Welcome to the first installment of our Reputation Blog! With this virtual space, we are hoping to bring together a community around us ‘reputation groupies’ to discuss a wide variety of reputation-related topics. To spur our collective thinking, I have already invited some leading practitioners and academics from around the world to post their thoughts and reflections about reputation matters. I hope you will be as enthused as I am about joining our online community. All you have to do is to subscribe to the Reputation Blog and stop by as much as you want to react to others and to share ideas, articles, links, and comments with us all. Only through your ongoing participation can we make our increasingly visible and important world of reputation thinking come alive. In addition to subscribing to this Reputation Blog, let me point out that you can also sign-up for our ‘Reputation Institute’ groups on LinkedIn and Facebook. These three forums will provide you with easy ways to interact with a broad range of people interested and involved in improving our understanding of the reputation challenges facing individuals, companies, and institutions around the world.
When I first started thinking and writing about reputations over 20 years ago, I had a gut feeling that it was a topic that would have some longevity. Little did I know then how vital the topic would turn out to be! Since then, like you I’ve watched a global crisis of public confidence develop that has been spurred by the collapse of Enron in 2001 and the disappearance of Arthur Andersen in 2002. Countless reputation-damaging scandals have swept over the corporate landscape dragging down once admired names like Worldcom , Adelphia, Tyco, and Global Crossings in the U.S. to Vivendi, Parmalat, Shell, and Northern Rock in Europe, Satyam in India, James Hardie in Australia, and the milk producers of China. And they all helped to further lower public trust, damage local communities, and destroy economic value for millions of investors. I felt confident then that reputation was a topic of study that was surely here to stay.
And it sure was. If we thought we’d hit bottom with the corporate scandals of the new millenium, boy were we wrong! Since then, a host of pharmaceutical firms, energy companies, banks, and automakers have willy-nilly had their backs put to the proverbial wall and amply shown how misguided they are as custodians of the reputation capital entrusted to them by their shareholders. Not only have they squandered market share and market value through misguided actions, but they are daily losing mind share with the public as one after the other flaunt their inability to understand the importance of stakeholder perceptions to their market value. The latest bonus scandals in the US at Merrill Lynch and AIG are just a symptom of it –and what a disregard for public opinion their senior managers have demonstrated!
In the end, these corporate scandals are just the tip of an iceberg. That iceberg is gradually surfacing as we observe the collective arrogance, hubris, and lack of understanding that senior executives around the world are demonstrating about the value and management of corporate reputation. Their ineptness is the primary reason for the crisis of public confidence we are experiencing in our institutions today, and it’s the principal reason we are in a global recession that has destroyed an estimated 20% of the value of our global assets to date.
It’s my honest belief that only by inculcating sound principles of reputation management into future generations of managers can we come out of it. New professional standards have to be developed in our business schools and universities, new models of organizing must recognize the fact that the tail does not wag the dog –it’s not financial capital that brings people into companies, its people who pull together financial capital to create economic value for society. Until that model reigns supreme in the minds of our leaders, our institutions will forever be at the mercy of the basest of human instincts –greed.
What do you think? What will it take to restore trust in our institutions?
Tags: Add new tag, Adelphia, AIG, Arthur Andersen, Charles Fombrun, Enron, facebook, Global Crossings, linkedin, Merrill Lynch, Reputation, Tyco, WorldCom
Reputation Management is about building strong relationships with key stakeholders. At this point in time a lot of companies have destroyed the trust, admiration and respect they had with customers, investors, employees, and politicians.
Rebuilding this trust will take a systematic effort where companies turn the perspective from the inside out to the outside in. Companies need to be better at understanding what the stakeholders expect from them and how the company can be relevant to them. By understanding what matters to stakeholders and delivering on that, companies will prove that that can be trusted, admired and respected again and stakeholders will start supporting them.
This will take time but the outcome will be better companies more in balance with themselves and their stakeholders. And this is how applying a reputation perspective will help restor trust in companies and institutions.
Hi Charles,
I enjoyed reading your first post to the RI blog. Good stuff.
