Leslie Gaines-Ross tells Craig Hoy that corporations must do more to protect their hard-won corporate reputation amid a raft of new threats and challenges
Leslie Gaines-Ross is one of the world’s leading authorities on corporate reputation. And following a period where some firms have been ravaged by the credit crisis and lampooned by customers, governments and the media at large, it is no surprise her counsel has been widely sought.
Like marriages, the old adage suggests that reputation takes years to build and moments to destroy. And as corporates such as Lehman Brothers can attest, the destruction can have much wider commercial, economic and political implications. Despite the risks, Gaines-Ross believes companies, and their senior management, can build and safeguard their reputation.
Interviewed ahead of the 2011 PublicAffairsAsia Corporate Affairs Forum, Gaines-Ross suggests that recent financial turmoil has put a new value on reputation. “I think that the global economic crisis has placed greater pressure on all companies to safeguard and preserve their reputations. Reputation is the new corporate metric and one of a company’s most competitive assets,” she tells PublicAffairsAsia.
Gaines-Ross suggests that as more CEOs and boards recognise the value of good corporate brand reputation and its payoffs, “greater attention will be paid to taking proper care of it”. However she warns that: “Unfortunately, most companies begin the process of understanding what goes into good reputation-building when their company reputations have been damaged. That is too late.”
The financial crisis, believes Gaines-Ross, has resulted in companies being “more transparent about the reality and volatility of their financial outlooks”. But she insists that they also have to build confidence that their capital is being properly managed and not subject to risk. “Leaders have learned the hard way that there are no secrets anymore and that reputations can be lost overnight for the slightest misstep. For these reasons, leaders are paying more attention to monitoring their reputations, understanding their competitors’ reputations and preparing for the inevitable stumble,” she adds.
Ahead of the Singapore conference, however, she notes that many Asia Pacific-based companies face a slightly different situation having “escaped the financial crisis with little damage, and in some cases gaining major ground on their global competitors”. But she warns they do not live on easy street. “While these companies have grown in reach and entered new market space, they have also been exposed to greater reputation threats. So as a result many have had to learn very quickly what is required of them in order to protect their reputation across borders and cultures,” says Gaines-Ross.
The new focus on reputation has also led to a greater push to monetise or measure the value of a corporation’s standing among influential stakeholders. Says Gaines-Ross: “Today there are many ways to measure reputation. Companies can create dashboards that include measurement of their reputation in the traditional media, trade media, online media and social media. There are also increasing opportunities to better understand what customers are saying about your company and its products or services.”
Gaines-Ross notes that new sites “pop up everyday” which provide insights into a company’s culture, detail what employees are saying about their bosses and the workplace. “An inventory of who is winning the most selective and prestigious awards can also provide insight into corporate reputation and how companies are trying to position themselves. There is a wealth of publicly-available information about a company’s reputation if a company only takes the time to look,” she adds.
Do the research
However, Gaines-Ross suggests that the best way to measure reputation is to conduct customised market research among key stakeholders over time in order to calculate shifts in perception and to better understand what drives a company’s reputation. In these situations she suggests that influential stakeholders should be subjected to quantitative and qualitative research. “In-depth interviews with difficult-to-reach stakeholders are a good way to find out what these hard-to-reach influencers think,” advises Gaines-Ross.
Central to building and maintaining a sound corporate reputation is a significant degree of corporate transparency. Not all the companies which crashed and burned, or crashed and were rescued, during the financial crisis were guilty of a cover-up. But almost all could have done more, more quickly, to inform their key stakeholders of their difficulties.Says Gaines-Ross: “Transparency is very important to reputation today. Companies have learned that we all live in glass houses. But this is again something that many Asian companies have had to understand and respond to very quickly as they ‘go global’.”
