If a company is of a certain size, it is likely to appear in some indices, rankings or ratings. But is this external data really helpful to manage an organization’s reputation? And if so, is it possible to push the needle of the indices a bit further? Or does reputation measurement need an entirely different data set? This episode deals with some essential questions in reputation management. Our guest Dennis Larsen knows where insightful data sources are to be found, what hurdles communication managers have to face and what it takes to successfully build your own specific reputation management system.
One year into a global pandemic, it was not possible to talk about developments in reputation management without a share of example cases from recent crisis communication, especially in the pharmaceutical industry. But as this aspect would have gone beyond the scope of the episode, there will be a second part dedicated just to reputation and the pandemic.
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Dennis Larsen has 20 years of experience as a management consultant focused on strategic reputation management. He is a managing Partner of ReputationInc, a consultancy headquartered in London, advising clients around the world in areas of strategy, communications and reputation. Larsen is active in a number of professional organizations, as a board member of the European Association of Communication Directors (EACD), a practice Fellow at the Nordic Alliance for Communication and Management, a regular lecturer at executive programs at leading business schools and last but not least as a Director at the Council for a New Economy, focusing on circular economic development. In the beginning of his career, he worked with some founding fathers in the field of reputation from an academic perspective, Charles Fombrun and Cees Van Riel. Dennis Larsen helped conducting the research for „Fame and Fortune – How Successful Companies Build Winning Reputations“. The book was published in nearly 20 years ago as an instructional standard on reputation management.
Measurement in the Nordics
Dennis Larsen works mainly from Oslo. When asked about communication and reputation management in Scandinavia, he mentions Scandinavian companies, for example in the energy sector and in fish and animal nutrition, that are taking proper time to explore issues and to impact on them in the medium and long term. They are reflecting broadly on their reputation, about what expectations their stakeholders will have in time. In Scandinavia and in the Nordics, there are a lot of opportunities for small and mid-size companies, but also for public sector organizations, to take a more strategic approach to reputation, says Larsen.
On Reputation and how to manage it
According to Larsen, there are many different definitions of reputation, depending on what your lens is. Economics or accounting have a slightly more asset-based perspective to what reputation is, experts in branding and corporate communication will regard reputation more as the perceptions and evaluations audiences make of companies.
“To keep things simple there are three perspectives that are essential to distinguish and to explore when thinking about reputation: awareness, assessment and asset.” Dennis Larsen
The awareness, assessment and asset perspectives overlap, they are not mutually exclusive.
- Awareness is about perceptions, the general impressions stakeholders have of a company. You have heard in the news about a company and have a general impression.
- Assessment is a more of a particular value judgment you make of a company based on the things you have seen or heard. Your judgment might be based on your own value systems and what you care about. There might be a national component to this as well.
- Finally, the asset view: reputation is seen as something that has intrinsic strategic value to the company. To build the right kind of reputation helps businesses attract and retain the vital resources that influence their future business success. Relational components are important, for instance attracting customers, attracting future employees, attracting suppliers, creating the right environments and the right license to operate.
The key is to think about reputation a) for what topic b) among which stakeholders and c) compared to who else. Those three points are essential because there are different reputations for specific topics and issues.
“In essence reputation is about the perceptions and future expectations stakeholders have of companies or other organizations.” Dennis Larsen
Reputation Measurement and Reputation Models today
Larsen thinks of reputation measurement as reputation intelligence, a kind of “measurement plus”. The common approach is often some primary listening: surveys, in depth interviews, focus groups are still a very important part of understanding your reputation. Both measuring your reputation and going beyond the numbers and understanding what is going to change your stakeholders’ willingness to support your agenda requires discussions, in-depth conversations which most organizations are already having but they need to be captured in the right way.
With the dawn of natural language processing and A.I. enabled techniques, there are suddenly very powerful tools to understand where the discourse is going, to test messages, to understand where potential reputation risks are.
There are good academic core models of what reputation is and measurement methodologies that are still applicable. But you would not go to a management consultancy and ask for the best strategy model to plug into your organization. There is not really an off-the-shelf approach because reputation is of such strategic value. But you can learn from good academic models and the science.
“Have a good mix of the best approaches methodologically to measure reputation – some of them indeed include online surveys, tapping into panels, tapping into omnibus surveys – but tailor it to where your stakeholders are, where you do engage with them, what they do care about and take a more tailored approach.” Dennis Larsen
The key is to use individual reputation dimensions, for your organization specifically, to use quantitative and qualitative methods and to combine all the data to develop an individual reputation model. As Larsen puts it, organizations are extracting the most value when developing their own reputation model with leadership ambition connected to their business strategy. They can then plug that model into other existing ongoing measurements, into social media monitoring, into internal surveys – maybe not entirely but the core pieces of it. They can embed some of the key reputation model components in measuring e.g. consumer sentiment or customer satisfaction surveys and then, in an ongoing process, integrate and report on the findings regularly so they have more real-time data coming in.
