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Reputation management in an era of total transparency

May 1, 2012 by Jonathan Hemus

This year’s TrustBarometer from Edelman shows that trust in chief executives has plummeted: only four in ten people view CEOs as “credible spokespeople”.  This finding underlines the enormous challenge that businesses face in achieving successful reputation management today.

It is also the background against which I led a workshop for business leaders at a recent Common Purpose event.  Whether representing banks, charities, professional services, educational establishments, the emergency services or arts organisations, all of these leaders are faced with the challenge of building trust in an era of total transparency.

The context in which leaders must communicate and manage reputation is very different to the one they faced five short years ago.  It is characterised by:

A lack of trust
Ever since Enron, trust in business has declined: the banking crisis has further eroded the regard with which we view businesses and their bosses.  This means that leaders have to build credibility and trust in order for their communication to be effective.

The death of deference
Respect for all establishments has diminished dramatically: it’s hardly surprising when people perceive that a Prime Minister may be economical with the truth in order to take us to war.  This means that leaders should expect to be challenged on what they say, rather than people believing them just because they are an authority figure.

Greater scepticism
People simply don’t believe what they’re told these days, and why should they?  After all, News International told us that phone hacking was isolated to a couple of rogue reporters.  This means that leaders cannot simply assert something; they need to prove it with evidence and actions.

Increased transparency
In the bad old days, organisations could say one thing and do another.  The transparency provided by social media means that those days are gone forever.  Business leaders should expect that anything they say or do behind supposedly closed doors will become public knowledge.  Communicate and act accordingly.

Expectation  of swift and expansive communication
One of the old strategies for crisis communication was to keep your head down, say nothing and hope that the problem would blow over.  It was rarely a good strategy then, and it’s even less likely to be viable today.  The speed and spread of crises, driven by social media, requires leaders and their organisations to respond quickly and broadly if a problem occurs.  Crisis planning is essential if reputation is to be protected.

A loss of control
Power used to lie in the hands of big business and that conferred control.  Today, stakeholders – employees, customers, neighbours – have the ability to damage your reputation and business if you don’t engage with them properly (take a look at what happened to LA Fitness when it tried to play hardball with one of its customers).   Leaders must listen and engage with their stakeholders if they are to retain the value of their reputation.

Demand for authenticity
In an era when trust and respect is in short supply, genuinely authentic business leaders will prosper.  People will be attracted to them, follow and support them.  The greatest test of authenticity comes when the organisation faces a crisis: a reputation which has been built over many years will rest upon the words and actions of the business and its leader at a time of maximum pressure.  Saying and doing the right thing in accordance with your values is essential to protect your reputation.

The new context for business leadership is extremely challenging, but provides enormous opportunities for executives who understand and embrace it.  Our next blog posting will provide a framework for doing so.


NB. Photos from the workshop are available on Insignia’s Facebook page. Feel free to visit us there.

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