* Corporate Reputation – the most important company asset? * The current widespread public backlash against business and its perceived unethical practices has left industry leaders scrambling to protect and nurture their corporate reputations. While the concept of business having to earn its’ social – as well as its legal- licence to operate, is now well-entrenched with the major business leaders around the world, many now find themselves having to incorporate the two sources of capital – social capital as well as economic – into their business strategies, as both are seen as vital to overall organisational success.
* As a response to public backlash, these Sustainable Business Development (SD) practices and Corporate Social Responsibilities (CSR) activities can be seen as the new standard benchmark to demonstrate corporate responsiveness to changing societal values and expectations. These practices are also the most effective way to protect and enhance corporate reputations. * While SD and CSR terms have come to be used interchangeably, SD is generally understood to refer to the acceptance of a new approach to business that seeks to safeguard the planet’s existing natural resources. And CSR is understood to refer to the corporation’s active role of enhancing the community life of the societies in which they operate. * At the same time, emerging research from corporations already engaged in SD and CSR practices indicates that this approach is delivering bottom line benefits. * How does reputation affect business?
* The recent spate of spectacular business collapses and the public backlash to business has resulted in an all time low in the public’s perception and confidence in business leaders. Such widening disparity between public expectations and business practices suggests that business leaders are out of touch with what matters to many of their stakeholders, and are inadvertently gambling with their corporate reputations. * The value of a corporation’s reputation
* The post Enron world has changed the rules for everyone. Society’s confidence in the ability of business’ to seek to balance what is good for society with what is good for the market place has worn thin. Despite the economic benefits delivered, three quarters of Americans believe big business is too powerful . A 1999 European study showed that 87% of European employees would increase their loyalty to a company if it were seen to be involved in activities that help improve society . The trend is similar in the US. A New York Conference Board study found that a high proportion of respondents (42%) believe that companies should be wholly or partially responsible for helping to solve social problems, whilst a further 33% said companies should focus on setting higher ethical standards and going beyond what is legally required.
* Reputation is no longer about “feel good” statements captured in glossy brochures or even about substantial dollar contributions to well deserving charities and public works. Today’s measure is about organisational behaviour in the pursuit of business which is seen to be both measurable, and therefore, manageable. It is no longer possible to buy ‘respectability’ – an increasingly cynical public and media have come to recognise that it is not how a corporation spends its philanthropic money that makes a statement about its’ character, rather it is how it makes its’ money on a daily basis, and the types of relationships it promotes with stakeholders.
* As organisations come under the magnifying glass, the values they state coupled with the how they live up to those values within their own organisation and in their global supply chains, is defining what stakeholders feel about them. Ultimately it determines whether they will do business with them. A Reputation Quotient or antenna has become core intelligence for business leaders in the Twenty First Century. * Reputation management
* Those industries, such as the mining and energy industries, that very obviously have social and environmental impacts on the societies were they operate, have long recognised the interdependence of reputation and overall organisational success. Many of these companies have already established environmental and social management systems and the evidence accumulating from their experience shows that such accountabilities lead to direct business benefits. For example, a survey of 300 large publicly listed US companies found that investment in environment management leads to substantial reductions in the firms perceived risk, and an accompanying increase in its stock price of about 5%.
