Most companies are still not organized for success in the new Reputation Economy, according to the Reputation Institute, which says that the results of its first global chief reputation officer survey indicate broad consensus among business executives that what an organization stands for is at least as important as what it sells, and that a firm’s culture and values have eclipsed shareholder value as a leading indicator of sustainable business in the 2010s
Nevertheless, while most executives now agree that reputation is crucial to business success, only a minority have learned how to manage their company’s reputation in a structured and systematized way.
“The feedback from the inaugural global CRO survey, alongside the dialogue that took place at our annual conference in Milan last month, clearly indicates that while companies are identifying the need for a systematic approach to reputation management, they acknowledge that they are closer to the beginning of the journey than the end,” says Kasper Ulf Nielsen, executive partner at Reputation Institute.
“Organizational structures are changing more slowly than stakeholder demand, which in turn forces leading companies to change not only what they say but how they behave in order to preserve their license to operate in these uncertain times.”
The Reputation Institute believes that companies evolve via a five-phase “reputation management journey, from exploring reputation for the first time (phase 1) or integrating cross-stakeholder reputation insights into business-planning and enterprise strategy (Phase 5).
According to the Institute’s research, advance phase companies (phases 4 and 5) are two to three times more likely to:
• Understand reputation across stakeholders and markets
• Understand specific business impact of reputation
• Have an internal council or steering committee to champion action
• Have senior executives accountable for corporate reputation KPIs
• Have reputation integrated into long-term enterprise vision, goals, and priorities
In addition, the Institute says that most respondents (83 percent) believe we live in a Reputation Economy, a world where who you are matters more to consumers than what you sell. Yet few companies (32 percent) are ready to meet that challenge (defined as measuring reputation as a KPI annually.)
Companies with established reputation strategies communicate more with stakeholders than early phase companies. This is both a quality and quantity advantage for Phase 4-5 companies who subscribe to the notion that “the best defense is a good offense.”
The status and confidence of the chief reputation officers rises as their company’s sophistication in reputation management improves, but the vast majority of companies (87 percent) are still in the exploration phases 1-3 of the reputation journey.