The topic of reputation, financial services regulation and management behaviours have been exercising me, too. I was pleased that my letter to the Financial Adviser (part of the FT Group) was chosen as their Letter of the Week. Here is the link:
http://www.ftadviser.com/FinancialAdviser/Regulation/Regulators/FSA/Features/article/20090312/7722a9aa-08b6-11de-ba4c-00144f2af8e8/Last-line-of-defence.jsp
Best wishes
John
John Browne
CEO
Strategic Advantage
I found Dr. Fombrun’s post very insightful – I think that it is important to understand the current status of where businesses are in dealing with these harsh economic times and crises – and how reputation management is the answer for surviving these types of situations. This is a great resource for researchers, professionals, and students interested in reputation management. I look forward to future posts on the new Reputation Institute blog.
Best Wishes,
Karen Freberg
Doctoral Student – Public Relations
The University of Tennessee
From now on, I think an important aspect of reputation management will be to develop among employees an understanding of how beliefs and behaviors have to be aligned with ethics and public opinion´s perspectives, and this goes beyond simple “Codes of Ethics” or “Principles of Corporate Responsibility”. Many of the examples cited by Dr. Fombrum were of companies that performed as closed systems, not open systems. In an environment like that, to be dysfunctional was the norm. An important challenge for corporations will be, therefore, to have procedures and process – a human resources reputation management system – that rewards sound reputation management practices. This would naturally lead to a new pattern of corporate behavior.
I expect that it will take more cases like Enron, Worldcom, etc to make sure that most of the companies will management their position in society with high standards of ethics. It’s for sure that not all companies can go to ‘heaven’. The fact that society has become more open (a/o thanks to media/internet) we all know about the scandals. The growth and innovation of media/ online tools will become more and more a key issue for companies to control/manage.
Trust, open systems/culture and loyality will be and stay the key drivers for business. To create trust companies need to be-do-say what they promise, not just today. Also tomorrow and over 20 years. Boardroom executives/companies need to be controled on CSR/ compliance by independant audits. Also the comments of Carlos Costa are applicable.
Best Regards,
Flip Dotsch
Sr. Corporate Identity
Holland Casino
Netherlands
Charles, Nice start to your blog and unfortunately your words are all too timely. I have to say that I am startled at how few companies seem to realize the world has shifted around them. The public demands transparency, humility, empathy and humanity — just like our mothers did. But some executives who have built their careers on rational thinking seem to have forgotten that emotions are also important. When actions result in outrage, a rational thinker would ask what drove the emotional reaction, and how can I change the outcome next time? It doesn’t seem like we are learning from our mistakes, or those of others.
Companies need reputation managers to offer straight talk about outcomes, to connect the dots and dive under the outrage to steer their companies back into favored trust. RI provides us the intellectual framework to respond to emotion in a rational way.
Let’s hope for many vibrant discussions among colleagues.
Linda Locke
SVP, Group Head, Reputation and Issues Management
MasterCard
Charles, great to see you’ve begun to use this medium. I’ve been addressing all of these issues in work I’m doing just now, including the use of these Web 2.0 tools – blogs etc – and their impact on reputations. More importantly, I’ve been blogging about the governance, branding, leadership and reputation management issues raised by you on colleagues for the past 6 months on http://graememartinshrblog.blogspot.com/. Just posted today on a some of these problems
Hello Charles, and regards to all those who have written. First I´d like to cheere up these communication initiative… it seems that we´re gaining more and more spaces to chat and interact.
Rearding the theme proposed by Charles, I truly believe that leaders have to shift the way they conceive stakeholders approach.
Frist, If an organization autoproclaims it self as socially responsible, then this responsibility should begin from inside the companies core vision, modeling it for the benefit of their own collaborators… building and strengthening a strong identity and reputation… only then, we may start thinking of building an external corporate reputation.
Secondly, acknowledge that there is a new wave of publics that, as Linda commented above, are systematicly demanding more transparency from the companies that surrounds them. When organizations leaders understand that they coexist “with” a variety of elements formed by people that share a sume of beleives, expectations and emotions, instead of thinking that they exist “for” supplying products and services, then a new order will rise in corporate governace.
Strong Identity and Transparency… good practices of Corporate Governance for building positive reputation.
Regards from Caracas, Venezuela
Charles, congrats on starting a blog on reputation. Like you, I hope that the world comes to its senses and learns to regard their reputation as their most important asset and one through which all activities should be filtered. These are difficult times and I am excited to think about how reputation will shift in the years ahead. As our economic problems mount and consumers become more engaged in identifying the “right” corporate behavior, we may very well witness a sea change in our definition. I think that a new dimension to reputation will soon appear on the horizon and it keeps me wondering. It could be a good one…..keep the reputation flame alive! lgr