* Four distinctive approaches to reputation management can be identified: * The ‘discretionary’ approach is where little time and effort is invested in shaping and nurturing an organisation’s reputation. The approach is ad hoc, depending on need and available budgets; * The ‘PR’ approach where the proverbial “spin doctors” are retained to identify and execute specific strategies, and programs are designed to build corporate profile and reputation – authentically or otherwise;
* The ‘pragmatic’ approach where leaders recognise the rules have changed and are concerned to be seen to be doing the right thing – even if they do not really believe it will deliver business benefits; * The ‘principle-based’ approach is where organisational leaders seek to respond to changing expectations of their stakeholders both inside and outside the organisation. These leaders seek to clarify their core purpose and values and develop organisational systems to enable them to “walk their talk”. They strategically manage for all their impacts by engaging in dialogue with their stakeholders to refashion their product offering. * Communicating with stakeholders
* Information systems are now so powerful, social leaders more than political leaders, are shaping public opinions. For this reason it is now vital for organisations to hone a two way communication system between itself and its stakeholders to ensure that it remains in step with changing expectations of what constitutes a good corporate citizen. In a recent MORI study, for example, almost 75% of the UK public claimed that reputation directly affected their buying decisions. * Perceptions of ethical practice loom large in the public’s reputation rating systems. Most people live their ethics through the personal values they practice and are holding companies similarly accountable for the integrity of their behaviour.
The core values that comes to be associated with an organisation increasingly determine its ultimate success, including its ability to deliver a market capitalisation that is 4- 5 times book value ;; to attract and retain the most talented employees; to become the preferred investment and supplier of choice; in moving into overseas locations to be regarded as the neighbour of choice; to be seen by local communities as responsible corporate citizens; and to enjoy the other intangibles derived from a reputation for being a good corporate citizen. These intangibles are the new source of capital for the 21st century. According to the Financial Times .the proportion of a company’s value derived from intangible assets is up to 75-80% of market value.
The New Accountabilities Of Business
* The perceived role and accountabilities of business has has evolved from a narrow focus on generating income and wealth to one of strategic partnering with the government and the community sectors to play an expanded role in shaping the social context of nation states. Public debate has evolved through 3 distinct phases. Phase one saw the corporation being almost exclusively responsible to shareholder interests only. Phase two saw the rise of the concept of “the stakeholder economy” as promoted in the UK by the Blair government and in the US by the Clinton administration. Here organisations were seen to have obligations to a much wider set of stakeholders who were being impacted upon by the organisation. The third phase as characteristic of today’s model focused on sustainable business development philosophies. Organisations are now being asked to play an active role in managing for all their impacts in a sustainable manner and in so doing safeguard the rights multiple stakeholders including the next generation.
* In the last five years especially, business has been subject to an increasing number of external and internal influences that have redefined its role. The rise of shareholder and consumer activism, the broadening of its investor base, the partnership between the private and public sectors, the retraction of statutory regulation and the democratisation of the workplace have all influenced the shape of business by redefining business organisations as social organisms where people can make choices about their behaviour that have significance consequences for others and therefore bring ethical accountabilities. * It is in this context that an increasing focus on a company’s reputation and in particular, its reputation for ethical practices, has emerged and will continue to accelerate as host societies demand greater transparency from business and more jealously guard their right to confer or withdraw its ‘social licence to operate’.
* The globalisation of business in particular has spawned new expectations for multinational organisations. The UN estiamtes that the number of transnational corporations has increased from 37,000 in 1990 to over 60,000 in 2001, with around 800,000 foreign affiliates and millions of suppliers and distributors in their supply chains. Perceived as being more powerful than many national governments, the corporation’s range of influence is seen to extend across borders and therefore its responsibilities too have extended well beyond national laws and local regulatory compliance. Companies are now required to manage their reputations simultaneously in multiple arenas, including online.
The explosion of internet ‘corporate watch sites’ coupled with the instant global communications transfer, has rendered company reputations extraordinarily vulnerable to public perceptions. As reputation gains in importance on the company asset register, business leaders are redesigning their organisations as “open systems” engaged in dialogue with significant stakeholder groups to build their social capital stocks.
The 2002 World Economic Forum’s (WEF) taskforce on the leadership challenges for CEO’s and Boards acknowledges that stakeholder management is now fundamental to core business operations and it recommends a framework for members to adopt in moving to greater stakeholder accountability. CEOs from diverse businesses including Coca-Cola, Deutsche Bank Group, Renault, Rio Tino and Merck & Co. have pledged their allegiance to the framework. Altogether over 3000 companies are now engaged in producing social and environmental reports in addition to their economic reports (triple bottom line reporting) as their very public demonstration that they are willing to reinvent the way they go about business.
