On the 2nd September 2010 I made a point in a blog post Discuss. Dissect. Decide that Reputation is a mission – critical task and is of such importance that it should be included in every meeting’s agenda and be included as a must in the Company Learning & Development Training Calendar – as a must and not an elective.
My point and reservations have now been vindicated through some interesting research by a company ReputationInc .
Here are the main facts they discovered by examining the curriculums of the leading Executive MBA programs identified by the Financial Times. They were looking to see how reputation was incorporated into the course work.
- 1 in 5 leading EMBA programs teach none of the 10 core reputation disciplines
- Just one of the 50 leading EMBAs has ‘Reputation’ as a core module
- Communications & relationship building skills are taught in less than 20% of programs
- Government & policy relations is covered by fewer than 1 in 5 EMBA program
- Governance and ethics is the most popular reputation discipline being taught to business leaders today (no surprise there)
ReputationInc cites McKinsey research that found that one-half of global CEOs say managing external affairs is one of their top-three priorities. Yet one fifth of the world’s top 50 global Executive MBA programs do not offer any training in the core disciplines of reputation management.
They report that the missing disciplines include CSR, stakeholder engagement, government relations, communications, and reputation management strategy.
More worrying still, just two of the top 50 business schools surveyed offer a dedicated reputation module and 80% offer no training on either public affairs or external communications – the two core “hands-on” skills executives need to build reputation. “The results reveal a frightening gap between the reputation skills business leaders must possess in 2012 and the cursory attention they get in the traditional executive MBA.”
The programs with the highest ranked scores for including reputation are Henley Business School, Essec/Mannheim, and the University of Texas at Austin: McCombs.
I also agree with this statement: “On this evidence, companies and shareholders should be concerned that Executive MBA programmes risk creating ineffective business leaders who leave academia without the skills to actively manage the precious asset of corporate reputation,” said John Mahony, CEO, ReputationInc. “Reputation management skills are vital for today’s CEO who sets the tone and mood for a corporation and must lead from the front in communicating the purpose of the brand and its value to society.
Many managers are not born ready to meet this challenge and will benefit from coaching and confidence building in reputation, something today’s Executive MBA courses fail to adequately provide.”
The problem though is that it is not just MBA modules that lack this, but also Director training programs, Government Officials training, town councillors development programs and Internal Learning & Development programs that suffer from this lack.
The research clearly shows that training in managing external relationships is mandatory for all executives (Again a vindication that my Stakeholder Reputation Management course has filled a very important gap these past few years)
It is my belief that the problem is derived from the past where it was believed that Reputation was naturally an extended PR & Communication function and discipline. And, although communication forms and integral part of the discipline, there is now a realisation that Reputation Management requires advanced systemic thinking skills and thorough understanding of intangible issues, reputation and strategic business drivers.
The report goes on to say that “These findings should be a red flag to corporate affairs directors and those responsible for leadership development in global corporations. Knowingly or not, next generation leaders will be under-prepared
to steward their company’s corporate reputation in the coming decade.”
This statement just reminded me of the conversation in 2010 I had with the Learning & Development Manager of an international bank when they were considering my Stakeholder Reputation Management program for internal use. He was of the opinion that it was not a must, but should be an optional elective for senior executives.
How these words will haunt now. If only the financial services community understood that importance. Just perhaps there may have been less Reputation Damage.
As Warren Buffett, the world’s most astute investor have said many times: “It takes 20 years to build a reputation and five minutes to ruin it, and if you understand this YOU WILL DO THINGS DIFFERENTLY”
Funny though that most managers miss the last part of the quote. The research quoted above shows how important understanding this difference is.
The missing difference in the MBA programs – “ If I do this, or make this decision, will it harm my (own) or my company’s reputation?”
Understanding this difference is vital in an Era where Reputation is the New Bottom Line.
Today’s complex business environment requires companies to build relationships with a wide variety of stakeholders. Each of these stakeholders have their own needs, expectations and positions and companies face stakeholder reputation risk if these needs and expectations are not monitored and faced.
