mathematical co-relations do not necessarily demonstrate causality • The question is complicated and multidimensional
51
B U S I N E S S C A S E F O R R E P U T A T I O N
• Does a good financial performance develop a perception of a good reputation? • Good links do exist between corporate image and customer satisfaction • Satisfied customers are not always loyal
52
REPUTATION AND FINANCIAL P E R F O R M A N C E
• Risk and reputation are linked • Traditional methods of assessing risk: • Value at risk VaR – a measure of the riskiness of a portfolio, based on assessing the maximum amount that would be lost 19 out of 20 days, given typical levels in market prices
53
FOREIGN FIRMS AND REPUTATION DEVELOPMENT
• • • • • • • • Develop investor relations and financial communications Produce detailed Annual Reports Develop media profile Work towards best practice and compliance with corporate governance Establish a strong and transparent working board Integrate risk analysis in all areas of the business Develop strong and clear corporate responsibility polices Appoint risk and reputation officers
54
STRATEGY AND REPUTATION
• An organisation’s strategy describes how it intents to create value for its shareholders and stakeholders • What is the link between reputation and intangibles? • Intangibles are hard for competitors to imitate, therefore they are a source of competitive advantage • Co-creation of value
55
STRATEGY AND REPUTATION
• Intangibles per se do not directly affect financial performance; instead they work more indirectly via a complex chain of cause and effect • The impact of a new tangible asset tends to be more immediate • Intangibles need to be generally combined with other assets – HR and IT
56
BALANCED SCORECARD
• Kaplan’s and Norton’s – Balanced Scorecard approach and strategic maps Four perspectives: • Financial • Customer • Process • Developmental
57
CASE STUDY: Coca-Cola: problems
• Poor executive reshuffle • Anti-Americanism: Mecca and Zam Zam Cola • Problems in Belgium 1999 • Faltering financial performance • Crisis with “Dasani” drinking water UK 2004 • Obesity issues • Problems with NGOs in India • Trying to grow faster than the market • Deaths in Colombia
58
Coca-Cola: S o l u t i o n s
• Continuous brand equity building within communities • Citizenship initiatives
• Work with Greenpeace on reducing carbon dioxide emissions
• Open acknowledgement of the obesity issue within the US • Sustaining brand identity and Image • Re-evaluation of strategic growth
59
HOW TO DEVELOP A REPUTATION
• • • • • • • • • • • • Quality of products and services Passion for brand Customer relationship marketing Strong corporate governance and compliance Integrated risk and issue management Crisis planning Corporate responsibility (CR) Strong brand values, experience and communications Organisational culture and structure Contract fulfilment Business presentation and conferences Customer facing staff
60
HOW TO DEVELOP A REPUTATION
• • • • • • • • • • • • Innovation Vision and leadership by CEO Investor relations and public affairs Intelligence gathering Developing media profile Adaptive and ability to reinvent Community relations CEO’s reputation Core competencies Establishing networks and alliances Understand the market Develop brand experience: “moments of truth”
61
HOW TO DEVELOP A REPUTATION
• • • • • • • • • Clear strategies and resources Learning from other’s mistakes Listening to customers’ opinions Audit and assurance Measuring and evalutation IP protection Stakeholder analysis, mapping and engagement Deliver on customer promise Think global, act local
62
HOW TO DEVELOP A REPUTATION:
Organisational Structure
• Who talks to who? • Final “gatekeeper” responsibilities • Question of internal communications • Vertical to global matrix to e-business network structures • The Case of ABB – Asea Brown Boveri
63
A REPUTATION PLAN
CEO leadership and senior management commitment
Communication audit
Frame your corporate communicational structure
Implementing programme and resources
Maintaining and evaluating
64
HOW TO CONDUCT A COMMUNICATION AUDIT
