Brand&Reputation:ALeadershipPerspectiveReputationConference2008

HenleyBusinessSchoolJohnMadejskiCentreforReputation

November25,2008

ElliotS.Schreiber,Ph.D.

ClinicalProfessor

BennettS.LeBowCollegeofBusinessDrexelUniversity

Philadelphia,Pennsylvania,USA

elliot.s.schreiber@drexel.edu

SeeingtheWorldfromthePerspectiveofCorporateLeadership

Managing Financial

Resources

Attracting &Aligning the

TalentAssuring Execution

• Financial targets & non-financial drivers• Shareholdercommunication

• Fiscal policy• Forecasting & budgeting• Capital expenditures

• Workforce acquisition, retention & performance management

• Performance reporting & review• Initiative management

Source: Balanced Scorecard Collaborative©—bscol.com

The Board holds the CEO responsible for 4 key objectives:

BasicPremise ChiefCommunicationsorMarketingOfficers(CCOs,CMOs)canhelpthe

CEOachievehis/herkeyobjectivesthroughastrategic*BrandandReputationManagementprocess

(*thewayinwhichanorganisationseekstoachieveadvantagethroughtheconfigurationofresourcesandorganisationalassetstomeettheneedsofthemarketandfulfillstakeholderexpectationsinawaythatdifferentiatestheorganisationfromcompetitors)

Thekey“valueadd”fortheCCOand/orCMOistoputinplaceaprocessto: Identifytheorganisation’svaluesandclosegapsbetweenarticulatedand“real”,

actionablevalues Helptheorganisationmaintainaperspectiveonallstakeholders,theirrelationships

andinteractions

Buildandmaintainrelationshipswithkeystakeholderstocreatevalue Connectcorporatebrandtoreputationinawaythatdrivesbusinessoutcomes

SixLeadershipChallenges/Issues1. BoardsandCEOsfeelunpreparedformanagingreputationrisk:

Issues: Theinsurancecompany,AON,surveyed360globalCEOsonriskconcernsin

2007

The#1concernof31categoriesofriskpresentedwasReputationRisk 48%ofCEOsfelttheircompanywasillpreparedforreputationrisk Boardsrecognizethecriticalityofriskmanagementandareengagedinthe

reviewofriskissues

2. CompaniesoftenlooktoCorporateAdvertising,CorporateSocialResponsibility,CrisisManagementandPhilanthropyasreputationmanagement: Issues:

Thesearetactics,notstrategy;corporateleadershipisexpectedtobestrategic

CEOsneedreputationandassociatedrisktobemanagedstrategically,asonewouldmanageotherrisks(e.g.,market,capital,legal,etc.)

SixLeadershipChallenges/Issues3. Reputationhasnotbeenclearlydefined:

Issues: Wecannotmanageormeasurereputationifwedonotknowwhatitis Withoutclarity,reputationbecomesa“catch‐all”phaseorasubstitutetermfor

publicrelationsorcorporateadvertising Nowbecomingusedasaeuphemismforsearchengineoptimisation

4.Communicationsprofessionalsofteneschewthetermbrand,associatingitwithmarketingandproducts:

Issues: Brandisbetterunderstoodthanisreputationbymanagementbecauseitis

taughtinbusinessschoolsandusedbystrategyfirmsasan“umbrella”term Organisationalbrandisinterrelatedwithreputation—agoodreputationrequires

thattheorganizationhaveawell‐consideredandactionablecorporatebrand

SixLeadershipChallenges/Issues5. BrandandReputationManagementaretypicallyfocusedon

communicationstoexternalstakeholders: Issues:

Actionsmorethancommunicationsbuildreputation Employeesarethemostimportantstakeholdergroupforanyorganisation

Thereisoftenafailuretounderstandthatrelationshipsbuildvalue‐‐customerserviceandstakeholderrelationsareoftenthepointsinnon‐consumerproductscompaniesatwhichbrandisdefinedatreputationisbuilt

6.BrandandReputationManagementaretooimportanttobelefttoanyonefunction: Issues:

Brandandreputationmanagementmustbeholistic,orenterprise‐wide‐‐weneedtointegrateacrosstheorganizationanddownthroughstrategicbusinessunitsandregions

Boardsneedtobefocusedonreputationsinceitdrivesordiminishesvalueandnotsimplydelegatethistomanagement

WhatisReputation?FortheOrganisation:reputationisanintangibleassetthat:

Thatoffersapromiseofperformance

Canbeusedtoshapeexpectationsandperceptionsaboutthecompany’sdifferentiationandabilitytomeetneedscomparedtocompetitors

Enhancesorganisationalvaluethroughrelationshipsthatbuildtrustandvalue

ForStakeholders:reputationisthebeliefthatanorganisationisdistinguishedfromitspeers:

Totheextentthatstakeholdersbelievethatthebehavioursandcommunicationsoftheorganisationresonatewiththeirneedsandinterestsandarebetterthancompetitiveofferings,theywillbeinfluencedtobehavetowardtheorganisationindesirableways

Theabilityofthefirmtoconsistentlydistinguishitselffromcompetitorsovertimecreatesa“haloeffect”thatprovidesgreaterresiliencetodifficultiesversuscompetitors

TheBrand‐ReputationConnectionBrandisownedbythecompany;Reputationisownedbystakeholders

Employees

Competitors

BusinessPartners

Media

Government

NGOs

Investors

Reputation

Brand

ORGANISATION BRAND• The self definition of how an

organisation wants to be perceived anddifferentiated from competitors

What factors create positive and differentiated perceptions?

