As corporations strive to remain competitive, understanding and managing reputation has become a business necessity. To help companies innovate as effectively and efficiently as possible, Reputation Institute conducts an annual study to ask: What is on the minds of key stakeholders accountable for reputation?
As Peter Drucker said, “You can’t manage what you can’t measure.” Doing this study every year gives us the opportunity to identify shifting reputational trends.
In 2018, we spoke with more than 170 C-suite executives and directors in corporate communication across 17 industries, representing North America, Latin America, EMEA and APAC. Among the topics we asked them about were their reputation management efforts, accountability for reputation management, the biggest obstacles hindering measuring reputation, and where the future of the reputation economy lies.
By measuring the current state of reputation integration and highlighting future trends, our state-of-the-art assessment provides critical insights at the cutting-edge of reputation intelligence.
Reputation Awareness Is Growing
There’s a critical link between reputation and corporate success. From crises at Uber and Facebook highlighting the close link between reputation and key business outcomes to companies like Microsoft drawing on an already strong reputation to deftly navigate potential obstacles, reputation has never been more important.
Over the last five years, corporations have become increasingly serious about managing reputation. In 2014, 65% of respondents indicated that reputation was a high priority and 63% expected reputation’s importance would only grow in forthcoming years. Even with this knowledge, only 16% of companies were positioned to manage reputation and just 15% were moving to integrate reputation across all functions and departments.
In 2018, an astonishing 88% of respondents indicated that corporate brand reputation is of average/high priority to key stakeholders. And that importance is no passing fad: 95% of respondents expect reputation to retain its importance or become an even higher priority within the next 2 to 3 years. Correspondingly, we saw a 17% increase in advanced reputational integration: companies moving to understand and employ reputation intelligence in all areas of the business. Far fewer companies are stuck at the early stages of the reputation journey, and 67% of respondents claim they are ready to manage their reputation.
This enthusiasm doesn’t always translate into concrete action, though. Fewer than 50% of key stakeholders are actively measuring reputation, and only 34% are taking active steps to manage reputation. What explains this gap between intent and action? Many factors can inhibit a company from implementing reputation management systems, even with an understanding of their importance and impact on the bottom line.
Among these factors is a shift in ownership of reputation. Reputation was traditionally owned by the corporate communications department, but now, CEOs, marketers, and even risk officers are taking responsibility for reputation management within a company.
Responsibility for managing reputation is becoming increasingly difficult to delegate. Our respondents indicated that CEOs, corporate communications executives, marketing executives, and corporate strategists are most commonly responsible for reputation management. This is a stark change from 2014, when corporate communications execs were by far the most common stakeholder accountable for reputation management—70% in 2014 vs. 19% in 2018.
Though CCOs still bear much of the responsibility for reputation management, CEOs are taking increased ownership of it. This is because they see that reputation is not merely a bonus to be focused on after the all-important bottom-line is addressed—it’s a key factor affecting outcomes across the business.
As CEOs take responsibility for reputation management, they are finding that there is a major knowledge gap between critical data and comprehensive data on reputation and business risks. CEOs are aware of key insights regarding brand and reputation, with 94% reporting access to this critical data, but only 24% have access to more comprehensive data that paints a fuller, more meaningful, picture.
The difference is just as stark when we talk about risks to which the business is exposed. Only 22% of CEOs have comprehensive data about potentially paradigm-altering risks, while 87% have access to a more limited, critical picture.
The inability to access holistic data makes it difficult to move forward with implementation of sound reputation management strategies. This creates a great deal of internal strife, putting pressure on CCOs, who are often the ones implementing these strategies.
Our respondents told us their biggest barrier to effective reputation management was a lack of CEO and C-suite support. Paradoxically, this comes at a time when reputation is more important to CEOs than ever before.
Uber is a particularly poignant example of the importance of reputation management in today’s economy. For modern, global businesses, Uber CEO Dara Khosrowshahi notes, reputation is of paramount importance. So why, despite increased CEO ownership of reputation and understanding of its importance, does lack of CEO support continue to be a significant obstacle? The answer lies in a failure to tie reputation management to core business outcomes.
The Reputation Gap
As CEOs remain reluctant to invest in reputation management, CCOs are finding it difficult to make the case that reputation impacts core business outcomes: While 56% of CCOs strongly believe that reputation has a financial impact on a company, they struggle with a lack of business value proof points. Tying the impact of reputation to specific KPIs is critical for CCOs hoping to get colleagues on board with harnessing the insights of comprehensive reputation intelligence.
Other barriers to implementation listed by our respondents include an absence of internal processes and a lack of cross-functional collaboration. As the litany of stakeholders responsible for reputation becomes more diverse, building internal collaboration across functions is critical.