Based on GCI group – Corporate Brand study • Internal – management survey - employee survey • External – Stakeholders survey • Assessment – Gap analysis – Structural equation modelling – Sensitivity analysis – Competitor analysis • Strategic communication planning • Communication programme implementation • Evaluation, measuring and monitoring
65
CONCLUSION
• The early part of the 21st Century is the era of reputation management and the management of intangibles • The ruthless organisation cannot succeed • Companies must adopt pluralistic approaches to managing risk and reputation- must adopt a socioeconomic approach • Emphasis must go on pro-active approaches, risk and issue management - not just crisis management
66
CONCLUSION
• Reputation management must be strategic in nature, but must incorporate emergent properties and reporting: involve everyone, not just managers • Getting organisational structure right and managing structural capital is critical
67
CONCLUSION
• Corporations must be innovative, passionate, and adaptive • Reputation must be viewed as a strategic weapon, emergent and monitored • Stakeholders’ views must be measured and evaluated: what is stakeholder reputation? • Reputation management should not stop at senior management and customer facing staff: all employees should be involved
68
CONCLUSION
• Brands are the glue of reputation • Develop brand equity internally and externally • Ensure your employees understand your intangible assets • Be proactive with the media
69
CONCLUSION
• Ensure your brand is not too easily copied or imitable: differentiate by behaviour • View CSR as a way forward, not a defence mechanism • Develop first rate corporate governance • Ask the right questions, then integrate, integrate, and integrate
70
doc_251697815.pptx
Describes the drivers of reputation and corporate governance. It explains the relationship between PR and reputation.
REPUTATION MANAGEMENT
1
Financial performance and capital
Customer benefits Tangible assets Business processes
Intangible assets
Human/Structural capital Stakeholder engagement
Culture values
2
R E P U T A T I O N :
• “If we picture a company as a living organism, say a tree,
then half of the mass or more of that tree is underground in the root system. And whereas the flavour of the fruit and the colour of the leaves provides evidence of how healthy that tree is right now, understanding what is going on in the roots is a far more effective way to learn how healthy that tree will be in years to come”
3
R E P U TAT I O N : A n o ve r v i e w
• What does reputation mean to you? • How much is your company’s reputation worth? • Can you measure and manage your reputation? • How much of your organisation is made up of intangible assets?
4
REPUTATION: An Overview
• What one mistake do businesses keep making? Answer: Asking the wrong questions • Issues facing business change little, but the answers do • Ask not what I should be doing, but WHAT NEEDS TO BE DONE
“We
must become the change we want to see”
5
R E P U TAT I O N : A n o ve r v i e w
• Corporate image can be created, but corporate reputation must be earned
• What exactly does reputation mean?
• Various perspectives and meaning, both in a business and cultural sense
6
WHO IS AT RISK?
You are at particular risk if you: • Offer life-saving or life threatening products – pharmaceuticals or arms • Enjoy high, global brand awareness –luxury brands • Are based on new technology – GM, mobiles • Confront changing social mores – fashion, alcohol, tobacco • Produce significant spill-over effects – mining, waste, oil
7
GLOBAL BUSINESS CONTEXT
• Pluralism: over time markets are inherently entropic • This leads to CREATIVE DESTRUCTION • Sustaining a competitive brand now relies more on reputation than it did a decade ago: reputation is one of the key sustaining factors
8
TRUST: the engineering of consent
Trust vs. Trustworthiness 1. Increased fraud – reward based incentives 2. Loss of authority from key institutions 3. Media distortion and anti-campaigning 4. Growth of urban decay and ant-social behaviour 5. Poor corporate governance and corporate behaviour – The Precautionary Principle
9
C H A N G E I N AT T I T U D ES