Building Organisational Reputation
* The evidence amassing from those already engaged in managing a wider range of accountabilities shows that it enhances overall organisational performance and nutures positive reputations. Since many of the principles of good management – treating employees fairly and rewarding positive performance; being honest with investors, customers and suppliers; considering long term consequences and consulting with affected stakeholders as part of a sound risk management plan – also mirror sound ethical behaviour this positive correlation is not too surprising. David Maister’s research finds a strong connection between “people” values and profitability with the most profitable companies found to be those who also had the strongest focus on people management. They also tended to top the list of the most admired companies in the categories of quality of managing employee talent, use of corporate assets, product quality, financial soundness and long-term investment value. Similarly, research by Greening and Turban (2000) indicated that highly qualified job applicants are more likely to seek to work for socially responsible firms than firms with poor social performance reputations.
* It could be argued that the accelerated corporate adoption of “Sustainable Business Development” (SD) philosophies is the clearest institutionalized business attempt yet to actively seek to manage its ethical dimension by measuring, managing and reporting on a comprehensive range of non-financial indicators to reflect a wider set of accountabilities. In this sense sustainability management practices make operational the goals and values of the organisation in its social, environmental and economic spheres of influence. By so doing, the corporation demonstrates transparency and engages in two-way communications with its stakeholders. * By linking ‘profits with principles’, business leaders have recognised that, just as balance sheets may not communicate the full value of a company, financial indicators alone do not adequately reflect either their opportunities or their risks, and in particular, their reputational risks.
To compete in a world where winning hearts and minds is a key to social legitimacy requires a new mindset that recognises the interdependency of the corporation’s welfare with that of its stakeholders As it becomes clearer that only business has the resources to engage with global issues such as corruption, slavery, environmental degradation or child labour practices so too there is an increasing social expectation that business sees this as the only way forward in ensuring the necessary stable social context in which commerce can thrive.
“Enlightened self-interest” as well as the maturity of business will see business leaders increasingly respond to societal expectations. Major corporate leaders are already signalling that they have hear the message as acknowledged at the recent WEF forum: * “…business leaders have a direct interest in working with each other and with governments, inter-governmental institutions and civil society organisations ot harness the opportunities and resolve the challenges posed by globalization… being global corporate citizens requires us to identify and work with key stakeholders in our main spheres of influence: in the workplace, in the marketplace, along our supply chains, at the community level and in public policy dialogue…
Trust – The Key To Social Reputation
* The strategic planners at Royal Dutch Shell identified a significant shift in public perceptions of business as a move from a ‘Trust Me’ world of the 1950s, where society trusted that if business prospered so would society, to a ‘Show Me’ world where, following the corporate greed of the 1980s, business was longer trusted to balance corporate gain with societal interests. As the century closed, a move to an ‘Include Me’ world where society recognizing the significant impacts of business, well beyond the bottom line, demanded to be consulted in decisions that affected them. * The challenge for business leaders seeking to win back public approval, is to not only keep pace with these rapid social developments but to leap ahead and embrace ethical business practice as the cornerstone of sustainable business.
Compliance no longer suffices as a demonstration of intent; instead embracing the principles of a social construct of business is increasingly being seen as the only way to ensure mutual prosperity and stable societies. World business leaders, such as the chairmen of Shell and BP, are making explicit the link between the ethical responsibilities arising from our interdependent relationships and the pursuit of collective gain: * “It is important to understand that we are not doing this (BP’s work with local communities in Columbia) from any sense of philanthropy but as a proper part of doing business.” – Sir David Simon, Chairman BP. * “The terrible events of September 11 and their aftermath have demonstrated the geopolitical uncertainties surrounding the energy suppliers the world depends on.
