Corporate reputation is something that is widely recognised as important. It is an asset that affects sales, drives share prices, builds employee morale and more. Corporate reputation can make or break a company. However, it is difficult to define, measure, build and control, and this means that companies often struggle to manage reputational risks.
Protecting a crucial asset
With today’s lightning speeds of communication, understanding and managing corporate reputation risks is more important than ever. In the UK alone, there have been a number of high profile corporate reputation scandals in recent years – among both large and small organisations – that have wiped millions off companies’ value, tarnished markets and weakened investor confidence.
The following five guidelines will help you manage your company’s corporate reputation.
1. Corporate governance and corporate reputation go hand‑in‑hand
Good corporate governance inspires trust between a public company and its shareholders. It creates and protects value by reducing the risks that a company faces as it seeks to create growth in long-term shareholder value. Without trust, there will be no appetite from shareholders to invest further — or even to remain shareholders.
2. It’s not enough to have good governance: you have to report on it too
Companies need to implement sound governance processes and procedures and then report on them regularly. While institutional investors may get face time with companies and know them well, private investors do not. Therefore they need to be able to see what the company is doing to ensure that it is creating and protecting value and being run in the best interests of all shareholders.
3. Treat corporate reputation as you would any risk
Effective companies view corporate reputation as a strategic risk that should be discussed regularly as part of an overall risk management system. Most risks can have an impact on the organisation’s reputation, so companies need to consider their risk profile and how it actually manages this.
4. Figure out who is responsible for managing corporate reputation
Companies need to be clear about who is responsible for corporate reputation within their businesses. The tone should be set from the top, so a board member or CEO usually takes responsibility for this area. However, organisations also need to identify all the internal stakeholders who help to manage corporate reputation. They need to have a named team of individuals – a “war cabinet” – ready to take control of the situation as soon as it occurs.
5. Corporate reputation presents risks, but also opportunities
Understanding corporate reputation and how you can influence it can help to grow your customer base and attract new investors. Good corporate reputation is a great asset that can contribute to long-term growth. Nonetheless, corporate reputation is hard to earn and easy to destroy.
For more tips on protecting and enhancing your company’s reputation, email me or call me on 020 7099 2621.