How can we influence those factors?

ORGANISATION REPUTATION• The “vote” by stakeholders as to

whether or not the brand attributes andbehaviours resonate

Analysts

Communities

CoreAttributes

&behaviours

The Brand-Reputation-BusinessOutcome Value-Chain Model

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Satisfaction

Retention/Attraction

Trust

Satisfaction

Reputation

Turnover

Trust

CorporateBrand

SymbolsCommunications

Behaviour

EmployeePerspective

CustomerPerspective

•Salary•Career•Culture

OrganisationCulture,Values&Strategy

Reputation

• Price• Quality• Service

Adapted from Gary Davies, Corporate Reputation and Competitiveness, p 76.

Fea

r, U

ncer

tain

ty &

Dou

bt

Complexity of Information in DecisionLow High

High

Brand and Reputation Strategies Dependon The Nature of the Organization

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Driver: Personal Need Brand Strategy: House of BrandsDemand Created by: Advertising & Direct MailValue of Corporate Reputation: VERY LOWValue of Product Brand: VERY HIGH (P&G, Unilever)

Driver: Social AcceptanceBrand Strategy: Endorsed Brands Demand Created by: Advertising & Product EndorsementsValue of Corporate Reputation: LOW to MODERATEValue of Product Brand: HIGH (Air Jordan, Martha Stewart, )

Driver: Safety & SecurityBrand Strategy: Branded HouseDemand Created by: Relationships and 3rd

Party ReferralsValue of Corporate Reputation:

VERY HIGHValue of Product Brand: VERY LOW (Dell, Cisco, AT&T)

Driver: Ingredient PerformanceBrand Strategy: Sub-Brands Under a MasterbrandDemand Created by: Integrated Communications & ReferralsValue of Corporate Reputation: HIGHValue of Product Brand: HIGH (Intel, Pharmaceuticals, Marriott)

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CreatingaStrategicProcess External:CreateaFrameofReferenceforyour

company: Whatstakeholderscanexpectfromyouintermsofproducts/service,investment,

employment,civicinvolvement,etc. Theframeworkshouldbecomean“organisationalimperative”:

• toengagemanagersandemployees• tocreateneededorganisationalchangeandactionsconsistentwith

communications

Internal:Developa“ReputationScorecard”tohelpmanageprogress:

Commonmodelofreputationthatisagreedto

ReputationRiskSWOTanalysisfortheorganization ObjectivesforCustomers,EmployeesandFinancialResults,aswellasfor

RelationshipswithKeyStakeholders

Metricsforeachobjective

ValuesaretheFoundationofReputation

ReputationConsistent, Trustworthy behaviours

Consistent Communications

Employee Commitment

Policies & Practices

Business Objectives

Values

Internal Controls &

Governance

Sta

keho

lder

Per

cept

ions

Resource Allocation

First‐ordervalues:Thosethatareintrinsictotheorganisation,embeddedinculture,monitoredandreinforced—connectedtothevaluesofstakeholders

Second‐OrderValues:Thosethatanorganisationcommunicatestostakeholderstoinfluencemarketperceptions,butwhichdonotnecessarilymeetthetestoffirst‐ordervalues

Intrinsicvs.ExpressedValues

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Financial Returns are a Proxy ofEmployee and Customer Satisfaction

Employee satisfaction and commitment are related to how employees’perceive their organisation is seen externally (Carmeli & Freund,Corporate Reputation Review, 2002)

There is a strong relationship between employee & customersatisfaction, and the interaction between these drives financial value(Girouard, Waukesha, Stowers, Barr & Franklin, Chicago School ofProfessional Psychology, 2007)

Companies perceived as good places to work earn returns double thatof others (Alex Edmunds, Knowledge@Wharton, 2007)

HOWEVER Schultz & Hatch, The Expressive Organisation (2007) found that 90%

of employees did not understand the company’s brand; 70% were notcommitted it

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The EBP is an internal brand for employees, bothcurrent and future prospects

Builds understanding and actions of employees withthe external brand

Addresses two questions: 1. Why would a talented person want

to work here versus someplace else?

2. What can employees do to help enhancestakeholder value?

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Employee Brand Proposition(EBP)

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PuttingItAllTogether

LeadershipThroughaCouncilof“StakeholderRelations”

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Communications

Marketing

Sales

R&D

Legal

Investor Affairs

Government Affairs

Human Resources

Strategic Planning

LeadershipinReputationManagement

Focus‐Defineyourbrandattributes,geteveryonetounderstandandagreetothem,andmakecertainthateveryoneiscommittedtothem

EstablishaCommonStrategyFrameworkthatintegratesbrandandreputation—theyareinterrelatedandcannotbeseparated

ConcentrateonBehavioursMorethanonCommunications

CreateanInternalCoalition‐‐usea“StakeholderRelations”Council

LeadershipinReputationManagement

BeAuthentic–makecertainthatyourcommunicatedvaluesareyourrealvalues.“WalktheTalk”,donot“TalktheWalk”

Inspire–emotions,notintellectualarguments,drivebehaviours

StrivetobeConsistentinEverythingYouDo—insideandoutsideoftheorganization

SeektobeDisproportionatelyValuedfromCompetitors

BrandandReputationLeadershipHelpsCompaniesAlignObjectives&ActivitiesatAllLevels

Corporate

Group

Division

Provides aframework forCorporate strategy

Process alsoprovides a framework forgovernance

Governance

Man

agem

ent S

trate

gy

Source: adapted from Balanced Scorecard Collaborative, 2003

Board CEO