• In the Industrial age, the marketing model was driven by advertising • For knowledge-intensive products, inherent value cannot be as easily communicated in 5-10 sec commercial • Therefore, products and services rely more on reputation – the key vehicle for which is the BARND and its ability to create value
10
C H A N G I N G AT T I T U D E S
• Corporate value can no longer be determined by short-term profit and sales • Long-term, sustainability is the key Mobile phone industry is a classic example • Old systems deemed employees as cost factors, not as value creating elements and stakeholders
11
R E P U TAT I O N : A n O ve r v i e w
Reputation is the sum values that stakeholders attribute to a company, based on their perception and interpretation of the image that the company communicates over time
12
R E P U TAT I O N : A n O ve r v i e w
Reputation is the principal means through which a market economy deals with consumer ignorance
Professor John Kay
Reputation exists because of asymmetric information
13
REPUTATION: An Overview
Reputation is a collective term referring to all stakeholders’ views of corporate reputation, including identity and image
Professor Gary Davies –Manchester Business School
Reputation = experience - expectations
14
IT ALL ABOUT ISSUE MANAGEMENT
Good reputation management is based on issue management • Issue identification • Issue Analysis
• Issue Change Strategy Options
• Issue Action Programme
• Evaluation of Results
15
B R A N D S A N D R E P U TAT I O N
Phase I
Phase II Phase III
Corporat e Identity
Corporat e Image
Reputatio n
16
IMAGE
F O R M AT I O N
Communities Attitude & behaviour of employees
Communications Quality of goods & services
Organisation Structure & Culture Financial Performance
Corporate Image
Experience Corporate Social Responsibility
17
Physical Environment
ROYAL DUTCH SHELL: Corporate Communications
• Developed and pioneered scenario planning for crisis management • Corporate communications centralized • Significant alteration to organizational structure • Strategy of stakeholder engagement
18
TELECOMS: Vodafone
• Vodafone is the world’s largest mobile telecommunications community, employing over 65,000 staff and over 130 million customers • Success and reputation because of its brand: brand driven
19
TELECOMS: Vodafone
Brand strategy – key to its success
• • • • •
Operates over 300 of its own stores Sells through independent retailers Extensive sponsorship Advertising - high profile-celebrity endorsement Extensive below the line promotion
20
GUINNESS: A REPUTABLE DRINK
• • • • • • • • • • • • 250 year-old beer brand Well know and identifiable Irish provenance Made from nature ingredients Owned by Diageo- UK Sold in 150 countries & brewed in 49 Brewed for local tastes In UK, Europe, USA – Guinness Draught In Africa, Asia and Caribbean – Foreign Extra Stout Nigeria – largest overseas market A pint of Guinness has less calories than equivalent Semi-skinned milk In Muslim countries –sold as Malta Guinness – non-alcoholic
21
I N TA N G I B L E S
• The last two decades have witnessed a revolution - transfer from industrial capitalism to a new knowledge-based economy • Industrial capital based mainly on physical assets
• New economy based on intangible assets and value creation
22
I N T A N G I B L E S
Market Capitalisation Brand Reputation IP Customers Employees Innovation Organisational structure Book value ___________ $ * The above would also be affected by other variables including macroeconomic factors, shareholder sentiment and market speculation
23
I N TA N G I B L E S
• A company’s market value is driven by its anticipated earning potential – the net present value of its future economic profit
• Intangibles are systematically underreported within existing accounting practice
24
I N T E L L E C T U A L C A P I TA L
Market Value MARKET VALUE
Financial Capital
Intellectual Capital
Human Capital Customer Capital Structural Capital Organisational Capital
25
I N T A N G I B L E S
Welcome to the world of intellectual capital
• Human capital
• Structural and organisational capital
• Customer or stakeholder capital
26