On stretch KPIs, Indices, Ratings and Rankings
To a certain extent, Larsen thinks it is helpful to have an aggregate overall number and to have a stretch KPI and a target, as a kind of north star. But make sure that your company was involved in designing that number.
“Do not hold yourself hostage to just one external index, ranking or rating because you will have less impact on it. If it is not company specific, you’ll have a hard time explaining to your board why you are not reaching 43 if you’re 42.” Dennis Larsen
There is a lot of value in looking across relevant indices, rankings and ratings to understand where you stand on core aspects of your business that are important to your stakeholders, but do not hold yourself hostage to one. When you do aggregate your own reputation data from all your own surveys and other data points coming in, it does help to have an overall stretch target. But then break it down into components so you can really be clear on the pieces that you actually can impact on, be it by government relations, by a procurement or by compliance in specific topics with specific stakeholders. If that one overall number is based on something you have less control over, it is a fallacy.
Another aspect Larsen mentions about KPI setting is what McKinsey called surrogation. In many of these KPI setting processes the metric or the KPI is confused with the strategy. For instance, when looking at consumer satisfaction surveys, if you are geared towards the maximum consumer satisfaction, your system might be sub-optimal because you might just be annoying consumers by continuously asking them to rate. The same applies to reputation so do not confuse the importance of the strategic value of reputation with a singular focus on the indicator.
Defining Action Steps out of Index Results
When it comes to measurement and insights, the more you can construct your own data from all the existing sources combining it with your own insights, the more successful you’ll be according to Larsen. Your employees are in contact with the stakeholders, listen to them and understand the issues and the expectations the stakeholders have. Perhaps there might be gaps to fill, you might have to commission some additional research, but maybe you have enough from all the existing sources that are available.
“Look across the relevant rankings and ratings and not just one, use them strategically as an input, but also as a way to signal to relevant stakeholders what your values are and what your company is all about. Play that rankings, ratings and awards management game strategically“ Dennis Larsen
The CEO might come knocking on the door asking why are we not at least in the top five of best place to work indices or on the top brands indices or top RepTrak in our countries and so on. If you are in corporate communication, you have to have an answer to that, you have to understand the models.
Corporate Communication and Reputation Management
The role of corporate communication when it comes to reputation measurement and reputation management is a question that often comes up in organizations. Corporate relations and corporate communication functions are stewards of the process if they understand issues, understand multiple stakeholders, if they can gather the right insights through the right methodologies, can integrate data points that are also being gathered by the marketeers and by investor relations of specific stakeholders.
But corporate communications should not be held to account for all of the reputation data. It has to be owned by the business. Corporate communications can steward it, can nudge the business in the right direction, but many reputation solutions and reputation risk mitigation actions cannot be solved by communication alone.
There are lots of great examples of how corporate communicators have taken reputation data, nudged the business to actually change a product line, extract themselves from certain very risky behaviors. There are various pieces of reputation measurements and reputation intelligence that can be owned by corporate communication and directly be impacted. Corporate comms tends to have the more direct influence on specific stakeholders, if you think about public affairs, the regulators, the policy makers, the media et cetera. But other components need to be taken into the business.
„Corporate communications need to understand analytics, they need to understand reputation risk and the way to take that data into the business to inform better strategies and better decision making. That’s the power of good reputation.“ Dennis Larsen
Reputation Management in Times of Crisis
„When companies are in crisis situations and leaders consider reputation being just about PR then they do not really understand what strategic reputation management is all about. Perhaps there is still a reputation problem for reputation.“ Dennis Larsen
Only CEOs that really take the long-term view in considering the impact of exactly short-term decisions especially in crisis situations will succeed in properly guiding the organizations through disruptive forces, says Larsen. During Covid we have seen companies take some good value-based and ethically correct decisions to secure safety and security of their employees, clients and other stakeholders and proactively start to help being a solution to certain aspects of the problem. We have seen companies having proper impacts on local societies with providing logistical support, providing hand sanitizers, and so on. Whether they call it reputation or not, companies that think long term, think multi stakeholder and take the right decisions are those that will prevail. Forcing employees to come back to work even though the government guidelines said perhaps you need to stay at home might be a reputation risk. Thinking properly about the reputation implication of how you handle especially short-term crises will be increasingly important.
Pandemic Impact on Reputation
The pharma industry has had reputation legacy issues and a deficit compared to the good they actually do in society. When you look at indicators and data there is a positive effect on the broader healthcare but also on most of the pharma industry as a result of Covid, an increased understanding of the importance of this industry. There are interesting approaches, companies helping to produce hand sanitizers or paying their employees a bonus if they get the vaccine to speed up vaccination. If they play the game right individual companies will come out stronger and ride that wave of increased public trust and public understanding of the importance of their role in society.
