- Perception- How the company is perceived by all stakeholders and;
- Reality – the truth about a company’s policies, practices, procedures, systems and performance.
Perception is thus closely related to the image that a company projects.
Another way of defining the elements of reputation is that it consists of:
- Images - what stakeholders think of a company,
- Identity – what the company say it is, and
- Personality – what the company is all about.
The alignment of these factors is vital if we want to build, sustain and protect an organisation’s reputation.
Each one of us plays a part in this by representing the company we work for.
The question is whether we project a positive or a negative image? The way we dress, talk, act, and feel expresses this reality of the company to the outside community.
Specifically what we say to others and how we act adds to the images of the organisation. It is therefore important to evaluate what your employees and stakeholders such as the Media are saying about your organisation. If we want to protect and build our company’s reputation, image being just one element, we have to influence this process.
I believe that the way to do that is to reflect on the actions we should use to make our employees become loyal in an era of continual downsizing, restructuring and other changes, and the feelings we should express about our company and what it is accomplishing in the community.
In this process we have to enlist the support of all employees. This process is not the domain of only the Communications department.
Here are a couple of ideas and suggestions that may help:
- Conduct research into what stakeholders such as employees are saying about your company.
- Conduct research into the actions you want from employees (Example – All employees will effectively neutralise any negative comments about our company and work to project a positive image), the methods that can be used to measure progress towards projecting a positive company image, and the incentives that might be used to help employees project a positive company image.
- Develop a list of suggested actions* on how to project a positive image that can be handed to each employee as part of an outreach & training program.
- Meet with employees to share this list of suggestions.
- Launch a formal program together with incentives. This has to be a process of selling the benefits to employees, not just telling them what to say, otherwise it will just be received as management propaganda.
* Suggested List:
- Relate positive stories or observations about our company, internally and externally. By telling only the good things we can prevent the spread of negative messages.
- Relate details selectively. Not every interaction with a customer or another person needs to become a “Truth and reconciliation” affair. You don’t have to confess just because some one asked for the details.
- Make a positive remark to neutralise a negative statement about the company. Support your company.
- Do what is important to you and let others know what you value.
Remember that your actions stand for what you are and what stakeholders believe the company is all about. This is closely related to stated company values.
(Or are you just working for the money?)
- Learn about and tell the little known positive things the company is involved in. Make it a point to discover these and to spread the good word about your organisation.
By influencing what employees are saying about an organisation, we can directly affect our reputation in the market and workplace.
This implies that there exist a web of relationships with a diverse range of stakeholders that needs to be monitored and managed.
But what is a stakeholder? The word stakeholder means anyone that has a legal, moral or economic stake in an activity. Some stakeholders have more clout than others, but that is also changing.
For example – Ghandi was an activist. Today with the right tools, any one person can become an activist or a journalist, hence the rising of the citizen reporter phenomenon. I can have a block of shares in a company, worry about ROI irrespective of the number of people who are retrenched. Alternatively I can be a member of the media. I will have an interest in what your organization does…because the public has a right to know.
The term ‘stakeholder management’ refers to the development and implementation of organisational policies and practices that take into account the goals and concerns of all relevant stakeholders.
The term Stakeholder Management also involves the dialogue, relationship building and process generation that take place between an organisation and its various stakeholders. Each of these stakeholders can affect an organisation’s reputation positively or negatively and necessitate different strategies to leverage the situation.
In the King 3 Code of Corporate Governance specific mention is made of the importance of 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.
The King Code also makes mention that the Code is on an ‘apply or explain’ basis and that the board of directors, in its collective decision-making, could conclude that to follow a recommendation would not, in the particular circumstances, be in the best interests of the company. ‘’The board could decide to apply the recommendation differently or apply another practice and still achieve the objective of the overarching corporate governance principles of fairness, accountability, responsibility and transparency. Explaining how the principles and recommendations were applied, or if not applied, the reasons, results in compliance. In reality, the ultimate compliance officer is not the company’s compliance officer or a bureaucrat ensuring compliance with statutory provisions, but the stakeholders”
In particular, the one danger that everyone is missing is Section 8.1 of the King Code 3 i.e. The Governing of Stakeholders states that the Board should appreciate that stakeholders’ perceptions affect a company’s reputation.
How can managers do this if they do not fully understand stakeholder management and its impact on governance and reputation?
Here is a quick test for you. Can your management team answer the following strategic questions:
- Who are our stakeholders?
- What are our stakeholders’ stakes?
- What opportunities and challenges do stakeholders present?
- What economic, legal, ethical, and social responsibilities does our organisation have towards our various stakeholders?
- What strategies or actions should we take to best manage stakeholder challenges and opportunities?
- Do you have a system for managing relationships with stakeholders?
- How do you measure results? What metrics do you use to assess and gauge stakeholder relationships?