I N T A N G I B L E S
Brand capital
Sales “push” focus Customer “pull” focus
NEW ECONOMY
Human capital
Production focus Customer focus
Working capital
High Low
OLD ECONOMY
(WIP, finished goods)
Physical capital
(direct delivery to customers)
27
I N TA N G I B L E S
Intangible assets Tangible assets
16% 38%
Market value
62% 84% 62% 38% 1982 1992 1999
Development of the value of intangible assets as a percentage of total market value of S & P 500 companies between 1982 and 1999. – Intangible Assets; J. Daum (1999); Wiley, p4
28
I N TA N G I B L ES
Utility Transportation Technology Services
Retail
Pharmaceuticals
Media
Financial services
Food and drink
Engineering
Engergy
Construction
Chemicals
Auto
Other
0 5 10 15 20 25 30 35
Market value as a multiple of net book value: Taken from eCFO, Wiley 2001, p95
29
I N T A N G I B L E S AND ACCOUTNING
• Off the balance sheet • Problems with global accounting - do not properly allow the inclusion of internally generated assets, except those obtained by acquisition • The issue of “goodwill” • REPUTATION IS AN INTANGIBLE ASSET IN ITS OWN RIGHT
30
REPUTATION AND METRICS
Vital Attributes: • Corporate Governance • Shareholder value • Innovation • Corporate responsibility (CSR) • Role and leadership of CEO • Satisfied employees! Value creation that is sustainable
31
DRIVERS OF CHANGE
• Increased specialisation – outsourcing and disintermediation • Relationship marketing – one-to-one customer relationship • Business is increasingly customer-led rather than production driven • Alliances and partnerships • Vulnerability of brand equity • Decline in trust – especially institutional
32
D R I V E R S O F R E P U TAT I O N
• • • • • • • Financial performance and shareholder value Corporate responsibility Corporate governance: compliance and regulation Technology – Internet and wireless Weblogs (blogs) over 5 m web journals Investor engagement (SRI) and NGOs Stakeholder convergence and managing stakeholders’ expectations • Employee expectations • Brand and operational risk
33
D R I V E R S O F R E P U TAT I O N
Indicators Indicators
• • • • • Cash flow Earnings Costs Capital expenditure Market growth Shareholders • Number of shareholder resolutions • Results of shareholder satisfaction survey Customers • Satisfaction survey • Customer complaints • Third-party ratings and awards Employees • Employee turnover • Employee profiles (ability, gender, race) • Employee satisfaction Society • Boycotts, marches, incidents • License to operate • Direct action • Media reports Partners • Quantity of partnerships accepted, sanctioned or rejected on basis of stewardship criteria 34 • Health and safety records of partners
Financial performance Sustainability
Indicators of reputational value taken adapted from: eCFO; C. Read et al, p115, Wiley, 2001
D R I V E R S O F R E P U TAT I O N
A more intrusive and sensational media – media amplification Need for transparency (disclosure) and accountability Companies as social institutions Globalization and the rise of corporate brands Notion that ethics counts Historical – Enron and WorldCom Reputation as an asset in its own right - $ Victim culture – insurance claims
• • • • • • •
35
CORPORATE GOVERNANCE
• Good corporate governance and compliance are seen by many as the primary force behind reputation management • FSA in (UK) • Basel II • Sarbanes Oxley (USA) • Role of compliance officers
36
R E P U TAT I O N : a n e n a b l e r ?
• • • • • • • Gain control and anticipate events Avoid long-term brand equity damage Avoid boycotts or sale losses Ensure compliance and shareholder value Better stakeholder relations – NGOs Better media relations and issue management Understand your risk exposure and allow easier entry into new markets and brand extensions • Improved investor relations and profile
37
R E P U TAT I O N : a n e n a b l e r ?
• Better employee output, retention and internal communications • Better understanding of issues • Preparation for crisis situation • Alignment of strategy with key stakeholders’ expectations • Sustainable wealth and value creation • Development of alert systems and a “radar”
38
REPUTATION: an enabler?
