Loss of Reputation is a Risk for All

Corporate responsibility has not always played an influential role in reputation management and recovery. When Nobel Prize winner Milton Friedman was once asked "Do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible?” His answer was a resounding “no.”

Times have clearly changed. People now regard corporate responsibility as fundamental to the kind of society where they wish to live, work and raise their families.

Reputation failure is no longer a threat for companies in high-risk industries and activities alone. It has become reality for companies and organisation around the globe and in whatever sector. A 2006 Weber Shandwick proprietary analysis revealed that 33% of the Global Fortune 500 – the world’s largest companies – experienced reputation deterioration in their “most-admired” status from the previous year. And the Weber Shandwick’s Safeguarding Reputation survey showed that approximately 1/3 of global business leaders believe it is likely their company will sustain reputation damage in the next two years.

According to Weber Shandwick this higher rate of reputation loss has prompted boards and CEOs to ask how they can best shield their companies from extended reputation damage. One way is by adopting a “triple bottom line” approach – in other words, going beyond financial goals by also protecting the environment and attending to social justice.

I do agree with WS's point of view of adopting a triple bottom line approach, but I do not agree that the higher rate of reputation loss has prompted companies leaders to act. The ones who did are rather exceptions than the rule.

Source: Weber Shandwick

The Link between Corporate Responsibility and Reputation

As part of its Safeguarding Reputation™ survey of 950 business executives in 11 countries, Weber Shandwick explored the relationship between corporate responsibility and reputation management. According to this survey corporate responsibility contributes increasingly to company reputation and the bottom line, and its role in reputation recovery.

Today, every lapse, error or other corporate misstep, whether it is true or just perceived, is seen. The internet, e-mail correspondence and mobile communication technology has lead to a situation where the behaviour of a company and the individuals who are working there is watched, criticised and spread at a speed which should make contingency managers re-think their communication strategies.

About a year ago, I experienced the speed of digital pictures being sent by MMS as soon as an aircraft landed after a pressure loss in an aircraft cabin. Inside the aircraft were a group of business who were going to a conference in Barcelona about... the latest mobile phone applications! Many of them were early adopters of new technology and used the built-in camera of their mobile phone to photograph the oxygen masks which dropped from the ceiling. Less than 30 minutes after the aircraft had landed at Brussels Airport the first images were spread on the net.

Not only it means that the response time of the company is decimised compared to 10-15 years ago, there are other implications too. Any communication manager who would dare to think that he would be able to conceal or withhold information must be aware that in this modern age he would make of his organisation a sitting duck for journalists, competitors, bloggers and everyone else who would feel like criticising the company.

When the company acts responsibly, it will be better protected during the crisis and afterwards. This view is supported by the findings of the WS survey: the vast majority of global business executives (79 %) surveyed believes that companies with strong corporate responsibility track records recover their reputations faster post-crisis than those with weaker records.
Read the executive summary for more interesting findings.

Source: Weber Shandwick