Caution: a reputation can be hard to mend
Many companies neglect to protect and enhance their image. Jeremy Clarke considers a new approach
Thursday 19 June 1997
At the same time, there has been a definite shift in the way businesses manage communications. Cynically one might suggest that senior managers are now influenced by the Cedric Brown factor - the buck really does stop at the top, and if the top man does not take responsibility it will be him (or her) who has to face the music in public, with the attendant risk to both personal and corporate standing.
In the not so distant past, businesses managed their communication functions in isolation of one another. Advertising, public relations, employee and community relations, were kept in tight little boxes. There was in-built rivalry among internal departments and between outside agencies, each anxious to protect or expand their share of the marketing budget. At the same time, communication was directed at specific target audiences and failed to take into account the likely "spillage" on to other target groups. After all, customers can also be shareholders; journalists quite possibly members of the local community and employees related to suppliers.
Now, a trend is developing towards a more holistic approach with the result that effort and expenditure is being co-ordinated to meet the organisation's needs, rather than the hidden agendas of individual managers. Board directors are taking hands-on responsibility for planning and implementation, no longer leaving things just to middle management.
And the reason for all this change? Corporate reputation. But what exactly is reputation, and how do you manage it?
Reputation is what people subconsciously feel about somebody or something, and articulate when talking to others. Reputation is not what you say or do, it is what you are. It is the true you as perceived by others. It is the whole cake, not just the icing.
So why is a good reputation important? "Familiarity breeds favourability, not contempt," says Bob Worcester, chairman of MORI, the research organisation.
I have five main reasons for its not inconsiderable commercial value. A good reputation generates reassurance and confidence, which translates into helping to sell more product. A company that has a good reputation is one that people want to be involved with, work for, invest in and supply to. It increases the intangible net asset value of a business, and helps to lay a sound foundation from which any future crisis or disaster can effectively be managed.
The elements that go towards determining a reputation - good or bad - are many and vary in importance with each organisation. But the better a company is at each, so its overall reputation will be enhanced and more enduring. The approach to customers, employees and suppliers, telephone answering, the response and quality of written correspondence, service, reliability, courtesy, speed of payment, innovation, price, quality, value for money, honesty, fairness and visual image - stationery, signage, vehicles, advertising - all go to create reputation. To bake the best cake you need the finest ingredients as well as the right recipe.
In terms of the recipients and assessors of reputation - the ultimate judge and jury - it involves those interested parties who are in some way influenced by the organisation: target audiences in marketing speak, stakeholders in the vernacular of New Labour. These are the customers, employees, suppliers, local community, local, regional and national authorities, the business community at large, shareholders and the City. All those people, whether with a current, future or past involvement hold a view.
However, time is also a vital element and often overlooked. It can take years to develop a sound and credible reputation, and the impressions that people form at an early age may stay with them for the rest of their lives. "I'd never buy a brand x car; my dad had one, it was always breaking down" is a common refrain. It can take a huge investment by the car company to change that view.
Volkswagen has done a brilliant job in re-inventing Skoda. The company started by radically improving the product, returning to the core brand values of engineering and rally success, and building a strong, unified and consistent marketing communications platform to reposition the marque - but it must have cost billions.
LawsonClarke is taking a similar path with its client Demaglass, the UK's largest producer of glass for the lighting, pharmaceutical and tableware industries. Following a management buy-out and the appointment of a new chief executive, the pounds 90m company has gone through a process of radical restructuring and change in its drive to become a world leading manufacturer and lowest cost producer. "The company was a classic example of under- investment," says Don Greaves, the new chief executive, "both financially and in terms of new management thinking. We had to move fast to improve every aspect of the business - from production output and quality, to employee morale, customer perception and visual identity. The company's reputation had also inevitably suffered, so we set about trying to fix that too."
Like Skoda, Demaglass started by doing the right things right; getting the product quality and service levels up to and steadily above customer expectation. "Reputation is founded on truth," Greaves says. "No amount of glossy advertising or slick PR will convince customers otherwise. But having established a firm foundation, we are now building and investing in our reputation."
LawsonClarke has established a corporate communications group within Demaglass, which meets every two months to review and plan issues affecting corporate reputation. Chaired by me, the group comprises the chief executive and marketing directors of the four divisions. Meetings cover everything from the top line marketing actions by division through to group sponsorship, local and national charity support, hospitality, brand development and crisis and issue management. If it impacts on reputation, we consider and police it.
Strategic planning at a senior level is the key to generating and preserving a sound reputation. It begins with an open and honest dialogue between the client company and the advising consultancy, with the consultancy working as an integral part of the management team.
Don Greaves agrees: "Having a positive reputation is one of my company's most important intangible assets. The responsibility for this is shared equally between me and my consultants - we're all accountable to the board and other stakeholders. This requires trust and empowerment, but the end result speaks volumes about both the strategy and the process. And the buck? It stops right here!"
The author is managing director of LawsonClarke, a PR consultancy specialising in reputation management.
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