• Positive influence on regulators when issuing licenses • Local authorities may take it into account when considering planning applications • In the financial markets more likely to raise capital • Reduce the cost of entry into new markets, thereby securing a price advantage
39
MEDIA MANAGEMENT
Good and diligent management of the media is central to reputation management: media profile
• Learn which media are the most influential within your target group • Supply the press with information that is accurate and useful • Build relationship with journalists • Look for triggers within issues – monitor the media and other users groups • Use media intelligence agencies
40
P R A N D R E P U TAT I O N
World of confusing terms • Public relations: a discipline in transition
• Public affairs and lobbying
• Corporate affairs • Corporate communications • Reputation management What’s the difference?
41
PR AND REPUTATION
PR
BRAND REPUTATION
Desired image
Vehicle of promise
Delivery of promise
42
CORPORATE COMMUNICATIONS
Marketing Management Communications Communications
Organisation Communications
- Van Riel (1995)
43
REPUTAION: An Overview
Organisational Reputation
Brand Reputation
Stakeholder Reputation
Reputational “Radar”
44
Relationship between PR and Reputation
• Public relations and reputation are intricately linked: • PR – more specific issues: media relations, public affairs, crisis management, event management and branding • Reputation management is more holistic in its approach and involves all employees.
45
Traditional PR
Reputational Management
• • • • • • • • • • • • • • Strategic in nature Integrated Holistic - long-term Involves all employees Aims to deliver an image and brand promise Uses all forms and opportunities to communicate policy and values Greater emphasis on multiple stakeholder relationships
Less strategic Non-integrated Focus - short-term Key people involved Aims to give the best possible image Media relations focused Focus on transactional stakeholders
1980, 1990s, 2000
2010 46
Some Traditional PR functions
Crisis Management
Assessing stakeholders’ opinions
Stakeholder conflict
Events & Exhibitions
CSR
Change Management
PR
Media profile, monitoring
Sponsorship
Internal Communications Corporate Publications: Annual reports
47
Corporate Affairs & Lobbying
Investor Relations
Some Key Tools For PR Practitioners
Viral
Features
Photography Stunts E-mail Press Release
Launch Events
Hospitality Events
Webcasting
PR
Corporate Structure
Interviews
Websites & Portals Case Studies Editorial Coverage VNRs
48
Advertorials
Direct marketing Advertising
Packaging
Sponsorships
FILTER
PR
Exhibitions
Point of sale Internet/ wireless
Word-ofmouth
Events
Integrated marketing communications
49
BRAND AND REPUTATION
What is the difference between brand and reputation – are they the same? Brand = promise
Reputation = delivery on the promise
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THE BUSINESS CASE F O R R E P U TAT I O N ?
• Links between reputation and financial performance are not easy to generalize about – evidence to-date unclear and inconsistent • Question – how do you measure and what? • Mathematical co-relations do not necessarily demonstrate causality • The question is complicated and multidimensional
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B U S I N E S S C A S E F O R R E P U T A T I O N
• Does a good financial performance develop a perception of a good reputation? • Good links do exist between corporate image and customer satisfaction • Satisfied customers are not always loyal
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REPUTATION AND FINANCIAL P E R F O R M A N C E
• Risk and reputation are linked • Traditional methods of assessing risk: • Value at risk VaR – a measure of the riskiness of a portfolio, based on assessing the maximum amount that would be lost 19 out of 20 days, given typical levels in market prices
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FOREIGN FIRMS AND REPUTATION DEVELOPMENT
• • • • • • • • Develop investor relations and financial communications Produce detailed Annual Reports Develop media profile Work towards best practice and compliance with corporate governance Establish a strong and transparent working board Integrate risk analysis in all areas of the business Develop strong and clear corporate responsibility polices Appoint risk and reputation officers
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STRATEGY AND REPUTATION
• An organisation’s strategy describes how it intents to create value for its shareholders and stakeholders • What is the link between reputation and intangibles? • Intangibles are hard for competitors to imitate, therefore they are a source of competitive advantage • Co-creation of value
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STRATEGY AND REPUTATION
• Intangibles per se do not directly affect financial performance; instead they work more indirectly via a complex chain of cause and effect • The impact of a new tangible asset tends to be more immediate • Intangibles need to be generally combined with other assets – HR and IT