They have also made manifest both the tensions of globalisation and the reality of our global interconnectedness. Greater connectivity has fundamentally altered the dynamics of human society, providing individuals with many more ways of expressing their values and of joining others to pursue causes…” Philip Watts, Chairman of the Committee of Managing Directors. * Moving from the early Taylorist models of organisations where they were seen as capable of being dissected and managed as independent units, managing for reputational gain requires that the organisation is seen as a system where all areas of the business need to be reviewed in relation to each other to identify the universe of business impacts.
Impact areas that are being typically monitored by organisations keen to safeguard their reputations and improve their overall sustainability performance now include organisational cultural risks; operational risks; product risks and supply chain risks. Stakeholder engagement has become the mechanism through which corporations seek to ensure that the enterprise grows organically as a whole system responsive to its changing social environment. Guided by a new set of global governance protocols such as the Global Reporting Initiative (GRI), business leaders increasingly seek to report and to be accountable for all their relationships.
The evolution of organisations such as the World Business Council of Sustainable Development (WBCSD) and the Council for Environmentally Responsible Economies (CERES) reflect major corporate support for the concept of expanded accountabilities and the maturation of business in a civil sense. * The latest 2002 research from the GlobeScan team at Environics International suggests that business leaders recognise a strong role for themselves in partnership with governments in addressing challenges in the developing world.
This research found that the majority of business leaders (76%) and the general public (60%) agree that problems in developing countries, such as poverty, education, and basic services, cannot be solved without the economic activities of global companies and a significant proportion of business leaders believe they have a role to play in addressing the SD issues related to water, energy, health agriculture and biodiversity.
WHY HAS REPUTATION BECOME SO CRITICAL?
* In addition to the recent spate of past failures in self regulation that have resulted in the public calling for a renegotiation of the social contract between business and civil society, three other major forces can be seen to be shaping today’s debate: * The changing role of Government, accumulating evidence linking sustainable development practices with high performance organisations and the growing importance of intangible assets.
* 1. The changing role of Government
* Governments around the world are rapidly retracting from their former social responsibilities and becoming the facilitators of social progress rather than the architects of social change. The outsourcing of large slices of what were traditionally government enterprises has further shifted the line of separation between the business of government and the business of business. To ensure corporations are held accountable for all social impacts, a new societal stratum has moved into the vacuum left by government in the shape of a plethora of Non Government Organisations (NGOs) who act as global watchdogs to police the boundaries of social accountability.
They have grown in size from some 176 international NGOs operating in more than three countries to over 30,000 by 1993 with millions of additional smaller but highly effective grass root organisation around the world . Their protests at the perceived inequalities being fashioned by the global marketplace have been highly televised around such gatherings as those of the WTO , the IMF, and the G7 summits and these exchanges are now part of the new world order. Behind these world protests are ongoing programs including maintaining corporate watch sites, organising local protests and working in partnership with the media to ensure business remains accountable to society’s values and interests. * 2. Accumulating evidence linking sustainable development practices
* High performance organisations and ongoing research suggests that managers who seek to balance their stakeholder interests nurture organisations that outperform their peers over time and deliver enhanced shareholder returns. A Harvard eleven-year study of corporations that managed for a wider group of stakeholders found that these corporations outperformed peers who focused on shareholders needs only. During the period studied, stakeholder companies increased revenues by an average of 682% versus 166% for the latter; expanded their workforces by 282% versus 36%; grew their stock prices by 901% versus 74%; and improved their net incomes by 756% versus 1%”. A similar 1995 into high performing organisations found that those who paid attention to their values and managed how they did business out-performed peers by a factor of 70 while yet another study found that stakeholder first companies are also more likely outlive shareholder focused companies.
