Why is Progress around Corporate Reputation So Slow and Uneven?

August 20, 2013

By: John Onoda

For decades, top corporate and agency PR professionals fought to convince CEOs and chairmen of large organizations that:

Corporate reputation is real
It has a significant impact on current and future success.
They won. Today leaders in the private and public sectors and at non-governmental organizations speak fluently about corporate reputation’s value. Expertise in reputation management is required of candidates for top corporate communications roles and many agencies have well-developed practices to help clients in this area.

So why do we still see so many cringe-inducing instances of corporate reputation meltdown?

I think in most instances when there is a clear fail, it is no longer the case that corporate reputation concerns were not considered. Rather, those who advocated them were overruled.

There are many reasons, but two at the top of the list are:

  • Not enough chief communications officers (CCOs) are sufficiently persuasive or powerful enough to drive the business and policy changes that will help corporations avoid self-inflicted reputational harm;
  • Not enough agency consultants are sufficiently skilled to educate and prepare their clients to push through the changes and programs that would minimize reputational risk or defuse a festering situation.

Persuasion Depends on Business Acumen and Financial/Operational Knowledge

A key shortcoming of the CCO’s who can’t or don’t champion corporate reputation management effectively is that they have less business acumen and understanding about their company’s business model than the people challenging their proposals.

It is hard to argue with a company president who has an encyclopedic knowledge of the affected operation and who claims a communications proposal will lead to ruin; and it is difficult to be more persuasive that a senior attorney who maintains that open communications will weaken the company’s position in future litigation. Only by wielding corporate reputation with equal force can a CCO prevail, and this must be done by talking about it in terms of revenues, earnings, market capitalization, shareholder relations, customer relations and regulatory implications. A lot of public relations people aren’t prepared to make this kind of argument.

Understand Personal & Professional Agendas

In an attempt to address this situation, the Arthur W. Page Society (whose 400 members are mostly CCO’s and PR agency CEO’s) has been taking steps to better equip corporate communications leaders to exert more influence by developing concepts like “The Authentic Enterprise” and by offering world-class leadership development training. More recently, the society, created a new group called “Page Up” to begin the professional development process even earlier in a future CCO’s career.

As to why agencies have only limited success helping their clients manage corporate reputations, a hindrance to many of them is a lack of first-hand experience in the way key business and policy decisions are made inside large companies. These all-important discussions take place in a larger context, an ongoing group dynamic of which few outsiders are aware. Every person comes to the table with a distinct mind-set. The chief legal officer seeks to minimize risk in case of litigation. The head of operations wants to avoid business disruption and increased costs. The head of marketing will resist any move that might reduce sales. The chief financial officer is concerned mostly about the perception and reaction of the investment community. And so on.

In these meetings, each executive has a rational and legitimate point of view. Certain strategic alliances are in place. Everyone knows that the issue at hand is but one of many difficult matters the decision-makers will have to face during their tenure, so it is important that they not take a position that permanently disadvantages their department or business unit. If someone is too abrasive or fails to act as a member of the team, they will be penalized in many ways over months or even years. Ruffling someone’s feathers could lead to payback in a totally unrelated matter in the near or distant future.

Unless agency counselors have engaged in this sort of interaction, it is difficult for them to adequately prepare their clients to enter the fray and prevail. It would be like coaching a friend to win a poker tournament without ever having tried your hand at it. It may look easy, but it’s a very exacting experience when you’re the one sitting at the table.

To date, agencies have worked to help their clients by conducting research that yields valuable data, producing measurement tools and offering proven models of corporate reputation management. Some firms have boards of seasoned advisors who can be introduced at critical junctures to help maneuver companies to the reputational high ground. These advisors can not only speak effectively to clients and other top executives, but they can coach professionals inside the agencies on ways to be more effective.

Probably what is needed is a course that simulates a high-level corporate meeting at which top executives struggle to reach consensus. People who have served as CFO, CMO, CEO, COO, chief legal officer and other key positions ought to be included. Imagine how much could be learned by anyone playing the role of CCO while debating how to manage a major oil spill, the layoff of thousands of employees, a hostile takeover offer or a catastrophic incident involving a major supplier.

This sort of gladiator training may prove valuable for both corporate and agency professionals expected to prevail in future corporate reputation challenges. It could go a long way to putting corporate reputation management on a more even and consistent course than we are currently witnessing.

John Onoda, who has led the communications functions at Charles Schwab, Visa USA, General Motors and Levi Strauss, is a senior advisor at Gagen MacDonald, a firm that helps to develop and execute strategies related to organizational change and transformation.