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BALANCED SCORECARD
• Kaplan’s and Norton’s – Balanced Scorecard approach and strategic maps Four perspectives: • Financial • Customer • Process • Developmental
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CASE STUDY: Coca-Cola: problems
• Poor executive reshuffle • Anti-Americanism: Mecca and Zam Zam Cola • Problems in Belgium 1999 • Faltering financial performance • Crisis with “Dasani” drinking water UK 2004 • Obesity issues • Problems with NGOs in India • Trying to grow faster than the market • Deaths in Colombia
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Coca-Cola: S o l u t i o n s
• Continuous brand equity building within communities • Citizenship initiatives
• Work with Greenpeace on reducing carbon dioxide emissions
• Open acknowledgement of the obesity issue within the US • Sustaining brand identity and Image • Re-evaluation of strategic growth
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HOW TO DEVELOP A REPUTATION
• • • • • • • • • • • • Quality of products and services Passion for brand Customer relationship marketing Strong corporate governance and compliance Integrated risk and issue management Crisis planning Corporate responsibility (CR) Strong brand values, experience and communications Organisational culture and structure Contract fulfilment Business presentation and conferences Customer facing staff
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HOW TO DEVELOP A REPUTATION
• • • • • • • • • • • • Innovation Vision and leadership by CEO Investor relations and public affairs Intelligence gathering Developing media profile Adaptive and ability to reinvent Community relations CEO’s reputation Core competencies Establishing networks and alliances Understand the market Develop brand experience: “moments of truth”
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HOW TO DEVELOP A REPUTATION
• • • • • • • • • Clear strategies and resources Learning from other’s mistakes Listening to customers’ opinions Audit and assurance Measuring and evalutation IP protection Stakeholder analysis, mapping and engagement Deliver on customer promise Think global, act local
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HOW TO DEVELOP A REPUTATION:
Organisational Structure
• Who talks to who? • Final “gatekeeper” responsibilities • Question of internal communications • Vertical to global matrix to e-business network structures • The Case of ABB – Asea Brown Boveri
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A REPUTATION PLAN
CEO leadership and senior management commitment
Communication audit
Frame your corporate communicational structure
Implementing programme and resources
Maintaining and evaluating
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HOW TO CONDUCT A COMMUNICATION AUDIT
Based on GCI group – Corporate Brand study • Internal – management survey - employee survey • External – Stakeholders survey • Assessment – Gap analysis – Structural equation modelling – Sensitivity analysis – Competitor analysis • Strategic communication planning • Communication programme implementation • Evaluation, measuring and monitoring
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CONCLUSION
• The early part of the 21st Century is the era of reputation management and the management of intangibles • The ruthless organisation cannot succeed • Companies must adopt pluralistic approaches to managing risk and reputation- must adopt a socioeconomic approach • Emphasis must go on pro-active approaches, risk and issue management - not just crisis management
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CONCLUSION
• Reputation management must be strategic in nature, but must incorporate emergent properties and reporting: involve everyone, not just managers • Getting organisational structure right and managing structural capital is critical
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CONCLUSION
• Corporations must be innovative, passionate, and adaptive • Reputation must be viewed as a strategic weapon, emergent and monitored • Stakeholders’ views must be measured and evaluated: what is stakeholder reputation? • Reputation management should not stop at senior management and customer facing staff: all employees should be involved
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CONCLUSION
• Brands are the glue of reputation • Develop brand equity internally and externally • Ensure your employees understand your intangible assets • Be proactive with the media
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CONCLUSION
• Ensure your brand is not too easily copied or imitable: differentiate by behaviour • View CSR as a way forward, not a defence mechanism • Develop first rate corporate governance • Ask the right questions, then integrate, integrate, and integrate
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