Steps on how to manage your company’s reputation
By Beth Rusert
Companies put thoughtful effort into building their brand. Once that stage is well underway, the biggest asset to that organization – its reputation with stakeholders – is still vulnerable to harm. Reputation falls within the economic pillar of corporate responsibility, but if you are not aware of risks in all areas – operational, financial and governance – it can impact your reputation as a responsible company.
A recent poll conducted by Standing Partnership and Edison Research, which surveyed more than 1,000 executives to identify how companies monitor and manage reputational risk, found that 78 percent believe their organizations do an excellent job of building and managing its reputation. However, only 53 percent gave similar grades to the organization for identifying risks – and even fewer highly rate the ability to develop strategies to mitigate those risks.
Those findings represent the propensity of executives to focus on the building stage, but then turn a blind eye to the risks that pop up in operations. The study revealed that no one clearly owns reputational risk management, leaving many businesses’ reputations vulnerable to surprises.
Steps Your Organization Can Take to Minimize Surprises and Reduce Risks:
• Assign responsibility for oversight Reputational risks can quickly spin out of control, and the impact can reach every part of a company’s operations. In order to minimize that impact, it is critical to assign responsibility for oversight. The findings of the 2016 Reputational Risk Report include a division of responsibility for managing reputation across many roles. More than one-quarter (28%) of executives said the president/CEO holds the most responsibility for managing reputation. There was a split between respondents who said it was the audit (13%), compliance (12%), or operations (11%) functions that had primary responsibility. Only eight percent said responsibility lies with a dedicated enterprise risk management department; another eight percent said communications/ public relations.
By assigning a dedicated, cross-functional reputational management team, risks can be monitored, managed and mitigated more efficiently and ensure that they do not bypass the radar. Detecting risks with advance notice enables businesses to develop strategies to minimize the impact, as well as find potential advantages of the situation. The best-case scenario involves the support of a diverse team, since risks can emerge from any area, and a variety of perspectives is ideal for identifying and addressing reputational risk.
• Conduct an annual reputational risk audit
Reputational risk audits are comprehensive scans of internal and external factors, combining industry data and information from internal interviews to inform reputation management plans. Reading the risk radar helps organizations detect emerging reputational risks, and participating in a systematic analysis of potential threats to the organization and the industry can uncover gaps and pinpoint strategies to address them. A majority of respondents (71%) said their company handles reputational risk without seeking outside counsel, but introducing a third party to conduct a reputational risk audit can ensure a more accurate scan by avoiding the blur of bias, and the influence of an internal view.
• Build reporting into governance
Once a multi-disciplinary team is poised to identify and manage reputational risk, it’s important that reputational risk management becomes an integrated piece of operations. Agreement from leadership on a system of risk indicator assessment and incorporation of findings into decisions is important for a well-functioning plan. It’s imperative that the process includes operational decisions, social impact initiatives and financial performance.
A noteworthy result uncovered in the 2016 Reputational Risk Report is the different perspectives of members of the C-suite, and how those views affect the management strategies pertaining to risk.
Specifically, presidents and CEOs tend to be more optimistic than COOs about the ability of current strategies to effectively mitigate reputational risk, giving an above-average grade to the organization for:
• Managing its reputation: 79 percent compared with 65 percent of COOs
• Preventing reputational risks: 68 percent compared with 51 percent of COOs
COOs also express the highest degree of regret with spending on reputation management – 44 percent think their companies are not spending enough.
• Monitor for reputational issues and opportunities
The decision to proactively monitor for factors that could damage a company’s reputation appears to be a hard-learned lesson. According to the 2016 Reputational Risk Report, organizations that have experienced a reputational issue in the past are much more aggressive about monitoring (72%) than those who haven’t had problems (44%). Monitoring of issues affecting your business and industry can prevent surprises – or even create the opportunity to mitigate risks ahead of the rest of your industry.
A monitoring strategy grows from capitalizing on existing data, such as customer feedback, financial and software/IT audits, and employee surveys to identify areas of concern. If your company has a government relations function, stay alert for emerging legislation or regulations that could impact your business. Invest time and money into monitoring made available by external resources, such as business and trade media, social media, employer review sites, such as Glassdoor, as well as the information channels of your critical stakeholders. Often, patterns can emerge from different sources, which can point to areas that need attention.
Equally as important is determining who will manage the flow of data, and transform the information into an action plan. It also must be decided if this is a fit for internal management or an opportunity for a third party to offer counsel. If the data is handled internally, it must be made available to the cross-functional team responsible for oversight in order to inform decisions.
The 2016 Reputational Risk Report results show that organizations divide their reputational management responsibilities across many functions. If an organization truly wishes to make its reputation a priority, then it needs to develop a holistic crossfunctional approach that blends those divided functions for an all-inclusive look at the company’s reputation and the possible threats to it. Those in leadership roles must take ownership in creating and maintaining a more cohesive business strategy that holds a rightful place for reputation management at every stage of business development.
Beth Rusert is a partner and senior vice president at Standing Partnership, a reputation management consulting firm. With extensive experience helping companies manage reputational risk, she provides expertise in developing strategic plans that leverage strengths while managing potential issues. Rusert is an author of white papers on Reputational Risk: How Senior Leaders can Build Trust in their Organizations and Creating Positive Social Impact: Mitigating Risk by Aligning Social Impact with Business Strategy.