An analysis of “America’s Most Admired Companies”, as listed in Fortune magazine, found that a good corporate reputation increases the length of time the firm spends earning above-average financial returns and decreases the length of time that a firm spends earning below-average financial returns. * As well as seeking to manage their internal workplace cultures, leading companies have embraced triple bottom line reporting as a way of demonstrating accountabilities to external stakeholders. Leading reporters have progressed to independent verification of their reports. KPMG’s International Survey of Corporate Sustainability Reporting 2002 shows that almost half of the Global Fortune Top 250 companies produce these reports compared with 35% in 1999 with more than a quarter of these reports being independently verified.
* During August 2002, Environics International conducted an online survey of business executives to explore the adoption of sustainable development philosophies in their companies. A total of 212 leaders across 50 countries responded and their feedback suggests that sustainable business philosophies are no longer being debated for their business worth; rather leaders have moved beyond the debate and are actively engaged in implementing sustainable management initiatives. The research found that 3 in 4 business leaders strongly agree that there needs to be better cooperation between government aid and private investment to ensure sustainable development takes place in developing countries and 1 in 2 business leaders strongly agree that the benefits of environmental and social reporting outweigh the costs.
* 3. The growing importance of intangible assets
* The experiences of global organisations such as BP, Shell, Nike and Johnson & Johnson demonstrate how protecting corporate reputations means moving beyond compliance to seek to respond to societal expectations of socially acceptable business standards. At the recent World Economic Forum, panellists agreed, “anyone with a brand name to protect must invest and behave ethically lest criticism damages the asset.” * Of equal importance is the growing realisation that identifying and communicating clear brand values that coincide with values sought by consumers significantly enhances the commercial value of the product as well as the output of employees. Research in 2001 suggests that 90% of consumers say that they would be loyal to a company that showed the same loyalty to them.
And 91% say they are likely to buy from companies that can show they behave ethically, while 78% of consumers say they would support a company that does good work in the community. * According to the 2002 Corporate Reputation Watch survey of more than 800 Chief Executive Officers and business leaders in Europe and North America, CEOs are now acknowledging the simple equation that a good reputation equals sales. European executives were found to be more likely to believe that a good reputation can enhance the company stock price whereas US CEOs cited the recruitment and retention of employees as the most important benefit of better corporate reputation. All agreed that it was relationships, particularly those experienced by customers, followed by employees, that are the most important influence on reputation.
American CEOs were found to be more likely than their European counterparts to view unethical corporate behaviour as a threat to corporate reputation. Two in five (42%) US CEOs viewed ethical lapses as a threat compared to between 39% and 24% of Europeans leaders. The research found that at least three in four international firms now have a corporate reputation measurement system in place. Reputation monitoring in the Boardroom is also increasing with some 69% of Belgium and 62% of UK boards likely to monitor the effectiveness of corporate reputation management efforts. * The values that are seen to determine good reputation are increasingly those associated with the corporate social responsibility role (CSR).
One of the most comprehensive surveys of consumer attitudes to CSR involving 25,000 individuals in 26 countries, found that more consumers form their impression of a company on the basis of its CSR practices than they do on brand or financial factors. The 2002 Corporate Reputation Watch research indicated that the vast majority of executives across Europe are expecting corporate social responsibility accountability to increase with 88% of UK and Italian executives gearing up to this expectation.
Yet another international reputation analysis firm, Echo, also found that media increased its coverage of CSR by 52% over 2001 and 2002 as compared to the previous year and they found that more than 80% of companies’ CSR decision-makers believe in the ability of CSR initiatives to enhance corporate reputations as well as attract, retain and motivate employees. In researching the business case for Corporate Social Responsibility (CSR), Associate Professor Craig Smith from the London Business School identified 80 studies of CSR and its impact on overall organisational performance. Of these, 42 demonstrated a positive impact, 19 found no link, and 15 produced mixed results. Only four showed a negative impact.
