To help us understand what we mean by “corporate reputation” and why it matters, I was joined by Jane Wakely, lead CMO from Mars, and Sandra McLeod, group CEO at Echo Research, for the latest CMI Better Managers Briefing. Here’s what they had to say...
Fundamental to business success
Reputation fundamentally leads to trust, and trust drives both internal and external behaviours, Sandra explains. Analysts estimate that an organisation’s reputation is worth 20-30% of market cap (across the FTSE and S&P).
As such, like any other valuable business asset, reputation needs proper systems, processes and discipline in place. “Yet it is often left to chance,” Sandra says.
Core to reputation is the concept of mutuality of benefit, Jane says. “Companies that take shortcuts and don't create mutuality with every element of the stakeholder group will suffer either financially, reputationally or both,” Jane adds.
At Mars, corporate reputation is recognised as a priority primarily for attracting and retaining talent. “I joined Mars almost 19 years ago for the brands and the business opportunity, but I stayed for the values and principles that match my own,” Jane explains.
Corporate reputation is not the end in itself; at its most fundamental, it requires organisations to understand why they exist, what their deep purpose is and what success looks like for them, Jane says.
Measuring reputation beyond financial performance
Corporate reputation needs to move beyond a box-ticking exercise if it is to become a true driver of performance. “Authenticity and trust are never more important than in a crisis,” Jane says. Covid-19 has exposed those companies that are simply paying lip service to the purpose they claim to have. Others meanwhile have used Covid-19 as an excuse to either behave badly or take shortcuts.
In addition to financial performance, Mars measures success across a range of metrics, which include its impact on the environment and society, and its corporate reputation. “The old form of capitalism where only the bottom-line counts is long gone,” Jane says.
Increasingly success must hinge on how we make meaningful and measurable impacts on the broader society, Jane says.
“Quite a few organisations are just struggling to survive right now but for those with an eye on the future corporate reputation needs to be a priority,” Sandra adds.
Reputation equals Performance minus Expectation
The above equation defines reputation for Sandra. The experience of Covid-19 has resulted in a dramatic shift in expectations among both employees and customers, she believes. “People want to work with organisations that are implementing systemic change, rather than something that is driven out of the CSR department. Customers identify with the brands that they choose, and want to know that they are contributing to a better world.”
Corporate reputation is no longer a nice-to-have; it’s a need-to-have in the business world, Sandra says. “If boards are asking for it, certainly investors, employees and customers are too.”
“Let us see it as an opportunity for innovation for brilliance rather than something at the bottom of the management agenda. Companies that lead the way on this can truly shape the future,” Jane says.
How to accelerate the journey
People at all levels of the organisation – from leadership and manager level down to employees – want to be part of that change. Investment in training and development and education is money well spent, particularly in areas such as empathy and recognising stress signals, Sandra says.
Sandra also advocates building coalitions of support for something that you believe in strongly among your peers. It’s important to walk the walk and not just talk the talk, she urges. “Don't just tell people, but actually show that you live it.” And recognise this as a journey, using data to show progress and highlight areas that need additional support or resources.
Opportunity from crisis
Turning the crisis of the past few months into competitive advantage depends on four Ps, Jane says. You must listen to your associates and consumers and have a real-time ‘pulse’ of what's going on. The ability to ‘pivot’ and respond to changes and shifts in customer behaviour is essential.
Similarly, having corporate values and a sense of ‘purpose’ in the broadest sense enables a level of entrepreneurialism and empowerment “because if you act in line with your purpose, your values and principles, you can give tremendous freedom to your associates to act,” Jane explains. Jane’s fourth P is ‘performance’. “We have to measure what's important to us, and P&L is no longer enough. We need a broader set of metrics,” she says.
The value of social listening
Mars has more recently turned to real-time social listening, looking at people's search queries – to understand their concerns, for example. about their pets during the pandemic. “It has enabled us to flex our content, our products and services very rapidly to respond to changing needs,” Jane explains.
Sandra agrees that social listening presents huge potential benefits to business. “It's like a laser gun,” she says. “Where do you want that laser to focus and what sort of discussions and issues are relevant for that particular group?”
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