Stakeholders offer organizations both opportunity and threat. For instance if an institution has a good reputation with stakeholders they may give the organization more latitude to operate.
On the other hand a poor reputation with the regulators may result in laws being passed that can make it more difficult for an institution to operate. The Consumer Protection Act is a prime example of what happens when the reasonable expectations of stakeholders are not met.
What international research have shown is that there is a lot that organizations can do to positively influence the process of creating good images in stakeholders minds.
The management of and interaction with stakeholders therefore needs careful attention if an organization wants to maximize its opportunities and minimize threats in dealing with stakeholders.
The King 3 Code on Corporate Governance makes specific mention of this need for stakeholder inclusivity (i.e. that the legitimate interests and expectations of stakeholders are considered when deciding in the best interests of the company), stakeholder identification and determination of expectations and needs, the proactive management of stakeholder relationships, and that management should develop a strategy and formulate policies for the management of relationships with each stakeholder grouping.
Research shows that when an organization builds relationships with key stakeholders, it saves the organization money by reducing the costs of litigation, regulation, legislation, pressure campaigns, boycotts, or lost revenue that result from bad relationships.
Good relationships with employees also increase the likelihood that they will be satisfied with the organization and their jobs, which makes them more likely to support and less likely to interfere with the mission of the organization.
In the not so distant past much PR efforts were one-way, designed to measure the effects of communication on stakeholders. Measuring relationships, however, assumes a two-way communication process with effects on both parties in the relationship.
The most productive relationships in the long run are those that benefit both parties in the relationship rather that those designed to benefit the organization only, the so-called Win-Win. Public relations theorists have termed these types of relationships symmetrical and asymmetrical, respectively.
It is my advice that relations with stakeholders be conducted in a context of transparency, honesty and professionalism.
A director of public affairs for a county government once summarized the link between symmetrical public relations and organizational effectiveness: “The main strategy is open communication–by being open, in touch with your various stakeholders, determining what their needs and wants are, how they can best be achieved, and how you can all work together toward common goals. And, I think that’s key with any group and organization that you bring together. That’s what you build trust on, that’s what you build relationships on, and that’s what you accomplish goals with.”
Building positive and lasting relationships should be a key organizational function and strategy.
How to do this I will discuss in more in-depth in my next Stakeholder Reputation Management Master Class in June.
Does Reputation Really Matter?
For the past 15 years I have been speaking and training that it does.
Well it does! My views are now more and more vindicated by on-going international research such as the interesting findings from the Global Corporate Reputation Index study conducted by Burston-Marsteller amongst 6000 companies worldwide and the 2011 Lloyds Risk Index.
Burston- Marsteller’s studies show that Corporate Reputation is underpinned by 2 main drivers namely Performance (Putting your money where your mouth is) and Corporate Citizenship. View the findings on – http://www.slideshare.net/BMGlobalNews/global-corporate-reputation-index
(I find it still interesting that this terminology is used as there is a drive worldwide to just call it Corporate Responsibility)
They found that the average age of the top 25 companies had an average age of 87 years in business with the oldest company having been around for a 147 years. This reminded me of the story about Agatha Christie’s famous play – The Mousetrap that ran at London’s West End Theatre for more than 35 years. Over the years, directors and actors were changed but the standards never wavered. Most certainly a lesson for compliance and adherence to standards of commitment.
What stood out for me is that the world’s most reputable brands set high corporate responsibility standards for themselves and their partners and deliver consistently over time.
These are also the companies that invest heavily in corporate responsibility practices and adherences to codes of standards and conduct like ISO and ensure compliance with these codes of governance and best practice.
These companies also view potential Reputation Risk in a serious light and understand how dangerous it can be in a interconnected world. According to the world’s largest reinsurer Lloyds Reputational risk rose to No. 3, up from No. 9 in 2009, according to the 2011 Lloyd’s Risk Index. View the report – http://goo.gl/NlQRb.
