Executives ill prepared for reputational crises
A majority of executives — local and global — say they could have safeguarded their company’s reputation better by acting sooner when crisis hit
Just over 50% of SA executives have experienced a reputational crisis of some sort at their company in recent years, and close to 70% say it could have been avoided with proper management. This is the message from a survey, "The State of Corporate Reputation in 2020: Everything Matters Now". It was compiled by global PR agency Weber Shandwick and looked at 22 markets, including SA.
The survey comes at the right time in SA, after major recent corporate malfunctions including the Tiger Brands listeriosis scandal, the Steinhoff meltdown, and the KPMG/SA Revenue Service/Gupta nexus.
Globally the figure is even higher when it comes to reputation salvage, with close on 80% of those surveyed saying an entire crisis could have been avoided if they’d sought help — and acted — faster.
Jill Hamilton, Weber Shandwick’s CEO for Africa, says 2020 is a year in which business leaders around the globe will need to change how they think and act, using a new approach to a range of emerging reputational issues. These are likely to include privacy breaches, cybersecurity attacks, health and safety breaches, and major management missteps.
"Building and protecting reputation must be a daily solve for all companies, large and small — particularly given the unforgiving nature and behaviour of many of today’s consumers, who shun companies when they lose trust in them or disagree with them about social issues," she says.
Companies are now expected to not only deliver on financial performance but make a positive contribution to society, lending their voices to political and social issues even when these issues do not strongly relate to their core business, Hamilton says.
The survey reveals that a company’s reputation is influenced by a variety of factors, but in SA the main driver is value for price of products and services. Other factors that worry local managers include customer perception, employees, suppliers and partners, government and regulators and social media.
This issue of reputation is also firmly on board agendas. Globally, more than 90% of executives say their company’s reputation is important to their board of directors. That figure is unexpectedly lower in SA, with only 67% of board executives agreeing with that statement, 27% saying it is somewhat important, and 2% saying it is not important.
When it comes to monitoring reputation, SA executives outperform the global average, with 80% saying their company leaders monitor and measure the company’s reputation.
When asked how that is done, SA executives said the most common gauge is through sales or financial performance, new customer or client acquisitions as well as awards and rankings.
Reputation is also well tended to by leaders: 70% of global executives report that their senior management spends just the right amount of time focusing on their company’s reputation. Almost 80% say it’s important for the CEO to communicate the organisation’s values in order to be highly regarded. Additionally, 58% rate highly a company’s ability to communicate and deliver on its mission, vision and value as a driver of reputation. The SA figures were the same.
Millennials will constitute the next generation of corporate leaders, and Hamilton believes their views on company values, societal issues and investment decisions will change how corporate reputations are shaped and communicated.