Together, these various obstacles have led to a reputational gap. Companies understand more than ever the importance of managing reputation, but find themselves hindered from taking proactive steps to do so.
Big Data: Searching for a Solution
A natural response to this reputational gap is to collect more information—to attempt to fill the data facing CEOs and CCOs hoping to implement reputation management systems. But to effectively collect more data, companies need to understand what they and competitors already have. What information are companies collecting now?
Our respondents believe reputation is most impactful when it comes to acquiring and retaining top talent (37%). This should come as no surprise, given the tight labor market—competition for talented employees is tougher than ever. As millennial and Gen Z employees care increasingly about working at companies whose values align with their own, having a strong reputation is crucial to attracting the best talent. Companies that communicate their values clearly and effectively, that make a commitment to responsibility, whose employees are proud of their employers—those are the companies attracting and retaining the best and the brightest.
Similar emphasis is placed on capturing and monitoring earned media sentiment. As companies understand that reputation can be destroyed overnight by one viral tweet or bolstered significantly by a feel-good story, taking ownership of their narrative and making sure that their values are communicated clearly, effectively, and authentically is of crucial importance.
CCOs also recognize the advantage a strong reputation yields in terms of differentiation and premium status. Companies with stronger reputations are better able to set themselves apart in fragmented and competitive industries, while also being able to sell products and services at more attractive price points. Companies with poor reputations, on the other hand, risk differentiating themselves for all the wrong reasons.
Most critically, CCOs view a strong reputation as an effective risk protection and mitigation tool. Not only can a strong reputation improve crisis management and post-crisis recovery, reputation can reduce the risk of increased regulations. A strong reputation gives companies the license to operate and serves as credit in the emotional bank with customers, to be withdrawn in times of crisis.
Sophisticated reputational intelligence requires targeted analysis to understand how reputation fares across various stakeholders. Our respondents said that the highest-priority stakeholders to their business strategy were Customers, Employees, and the General Public. Unsurprisingly, these stakeholders were also most likely to have their perception of reputation measured. Not as closely tracked are Investors/Shareholders, Government Officials, and Opinion Influencers. But these stakeholders are crucial in ensuring businesses have a license to operate, have the financial resources to innovate, and are ahead of current trends. Understanding reputation among these key stakeholders should be on any CCO’s action plan.
What else might be on a CCO’s to-do list? Connecting the dots from marketing and corporate comms to stakeholder perceptions and business results, the most important goal according to our respondents. Ensuring that marketing and communications effort translates to improved stakeholder perceptions and business outcomes is the next step in the reputation economy. The best way to accomplish this goal, as noted above, is to measure key stakeholders to understand risk and opportunities.
Third on our respondents’ lists was integrated communication across different touch points. In tandem with increased integration of insights into communications, companies need to develop and enhance CR program efforts. Focusing on products and services is not enough to bolster or maintain a strong reputation; CR programs are critical in developing a strong reputation.
Becoming Reputation Ready
In planning their next steps, companies need to understand global reputation macro-trends. By tapping into Reputation Institute’s extensive database of more than 21 years of business intelligence, we were able to distill the top macro-trends reflecting how reputation is shaping the world and moving markets.
For our respondents, the most important area of focus is promoting a Higher Brand Purpose. Looking to the future, they also see Cyber Attacks, Market Influences, CEO Activism, and being an Employer of Choice as crucial topics to consider. By concentrating on these important macro-trends, companies can cultivate stronger reputations.
What to Remember
The insights from our research chart a clear path forward for companies hoping to lead the trend in the modern reputation economy.
- Companies must move forward with sophisticated and well-sourced reputation management system. Though CCOs are still responsible for managing reputation, CEOs are taking increased ownership. To do so effectively, they need comprehensive reputation data.
- Executives must link reputation data and business outcomes. Doing so is the only way to effectively integrate reputation across the business.
- To overcome the obstacles to reputation management, companies should create a “reputation council” of key stakeholders from across various functions of the business.
- Understanding reputation as a dashboard metric for CEOs, one linked to sales, marketing, corporate brand reputation, and business results, is key to staying at the fore of the reputation economy.
Most companies are still in the early stages of the reputation journey, but 32% of companies are setting the trend and reaping the benefits. Lagging on reputation management is no longer a viable option for 21st-century companies. By following the steps above, companies can differentiate themselves, be more resilient in times of crisis, and reap the rewards of reputation in times of strength.
Reputation is driving the economy and moving markets. Companies who integrate reputation management across the organization are thriving, while those who fail to do so are falling behind.
Executive Partner, Chief Reputation Officer