Ethical Investment Movement
* SRI funds are now the fastest growing sector of the investment market. The growth in demand for ethical or Socially Responsible Investment (SRI) options reflects investor activism in aligning their investments with their personal values. The SRI funds have consistently returned more than the market average. The Domini 400 in the US has outperformed the Standard & Poors (S&P) 500 since inception while the Dow Jones Sustainability Group Index returns above the benchmark MSCI World Index. Performance ratings of mutual funds in the US by Lipper and Morningstar have allocated ten of the fourteen US SRI funds with more than $100 million in assets top marks for performance.
Social indexes have tended to outperform the wider investment universe as well, and these strong returns have fuelled interest from fund managers and retail investors as well as being yet another indicator that managing for a wider set of social values may well be safeguarding what is best for the corporation’s overall performance. A KPMG 2000 research survey found that 69% of a representative sample of Australians would consider investing their superannuation in an ethical option while a recent survey conducted by Market and Opinion Research International (MORI) found that 50% of British customers are paying attention to the social behaviour of companies, and 30% had taken action by boycotting a product or company for ethical reasons in the previous 12 months.
Neighbour Of Choice
* To become the neighbour of choice a company must establish a legacy of trust. An organisation’s ability to optimise its financial results ultimately depends on whether it has the trust of its stakeholders. “Reputation is much more than an abstract concept; it’s a corporate asset that is a magnet to attract customers, employers and investors”, so says Charles Frombrun executive director of the Reputation Institute. According to Corporate Reputation Watch 2002, a company’s ability to communicate is the most influential factor in building and protecting a company’s corporate reputation. The promotion of increased corporate transparency and accountability through constructive stakeholder engagement, and formal, comprehensive reporting on performance are seen today as ‘best practice’.
Union Carbide’s poor handling of media attention in the first few months after the Bhopal chemical disaster enabled the rumour mill to dominate and resulted in a share price fall from $64 to around $32. The company lost billions of dollars in market capitalisation, never fully recovered and was eventually sold into another company. In contrast BP and Shell’s proactive stakeholder and media campaigns in recent years have been found to have turned the tide of negative media coverage associated with oil corporations and earned them public recognition for being at the forefront of the CSR movement.
Employer Of Choice &Amp; Employee Satisfaction
* In its 2000 Organisational Integrity Survey, KPMG found that the ethical behaviour of top executives affects employees’ perception of their companies. Overall, 69% of the 2,390 employees of the companies surveyed believed that their current customers would recommend their company to others. But when employees believed management would uphold the company’s stated ethical standards that number went up to 80% while it fell to 40% among employees who believed that management would not adhere to written standards. Employees who rate their company as highly ethical are more loyal by a factor of 2:3. Only 21% said they would recommend their company if they believed top management would authorise improper conduct to meet business goals.
* Companies with tarnished reputations can face significant recruitment problems. When a major oil company suffered damage to its reputation on environmental and social grounds, fears for the future viability of the company rested on its concerns about no longer being able to attract the best graduates and management talent. * Research conducted by Sears found that if employee satisfaction were to improve by five points, customer satisfaction would increase by 1.3points, leading to a 0.5% increase in revenue. For Sears, this would equate to additional sales in the order of $65 million per annum, and increased market capitalisation of approximately $80million. Here in Australia, Westpac’s annual staff turnover rate dropped from around 30% in 1995 to less than 10% in 2001 after it invested heavily in becoming the employer of choice. Their Group Executive for People and Performance claims that organisations focusing on their people reap rewards of about 50% better performance.
Supplier Of Choice
* Lockheed Martin, the large US aerospace technologies manufacturer, claims that its reputation for an ethical workplace culture has dramatically improved its ability to win government contracts. Its ratio of successful bids was found to average 60%, compared with the industry average of 28%. * Similar success storys from socially conscious and values driven organisations such as Johnson & Johnson, Merck & Co, 3M, Cadbury Schweppes, Levi Strauss, Virgin Airlines and Harley Davison have helped their managers to build multinational businesses based on their social appeal and the values they stand for as much as the products they sell. * Fashion, pharmaceutical, food manufacturing and mining companies have all painfully learnt that loss of public reputation has significant impacts on the bottom line and can lead to the premature death of the enterprise. The Reputation Quotient (RQ) study of corporate reputations in the US claims that there is a direct link between market value, reputation and general corporate performance.