- In a crisis how quickly can you communicate with your relevant stakeholders?
- Do you know the various methods to engage with stakeholders and when not to use it?
- Can you state how much you are spending on each stakeholder group and what your ROI is?
- Have you developed a set of rules and practices on how best to manage the process of building stakeholder reputation with each stakeholder group?
Once you have answered the above questions, then you should attempt these:
- What strategies or actions should our firm take to best manage stakeholder challenges and opportunities?
– Should we deal directly or indirectly with stakeholders?
– Should we take the offense or the defence in dealing with stakeholders?
– Should we accommodate, negotiate, manipulate or resist stakeholder overtures?
– Should we employ a combination of the above strategies or pursue a singular course of action?
All of these are vital strategic questions to ask for any project, incident or issue. Reputation Risk emerges when the reasonable expectations of stakeholders are not met.
What is reasonable? Let me use an example. The recent amount of product recalls and scandals examples illustrates this very clearly. As a consumer safety is a basic right. I therefore would expect an organization to communicate with me, and warn me of the advantages and drawbacks of a product including tips on how to use it. (I wrote a short article on this in of my Powerlines newsletters )
But do companies do this? Only those who are enlightened do so, and not all are. It is only when a body like the FDA or the Consumer Protection Act forces some companies to comply, that they will come to the party.
Take a look at the Supersize Me saga, where through a class action law suit, McDonalds were forced to start to use more ethical labelling and change their menus. Why did it happen in the first place?
They were out of touch with current thinking. It is the same with collaboration methods. There are companies who try and stop staff from accessing Facebook, write blogs and use other forms of social media, thinking they can control messages. Yet, we deal with people in companies. Real, live people – not spokespeople, not Corporate Heads, but normal day to day people.
People want to connect with other real people.
How ready is your organization to engage with its stakeholders? Is there an integrated or a fragmented approach to managing stakeholders in the organization? Would you like to learn more about this interesting and holistic field of management?
Why don’t you attend the next Stakeholder Reputation workshop in March in Johannesburg, South Africa. For more information visit http://stakeholderreputation.invite43.com
Socrates, the great philosopher (469 – 399 B.C.) was trained as a "sophist". Sophists were people who played with words and showed how careful choice of words could lead you to almost any conclusion you wanted.
Socrates was interested in challenging people’s thinking and, indeed, getting them to think at all instead of just taking things for granted. He wanted people to examine what they meant when they said something. He was not concerned with building things up or making things happen.
Socrates has become renowned for his contribution to the field of ethics, and from him we got the great emphasis on argument and critical thinking. Socrates chose to make argument the main thinking tool. Within argument, there was to be critical thinking: Why do you say that? What do you mean by that?
Read more about the Socratic method – http://en.wikipedia.org/wiki/Socrates
Let me illustrate how critical thinking can be applied to the passing on of stories, as that is normally how rumours start.
One day an acquaintance met the great philosopher and said, "Do you know what I just heard about your friend?"
"Hold on a minute," Socrates replied. "Before telling me anything I’d like you to pass a little test. It’s called the Triple Filter Test."
"That’s right," Socrates continued. "Before you talk to me about my friend, it might be a good idea to take a moment and filter what you’re going to say. That’s why I call it the triple filter test. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?"
"No," the man said, "actually I just heard about it and…"
"All right," said Socrates. "So you don’t really know if it’s true or not.
Now let’s try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?"
"No, on the contrary…"
"So," Socrates continued, "you want to tell me something bad about him, but you’re not certain it’s true. You may still pass the test though, because there’s one filter left: the filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?"
"No, not really."
"Well," concluded Socrates, "if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?"
This is why Socrates was a great philosopher & held in such high esteem. The lesson in this story is quite clear.
Next time someone tells you a story about anyone, just apply the Triple Filter Test. I am sure that more times than not, that there; will be no story to pass on.
What do consultants bring to the table?
This is a question often asked by management & staff.
How can they charge so much? Do they really offer value?
Well let’s consider first of all the Aslan phenomenon which was first mentioned by Dr. Roger von Oech in the ground-breaking book on creativity – ‘A Whack on the side of the head’. Von Oech writes that where all men think alike no one thinks.
This is interesting as it links on to study results by Deloitte that indicates that patterns of decision making can result in reputation risk.
Now you may immediately question this assumption by saying that you are a free thinker – especially in meetings. However, subtly and often subconsciously you are being manipulated by the corporate immune response – the corporate culture.
From the first day with an organization you soon learn what is necessary to fit in, to manage perceptions and expectations and to get on with your manager. This acculturation is part of the immune response.
This is why we frown upon those with novel and new ideas. We call them helicopter pilots, we call them rocket scientists. In fact, at one stage of my career, I was told by the then HR Director to stick to my knitting – which was to be a trainer.
