Reputation management is a board-level priority

Vuma Reputation Management CEO Janine Hills says there is a direct correlation between reputation, trust and sustainable business.

Business reputation has been in the spotlight in the past few years, both in South Africa and globally, with crises frequently damaging affected organisations' bottom lines. According to the Business Dictionary, reputation management is the process of identifying what people are saying or feeling about a business or brand and taking steps to ensure that the general consensus is in line with the company’s positioning. 

A strong and positive reputation is not built overnight but takes years of careful management and evolution. However, one bad or careless decision can wipe out years of effort and rapidly put your organisation’s reputation into the gutter. 

In the age of social media and instant communication, never before have reputational crises been so rapidly publicised. Just a hint of malfeasance, fraud, corruption or unethical behaviour can be enough to destroy a company’s reputation, send its share price crashing and its investors fleeing for the hills. 

There is a direct correlation between reputation, trust and the ability to be a sustainable business. Anything a business does that erodes the trust of its customers, shareholders, suppliers and employees can damage its reputation and ultimately threaten its sustainability. 

So vital is corporate reputation – and the protection of corporate reputation – to the effective functioning of a business, that safeguarding it needs to be a board-level priority. This means that not only must board members have the right credentials to act in this position, but also an understanding of both corporate reputation management and personal reputation management.  

The need for reputation management experts

Board members need to understand that their behaviour and actions away from the boardroom can reflect on the organisation they represent. As such they need to be mindful of what they post on social media and what they say in media interviews, taking into consideration how their actions and words could be construed.

Corporate reputation must be considered in relation to every single decision the business makes. The challenge is that most boards and senior executives – both in South Africa and globally – don’t include a reputation management expert.  

This can be disastrous when a crisis occurs. Without a reputation specialist to prioritise the practice at board level, there is typically no strategy in place for dealing with the crisis or any potential fallout. How do you suddenly craft a holding statement, who dictates the tone of the messaging, and who is quoted as the spokesperson of the company? Without a plan in place, the result is often a disjointed and ineffective message that leaves the company on the back foot.

The expertise to handle a crisis needs to be present on the board, which in turn needs to be collectively accountable. A board expert needs to be somebody with reputation management experience rather than just media experience – the latter on its own could inadvertently bring the organisation into even more disrepute. Uber is a good example of a company that frequently made the news for all the wrong reasons until the appointment of Ariana Huffington to its board. Within months the company was handling its reputation much more professionally. 

At Vuma Reputation Management, we consider nine equally important dimensions when evaluating a business’s reputation management. These include ethical business practice; transparency; social responsibility; behavioural intention; trust; management quality; marketing and sales effectiveness; innovativeness; the quality of the company’s products and services; its attractiveness as an employer; and business performance.  

It’s vitally important to induct new board members, particularly with regard to reputation management, so that each individual understands the protocol to follow in the event of a crisis and so that comments from the board don’t automatically always default to the board chair. Ideally, different board members should be mandated to comment on different areas.

Similarly, the expectations that the organisation has for board members, as well as senior executives in terms of reputation, need to be clarified. For example, they need to be told how they are expected to behave at corporate and social functions, and when they can and can’t make statements to the media. 

One of the most important committees on any board is the audit and risk committee. Risk management forms an integral part of reputation management and the individuals who sit on this committee should have the expertise to advise on any issues that could pose a risk to the company. 

Just as important as the audit and risk committee is the remuneration committee, given that this is where issues such as fraud and human resources issues such as suspensions generally tend to reside. It is the responsibility of the remuneration committee to evaluate whether remuneration is in line with the marketplace and that references have been correctly checked prior to both employees and board members being appointed. 

It's a science

At the board level, particularly for individuals who sit on these two committees, careful attention to detail is essential. Having a reputation management specialist on these committees is hugely valuable, as they tend to consider issues from a different angle. They’re able to highlight decisions that may not be aligned with the company culture, values or ethics, and red flag them before they cause the company reputational damage. 

Part of the role of reputation management is ensuring that employees understand and support decisions made by the board and that internal and external communication are working together in the best interests of the reputation of the organisation. As Richard Branson has said: “A brand is only as strong as its people. Make sure your people understand that they, too, are responsible for the business’s reputation.” 

Reputation management is increasingly a science that requires both high IQ and high EQ. There is a fine line that the reputation management specialist needs to walk between balancing the needs and reputation of the organisation, and the needs and rights of any individuals accused or implicated in wrong-doing. Knee-jerk reactions are out of the question and you can’t jump to conclusions. This is why it’s imperative to have pre-prepared holding statements ready to be disseminated while you set up an urgent enquiry to establish the facts of the matter. 

So vital has reputation management become to any business that it can no longer be regarded as part of the communication portfolio, but should form part of the company’s forward planning strategy. Reputation management has developed into its own discipline and is now a critical element of risk management, rather than being merely public relations on steroids. Failure to give it the attention it deserves puts the business itself at risk. 

Janine Hills is the founder and CEO of Vuma Reputation Management.