The arguments around the Astra Zeneca vaccine on the other hand, these all have implications for the reputation of Astra Zeneca. Maybe some of that will be short-term but also could have an impact on the reputation of vaccines themselves, which then have an impact on the industry.
Employee Ambassadors in Reputation Management
When people think about reputation, they think first external, says Larsen. But much untapped potential for many organizations lies in the internal perspective, their employees.
That comes with implications for measurement. HR is often running big employee engagement surveys and maybe some internal com surveys. But why not ask employees what they think the organization should be doing on big societal issues, what they think the reputation is, where the pain points are, how to address certain issues. Employees are experts. Tap into that knowledge from a measurement perspective. Make sure there is a good awareness and understanding by decision makers of the importance of taking reputation implications into account a priori in the business decision making process. Do not take business decisions and then “oops we did something wrong corporate communications can you help us fix this and help us look better”.
Build reputation into that decision making. Corporate communications can really play a role there, partnering with learning and developments, putting together coaching programs, training programs, all embedded in the organization. There is a lot of potential, a lot of organizations are investing adequately and there is a good return on investment, investing in really developing sufficient knowledge and skills across the organization.
For instance, Larsen mentions companies that built a simple reputation one-on-one short e-learning module into their onboarding program for new managers. All managers had to have this base level understanding. There might be some deep dive expertise built into specialist areas, different departments like compliance, risk or procurement, on their role in reputation management.
Start to embed it into the philosophy of the business, the culture of the business and then you start to see not just the ambassador effect but you build the awareness of the company’s reputation into the ethos of the people’s day-to-day work.
Starting to manage Reputation in four Steps
- First step: start to have internal conversations with colleagues, with leaders. Get a sense of what reputation means to the business. And perhaps the word reputation doesn’t work. Some companies from a pharma perspective think about trust. They might think about corporate brand. In many markets reputation is synonymous with PR. There is nothing wrong with PR but reputation is something more than that. Infuse those discussions with reputation thinking. Start having those discussions internally and explore where does the reputation concept live. Perhaps you already have initiatives in in trust building, compliance and corporate branding that you can leverage and that you can build into a broader strategic reputation approach.
- Step two: look at what data exists. Do not go out and buy a report. Look internally first what exists, across different functions. Whether there are perceptions or expectations from stakeholders coming in, survey data, online media monitoring, whatever it is. Start there.
- Step three: Once you know a little bit where you currently stand, use that to start to set an ambition with the leadership of a function or the entire business: what is the reputation ambition, what are the things we know we need to be seen as and known for and have a credible position for in order to achieve our business success. Have that ambition discussion with leaders.
- And only then do set your model up and make sure that you are integrating all the incoming data or perhaps do some additional measurements to understand continuously where you stand on reputation.
Then you can do neat things like take a quarterly reputation risk mini report to the board, have reputation embedded into other functional work, set up a culture program, work on compliance… make sure it’s part of the regular ongoing reporting cycle in the business. Some companies embed reputation from a KPI perspective into the corporate scorecard, they build incentivization around it. Other companies take different approaches and have more of a reputation council and look in depth at specific issues and brief their CEO and leaders on issues that are coming out of the research so there are different approaches.
Corporate relations and corporate communications might be the ones better placed to own the process of gathering the insights and the data and reporting into the business, pushing the business into certain directions based on what the data says. But they need to have sufficient analytical capabilities and access to the data. The measurements components and the analytical components can be in house or outsourced but it’s really important to make sure reputation is embedded into the structure of the organization at the right level and it has to be towards the top of the organization. It’s increasingly being seen as a business leadership imperative to take account of reputation. In some markets across the EU and indeed in the UK it’s becoming mandatory for directors to show how they are taking multiple stakeholder considerations into their decision making, moving from a singular shareholder focus to a multiple stakeholder focus, and that’s exactly where reputation sits.
Shownotes
Find Dennis Larsen on
- ReputationInc
- European Association of Communication Directors
- The Nordic Alliance for Communication & Management
- The Council for a new Economy
Resources mentioned in the episode
- Charles Fombrun, Cees Van Riel “Fame and Fortune: How Successful Companies Build Winning Reputations”, 2003
- RepTrak (formerly Reputation Institute) Global 100 Index
- Kantar Millward Brown Index
About Dennis Larsen
Dennis is Managing Partner at ReputationInc, a leading reputation management consultancy. He is a trusted advisor to leaders in businesses, NGOs and public sector bodies globally. He is on the board at the European Association of Communication Directors, Practice Fellow at the Nordic Alliance for Communication and Management and Director at the Council for a New Economy.