We frown upon whistle blowers (look at the furore of Wikileaks), we frown upon people who do not conform. In fact, armed forces around the world actually operate on that principle – using discipline to ensure execution of military strategy.
1. They bring a different frame of reference. A different set of knowledge, skills and attitude set. They have worked in many industries and that is what they bring to bear upon your problem or issue.
2. They bring an expanded knowledge management capability. They have read the books, white papers and reports that you have not seen nor had time to read. They often belong to networks and institutes and associations that give them access to connections and access to resources you don’t have.
3. They bring 3rd party, objective insight – an ability to ‘see the woods from the trees’. They have seen the signs of war and have dealt with casualties in many trenches. They bring this unique insight to the table.
It’s a similar example of the difference between doctors who work in 1st world countries and those who have worked in both 1st world and impoverished countries where the same level of medical and hospital care do not exist. Their skill sets are vastly different.
Unfortunately this knowledge and ability does not come cheap. You cannot equate a daily rate with the amount of investment & time that it has taken to develop that skill set.
Let me illustrate:
Years ago there was a factory in Northwest America that would for some unknown reason; go into shutdown mode at the most inopportune times.
Eventually a group of consultants was called in and they resolved only part of the problem at a cost of about 40,000 USD. Although the incidences dropped, the problem persisted.
One day at a brainstorm meeting, someone remembered that there was an old- timer who used to work at the plant, and that he had a way to get the system up and running instantly.
So, they decided to bring him back as a consultant. One day he arrived with a small black suitcase. Inside this suitcase, was a small silver aluminium hammer. As the plant went down in shutdown mode, he opened his case, went up to one of the pipes, smacked it with his small aluminium hammer, and the system restarted instantly.
Very happy, his customer asked him to bill them. Which he did, only for the bean counters to return the invoice asking for how the bill of 1043 dollars was made up.
This was the answer they got.
43 dollars for hitting the pipe, a 1000 dollars for knowing where to look.
It’s that ‘look’ that costs so much. And, that is what consultants bring to the table.
Santa Claus is definitely not dead to many.
His reputation remains intact, but to the contrary, there are many companies no longer around.
In fact, if failed companies have obituaries many of them would read as follows:
‘Here lies the XYZ Company, born 1966, died 2010 after a reputation risk incident.
Mourned by directors, staff, shareholders, and other stakeholders. No flowers.
Rather send donations to the Society for the Preservation of Trust, Integrity and Reputation.
Afterthought: Most companies say that reputation is vital, yet if you check their annual learning & development agendas there are no provision made to train Directors, executives, management & staff about why reputation is an asset and a risk and should be managed and protected.
That is wrong! There are subjective and objective reality.
Subjective reality, is reality seen through our inner mental filters that are shaped by our past conditioning. Objective reality is how things really are.
Although it is possible to perceive objectively, we cannot take in the totality of reality and say anything about it; we can only point to some of its characteristics, since we all trapped by our own mental cages – we are all biased.
So whenever we explore reality in any specific manner, we have to leave out something. For example, when you describe an orange, you cannot say anything about its totality. You have to talk about its colour or its taste or its shape. If you want your description to encompass the whole thing — its colour, shape, and taste all together — you can only say, "orange."
It is the same with objective reality. If you want to say anything about it, you have to focus on its specific characteristics.
An important part is to understand the view of objective reality. This understanding comes through discussions about it and through your own investigation, your own exploration and experience. This view is, in some sense, not one experience, but what unifies all experiences. It is the over-arching picture that makes all experiences intelligible and meaningful. The more we understand the view of objective reality, the more we know where we are in our journey.
The more we understand the view, the more we know how distorted or how objective our experience is. Thus, understanding the view is a valuable guidance and an important orientation. In time, as our realization process progresses and deepens, our experience corresponds more with the view. When experience is exactly harmonious with the view, this is what is called total realization or enlightenment.
To move us along this understanding continuum, I believe that research and more knowledge can assist. For instance, it is only once a doctor has positively diagnosed an illness that we should really start to worry about it.
That is why it is so important in my reputation work that clients communicate effectively. Knowledge backed up by substantiated facts – verified research can often assist in shifting opinion away from subjectivity to objectivity, hence the importance of strategic stakeholder –specific communication plans. However feelings and emotions are a separate issue to be dealt with.
Example: In a crisis, when there has been a death, you need to deal with the emotions and then the facts.
Perhaps this story explains it all : A man, who is the father of a year-old youngster, met his pastor on Sunday afternoon.
"Why weren’t you at church this morning?" was the first question of the spiritual adviser.
"I couldn’t come," was the answer. "I had to stop at home and mind the baby; our nurse is ill."
"That’s no excuse," said the pastor.
"It isn’t? Well, next Sunday I’ll bring him to church with me and see how you like it."
Action Plan Lesson – Always be ready to communicate the truth.