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Picture: 123RF/105438941
Picture: 123RF/105438941

A limping economy and morbid business outlook have prompted increasingly rigorous scrutiny of every cent of expenditure in SA’s corporate environment, as you would expect. Even for those companies in the fortunate position of being able to stockpile cash in a period of political uncertainty.

This has created a starring role for procurement specialists as companies bargain hard with their suppliers for the best possible price, and so cost-cutting pressure ripples through the supply chain. Again, this is a necessary process in the business cycle and positions those who adapt best to profit when the tide turns.

In the wake of the state capture era and its litany of disturbing lapses, it’s no surprise that governance is getting careful attention, with procurement teams creating a buffer between suppliers and the people they work with inside the business.

But there’s a point after which compulsive cost containment and compliance become self-defeating, especially when they are treated as ends in themselves. Rather, they should provide a supporting framework within which a company is able to get the quality goods and expert services at the right price, while eliminating backdoor dealing.

It takes years, often decades, to build a strong corporate reputation, but only one lapse in judgment to destroy it in minutes if not managed properly.

Just as you don’t put the cheapest brake pads on your car, there are times when price isn’t the only, or even the most important, consideration. It really depends on what you’re buying: if it’s paper clips, the procurement types are well placed to get the most cost-effective deal that meets the specifications, but when you’re looking for specialist expertise, the cheapest available option will often cost more — far more — in the long run.

Your corporate reputation is one such area. It takes years, often decades, to build a strong corporate reputation, but only one lapse in judgment to destroy it in minutes if not managed properly. Building and maintaining a strong corporate reputation is a disciplined strategic exercise. It takes a deep understanding of the information environment, the business and its objectives, and consistent execution of a bespoke reputation strategy with measurable outcomes.

Having a strong corporate reputation may not seem to have an obvious connection to the bottom line, but it is a powerful strategic enabler in the normal course of events, and critical to a company’s survival in a crisis. There are multiple dimensions to the benefits of a well-conceived and executed reputation strategy.

Trusted firms attract and retain the best talent, and enjoy greater product loyalty. A strong corporate reputation supports the share price and earns the company a seat at the table with regulators. Business partners are proud to be associated with a company that has a strong corporate reputation, and will go the extra mile for a client they respect and trust.

Trusted firms get the benefit of the doubt, and the opportunity to make things right when they go wrong. Companies that have neglected their reputation are frequently doomed before they’ve had a chance to respond to a crisis.

Building a corporate reputation is part art, part science. Only very few communicators in SA have the expertise and experience to do it well. There are a handful at the pinnacle of the industry, a slightly broader pool of those who talk a good game below them, and a sea of mediocrity underneath. Making the wrong choice is likely to prove a costly mistake.

Experience

You may get away with run-of-the-mill lawyers or accountants, but reputation management is not a stock capability. Protecting a company’s reputation in a crisis, and rebuilding it when the storm has passed, is an even more demanding skill. There are books about handling a crisis, and many of them are quite useful, but in the end every crisis is unique. There is no tried and tested formula to rely on, just experience.

This is not the kind of thing you leave to amateurs, and yet fewer and fewer CEOs are taking a direct interest in reputation management. Worse, the contracting of expert consultants in reputation management and crisis communications is increasingly delegated to middle management, with procurement specialists in the lead.

This is odd, because when things go south it’s the CEO who will be facing the cameras, and nobody will be asking if his or her backup team charges the lowest rates and ticked all the right boxes in the procurement questionnaire. This is not the kind of expertise procurement specialists are equipped to assess. In fact, they are quite likely to get it badly wrong because the criteria they typically use are not fit for purpose.

Nor is this a complaint heard only in the ranks of suppliers. Clients also complain that procurement rules sometimes get in the way of them hiring the skills they need. Of course, procurement specialists should be in the room, and of course there should be no compromises on governance. But the people who truly understand the importance of reputation management — and that ideally includes the CEO — should be the ones calling the shots.

When you rely on expert consultants to develop a reputation strategy and guide you through a crisis, there is only one question that really matters: who do you trust?

• Veley is MD of reputation management agency Corporate Image. She writes in her personal capacity. 

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