Firms that increased their RQ from 1999 to 2000 experienced an average 8% increase in market value, while firms with declining RQ experienced a 28% decrease in market value. In contrast, sobering reminders that companies can suffer heavy losses and damage to their reputation as a result of adverse media exposure and public consumer boycott include the experiences of Monsanto, Gap, Nike and Shell’s European divisions. The Harris study shows that reputation once lost is extremely difficult to reclaim, no matter how much time and money companies invest in an image makeover.
* As organisations consider how they can benefit from sustainable management philosophies, they are increasingly using a discounted cash-flow approach; that is, what levels of cash-flow can be expected in the future as a result of financial and non-financial stewardship and the interdependence of the two. The two currencies that characterize organisational life today – bottom line performance and intangible contributions around social capital – are being strategically managed by leaders keen to grow their organisation’s intelligence and resilience as well as its bottom line. C * Corporate failure to adequately self regulate to protect shareholder interests
* At the heart of the on-going corporate governance debate lies calls for companies and financial institutions to adopt a wider notion of corporate governance based on ethical accountabilities. This requires attention to ethics at several levels: individual decision-making, corporate culture, boardroom accountability and an overall understanding of a collective purpose that transcends individual stakeholder interests. * The spectacular corporate collapses of recent years highlight how, at their simplest, organisations are only collections of people. In each case it was the social context of the organisation that brought it to its knees.
Human error, not strategic plans nor technology, caused the businesses to implode. What emerged was a picture of organisations where two sets of rules existed. The formal rules, showcased in corporate codes of conduct and value statements, and the informal rules, which supported and rewarded a different set of behaviours around how business got done on a day-to-day basis. If relationships are not managed they disintegrate and the group becomes dysfunctional. This social breakdown can begin to undermine the ethical foundations of the enterprise and create the ideal conditions for the next spectacular corporate collapse.
* KPMG has identified four distinctive approaches to reputation management: * Ethical Icons – companies like the Body Shop, Ben & Jerry’s, Co-op Bank and Storebrand who long pushed the boat out for other companies seeking to enhance their reputation for socially responsible business. * The Good Citizens – mining and oil companies such as Placer Dome, Western Mining, Shell and BP have had to perpetually protect their reputations as good citizens because of the socially intrusive nature of their enterprise. Negotiating acceptable practices in environmentally sensitive areas has nurtured a culture of comprehensive good citizenry amongst the mining fraternity for decades. * The Intelligent Engagers – Telstra, Integral Energy, Westpac who recognize issues of access, fairness, socially responsible pricing and risk are factors that need to be addressed at an intellectual rather than material level and have adopted different strategies to protect and enhance their corporate reputations.
* The Reputationally Challenged –Those companies who find themselves in unpopular industries including cigarettes, gambling and alcohol and who have had to redefine their Corporate Social Responsibility platform in order to deal with the adverse social consequences of providing for an existing social need. * Whatever the motivation – whether it is principle-based or pragmatic self-interest – the push to make reputation a key determinant of financial success is on a roll.
When billions can be wiped of a company’s market capitalisation overnight or, in the extreme, a global entity like Andersen can disappear because it loses the trust of its stakeholder, then, reputation has become a key concern for every member of our post capitalist society where the rules for business success have been fundamentally changed: “Every few hundred years in Western history there occurs a sharp transformation. We cross a ‘divide’. Within a few short decades, society rearranges itself – its world view; its basic values; its social and political structure; its arts; its key institutions. Fifty years later there is a new world. And the people born then cannot even imagine the word in which their grandparents lived and into which their parents were born. We are currently living in such a transformation. It is creating the post-capitalist society.” -Peter Drucker, The Post-Capitalist Society, 1993
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