In fact, A 2010 study of the world’s 1,000 largest companies found that 80 percent lose more than a fifth of their value every five-year period because of a major reputational event.
Studies also show that the role of Social Media can no longer be ignored and that these companies have to have a dedicated function to deal with its Digital Reputation and the flow of messages in nano-seconds.
Late last year a new white paper by Deloitte developed in collaboration with RiiЯ Ltd entitled ‘A Risk Intelligent view of reputation – An outside-in perspective” once again highlighted the strategic importance of reputational risk. The report highlighted the fact that Reputational Risk is now regarded globally as a “meta risk, “standing at the forefront of key strategic and operations concerns, right alongside new competition, technology failures, talent issues, and changing regulations.
As executives in the study recognized, reputation, quite simply, can make — or break — a company. Reputation is an important factor across all four major risk areas of the Risk Intelligent Enterprise — strategic, operational, financial, and compliance — particularly of the former two, strategy and operations, because it is a constantly evolving and fully embedded part of why and how the company achieves its objectives.
This catapults reputational risk to what the writers call a meta risk, or a potential menace to fundamental business strategy, and possibly an even greater hazard to organizational survival than a financial restatement or problematical findings in a compliance report.
Read the Report – http://bit.ly/ph6omX
Can you define this Meta Risk in 4 different ways as well as describe the mitigation & prevention strategies required to prevent & respond to the risk that has been called the most dangerous and difficult to manage? I can help.
On the 5th – 6th March I will facilitate an intensive 2- day workshop on how to Manage and Mitigate Reputation Risk for those interested – More information available at http://goo.gl/6WM8M
Many people have asked me why I help companies to protect themselves against Reputation Risk. Why? Well this quote says it all – “If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.” – Jim Rohn.
My presentations and trainings are dedicated to create the necessary awareness and know-how to help companies to safeguard their fragile reputations.
Reputation does matter, and not only too companies. It is valid for us all. Read my blog post – http://deonbinneman.wordpress.com/2012/01/10/your-name-is-a-precious-commodity why your name is a precious jewel.
I offer specialised multi-disciplinary training courses and workshops for Corporate Affairs, PR & Communication, Stakeholder managers & OD practitioners and teams. I work in-house with Leaders, Executives, The Board and staff based on need, as well as consultants and professionals who want to build a reputation in an interconnected knowledge economy.
I am currently offering an Early Bird Special booking discount for all courses starting in July – valid until the 10th June. Now is the time to diarise these dates and up your game. Book online by clicking on the links or e-mail firstname.lastname@example.org for a registration form.
Here are the dates for my public training courses:
• 21 – 22 July
• 5 – 6 July
• 13 – 14 June
• 24 June
Other programs for in-house teams include Product Recall Crisis Management, Media Survival Skills, Crisis Management & Crisis Communication for Reputation Protection and Transforming Organizational Thinking Patterns.
I have been contracted to run a course for Marcus Evans called Crisis Management and Communication for Reputation Protection at the Grand Millennium hotel, Beijing, China 24 – 25 March.
Check out the Event Website: http://bit.ly/gcctGS
Thought you might like to see the list of upcoming business seminars from REPUCOMM (me) in the next two months.
Managing a consultancy or an organization’s reputation may be the most important asset a CEO and his or her team manages – as a good reputation helps a company to attract business, investors, hire and retain the best employees, partner with other leading organizations and lower the cost of capital.
Reputation must be built from the inside out, and encompasses everything that the organization says and does. Reputation is an intangible asset at risk on a daily basis. A good reputation means your name is trusted. You are considered a sound investment, purchase, partner, and employer. All of this dramatically impacts the organization’s bottom line.
My three events will equip managers with the necessary competencies to manage this asset and risk strategically and with care.
Go to http://mim.io/fd822 to see more information about these events.
You can register for these events online and I will do the rest.