Business leaders face crisis of confidence in how to manage reputation

7Eleven. Ardent Leisure. Seven West Media. And just last week, Commonwealth Bank.

The latest litany of crises to engulf corporate Australia. The list seems to grow longer each year. Each crisis increases the disconnect between the public and business leaders, and further erodes the reputation of, and trust in, corporate Australia and its institutions.

Combine this with new and more complex issues facing organisations, and it is clear why maintaining trust is one of the biggest and most widely recognised challenges facing Australian business leaders.

Social media has displaced traditional media. Grassroots activism has exploded. Concern about data and privacy is growing. And then there is the emerging threat of cyber-crime. Risk has no borders in 2017. There has never been a more challenging time to build and protect a reputation.

And that appears to be the view of senior executives across Australia and New Zealand. New research, from communications firm, SenateSHJ, shows almost 75% of senior executives have witnessed an increase in risks affecting reputation in the past year. Over half of executives surveyed reported reputation is now harder to manage than any other risk.

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More and more companies are proactively trying to get to grips with how to manage reputation in such an environment. They are well aware of their responsibility in protecting and managing company reputation, with 90% reporting they are proactive in this respect.

Indeed, senior management and board members are becoming more actively involved in managing reputation, putting systems in place to protect and mitigate risk. This is a welcome development for corporate Australia.

Yet, only one in four have high confidence that they could successfully manage their company’s reputation through a crisis.

This gap between being proactive and not being confident in managing reputation through a crisis is worrying. There are a range of concerning factors, for example only 40% confident managing social media during a crisis while less than half test their crisis plans.

There also seems to be a disconnect between who the public trust to be the spokesperson in a crisis, and who organisations feel are most trustworthy. Australian respondents overwhelmingly ranked the CEO as the most trusted person during a crisis, ahead of external experts and indeed their own employees.

This perception contrasts with numerous international studies which show trust in CEOs is at an all-time low. The Edelman Trust Barometer 2017, for example, reveals only 26% of Australians rank CEOs as an ‘extremely / very credible’ spokesperson.

This presents a challenge for corporate Australia.

The CEO is ultimately responsible for an organisation’s reputation. Yet recent crises at Ardent Leisure and Seven West Media demonstrate how badly CEO’s can get it wrong – and with terrible consequences.

In a crisis, businesses need to be able to call on third party advocates – external experts, others in the industry, government and the media – to speak up on their behalf. But to be able to do so, organisations must have these relationships established beforehand. If they haven’t, they may already be dead in the water if a crisis develops.

So how should business leaders respond to these challenges? How do they protect their reputation, avoid crises and manage them if they do occur?

Managing and protecting reputation is not only about having an effective communications team – it’s a whole-of-business endeavour. And while the CEO and Board of Directors might be accountable for reputation, everyone in an organisation, from the board to the call centre, from government relations to the head of risk, and from internal communications to investor relations, plays a role.

Reputation management today involves finding the link between a company’s culture, purpose, and reputation – combining an understanding of the stakeholder landscape with a capacity to navigate internal and external environments. Reputations are built and maintained when organisations consider how they promote themselves, how they protect themselves, and how they engage their people.

Successful organisations promote not only themselves, but also their contributions to the things their stakeholders care about. They take proactive risk management measures, including crisis and issues planning, and they proactively engage their employees, embedding behaviours that build trust with customers and align with their values.

Putting it into practice

Follow this checklist to ensure your business is set up to manage and protect its reputation.

1. Do you have a crisis communication plan?
2. Is it integrated with your organisation’s business continuity plan?
3. Has it been updated in the past 12 months?
4. Has it been tested in the past 12 months through a simulation?
5. Has your crisis management team had training in the past 12 months?
6. Have your spokespeople had media training in the past 12 months?
7. Has your senior management given you official licence to act in case of a crisis?
8. Have you undertaken stakeholder mapping in the past 12 months and / or built strong relationships with key stakeholders?
9. Have you identified who could be your third-party advocates in the crisis?
10. Do you have the names and contact details of these people so they are close to hand during a crisis?

Link to full report: http://senateshj.com.au/reputation-reality

Darren Behar is Managing Partner at SenateSHJ, one of Australia’s leading communication firms.