Gaines-Ross presses this point: “The concept of transparency conflicts with some longstanding cultural norms in Asia, and the idea of revealing how a company acts and behaves, in good times as well as challenging times, simply isn’t the standard way of doing business in many of Asia’s largest economies, such as China and Japan. Opaque business practices may be the key to a good reputation domestically, but it doesn’t serve a company well when it comes to other markets.”
Transparency not always successful
That said, Gaines-Ross also points out that transparency does not always equal success in the reputation stakes: noting that “even the most transparent of companies find that their reputations can be easily damaged”. “Ultimately, the more straightforward and open leaders are, the more support they will get from their critical constituencies when they need it. The one thing to always remember when it comes to stakeholder relations and maintaining a good reputation is that no one likes surprises. Stakeholders today are less forgiving than they used to be,” she warns.
Transparency, believes Gaines-Ross, should go hand-in-hand with a credible and coherent corporate social responsibility reporting strategy. “Companies sometimes struggle with how open they should be about not delivering on meeting all their goals. In actuality, being truly transparent requires that companies explain why a particular societal or environmental goal was missed and what a company is going to do to remedy the problem going forward,” she says. “Stakeholders will accept an honest appraisal of a company’s progress as long as they have been forthcoming all along. As it is often said, the cover-up can be worse than the crime.”
Allied to this must be a firm commitment to real dialogue with stakeholders. In an age of activism among consumers, employees, governments and regulators, consultation appears to be the key.
Counsels Gaines-Ross: “It is important to listen carefully to your stakeholders – from activist consumers, dissatisfied employees, disinterested government officials to impatient investors, to name a few. Companies do not have to agree with everything that stakeholders recommend or would like to see changed.”
And that also means listening to detractors – a group Gaines-Ross dubs “badvocates” – with whom companies must “foster a two-way dialogue”. “Companies now understand more than ever that the general public is an increasingly powerful force with an increasingly powerful voice. An individual or small group that was once considered inconsequential years ago no longer is, and no industry or sector is immune.”
Gaines-Ross points to China’s Sina Weibo microblogging site. This year alone, Morgan Stanley, China Red Cross, China Southern Airlines, Japan’s agriculture exporters, and various state-led organisations and government officials in China, among countless others, have faced significant threats to their reputation on Weibo. Despite the immense challenges thrown up by the increasing social activism of the once passive stakeholder community, Gaines-Ross suggests that the best solutions to managing crises rest on some long-established principles of
“The key to managing a positive reputation is not waiting until the tough times roll in. Those are always around the corner. The most important thing that a company can do is to build positive perceptions during ‘peace time’ when things are good. Before a crisis strikes, companies should engage their stakeholders, hear out their recommendations to improve products or services, focus on being a best place to work, communicate internally and build the best values-based organisation they can. They must commit to building a legion of advocates that will be there when the chips are down and friends are hard to come by.”
And looking to the long-term effects of the global economic crisis, Gaines-Ross insists that there is a moment of opportunity for the corporate affairs profession to prove its worth in Asia Pacific, where trust remains comparatively high.
“At the present moment, I believe that trust in business and government is generally lower around the world than it has ever been before. The global economic crisis, revolving crises, environmental and natural disasters, and lack of trust in higher authority have diminished the standing of government and corporations, whether privately or publicly held. Comparatively, trust in business and government is probably higher in Asia than it is in the United States now, where bipartisanship and the unemployment rate have soured many citizens’ opinions.”
Identifying that companies in Asia Pacific may now have a once in a lifetime advantage over their competitors in the West, Gaines-Ross suggests that the region’s corporations should reach out to build their reputations, and therefore markets, overseas. Gaines-Ross concludes that companies in Asia should market their products and services more visibly and “show their distinctive know-how through more channels and media”.
“Corporate affairs practitioners should capitalise on this trust-advantage by building stronger and more clearly defined reputations that attract more investors, capture the best talent and engage new partners. Just as European-based companies built significant reputations in the US, it is quite possible that Asian companies could do the same. This may be challenging but it is the route to global success,” she concludes.