No, I have not been missing in action.
After a well deserved holiday, this blog will be up and running as from today. I trust that you enjoyed the festive season and did nothing to subtract from your hard-earned reputation.
I sincerely hope that during 2007 you will “Regard your good name as the richest jewel you can possibly be possessed of - for credit is like fire; when once you have kindled it you may easily preserve it, but if you once extinguish it, you will find it an arduous task to rekindle it again. The way to gain a good reputation is to endeavour to be what you desire to appear.” (Socrates - 469 BC - 399 BC)
The implications of these words is that reputation is something that needs constant work just like a gardener attending to his flower beds. Like as in gardening it does not take much for weeds to grow, pests to come and flowers to wilt.
Constant attention and vigilance is needed if you want to maintain and safeguard your reputation. Do you know what drives your reputation? Do you know what can add or subtract from that reputation?
Find out! In today's knowledge economy your reputation is your stock-in-trade. Manage it carefully.
Wednesday, 03 January 2007
Monday, 18 December 2006
A Committee Approach to Managing Reputation
Organisations have a number of options available to them when trying to enhance, sustain and protect their reputation. They can either have a Reputation Risk Committee or an Operational Risk Committee or both as follows:
1. Run a separate Reputation Risk Management Committee. Typical attendees should include PR, Communication, Corporate & Public Affairs, Advertising & Marketing, Brand Management, Regulatory Affairs, Safety, Health & Environment, Internal Audit, Risk Management, HR and Compliance function members.
The focus of this Committee is to discuss opportunities for building & sustaining reputation as well as to discuss reputation management and reputational risk issues. Each individual/department is required to supply a report of all reputational incidents / issues and opportunities and actions taken for building reputation. The minutes and reports of this meeting should go to the Operational Risk Committee.
2. Secondly, Reputation Risk should serve as part of a traditional Operational Risk Committee (ORC). This Committee normally comprises of all heads of departments in operations of a company. It meets on a fixed frequency to discuss risk issues - which are defined as operational issues / losses above a cut off limit/level. Each individual/department is required to supply a report of all Operational Loss Incidents / Issues to the Secretary/convener of the ORC. At this meeting each of these reports are discussed in detail by the ORC and analysed to help introduce necessary changes that would help prevent repeats of such - and save losses. Normally, an ORC is a recommendatory body - and the minutes of the ORC meetings are summarized and put up for approvals by top Management / Management Committee / Board of Directors.
In my opinion both of these approaches is necessary in a company. The focus of the RRC is to build, sustain and protect reputation whilst the ORC includes all types of risk and is useful for all attendees to see how various risks interact and can ultimately create reputational damage. In South Africa these two approaches will be in accordance with the recommendations of the King 2 Report on Corporate Governance.
The key for the success of these committees is to ensure that they do not become simple "report analyzing mechanisms" – but that they focus on and identifying and addressing loss / risk issues.
I recommend that all companies make these committees or forums mandatory.
1. Run a separate Reputation Risk Management Committee. Typical attendees should include PR, Communication, Corporate & Public Affairs, Advertising & Marketing, Brand Management, Regulatory Affairs, Safety, Health & Environment, Internal Audit, Risk Management, HR and Compliance function members.
The focus of this Committee is to discuss opportunities for building & sustaining reputation as well as to discuss reputation management and reputational risk issues. Each individual/department is required to supply a report of all reputational incidents / issues and opportunities and actions taken for building reputation. The minutes and reports of this meeting should go to the Operational Risk Committee.
2. Secondly, Reputation Risk should serve as part of a traditional Operational Risk Committee (ORC). This Committee normally comprises of all heads of departments in operations of a company. It meets on a fixed frequency to discuss risk issues - which are defined as operational issues / losses above a cut off limit/level. Each individual/department is required to supply a report of all Operational Loss Incidents / Issues to the Secretary/convener of the ORC. At this meeting each of these reports are discussed in detail by the ORC and analysed to help introduce necessary changes that would help prevent repeats of such - and save losses. Normally, an ORC is a recommendatory body - and the minutes of the ORC meetings are summarized and put up for approvals by top Management / Management Committee / Board of Directors.
In my opinion both of these approaches is necessary in a company. The focus of the RRC is to build, sustain and protect reputation whilst the ORC includes all types of risk and is useful for all attendees to see how various risks interact and can ultimately create reputational damage. In South Africa these two approaches will be in accordance with the recommendations of the King 2 Report on Corporate Governance.
The key for the success of these committees is to ensure that they do not become simple "report analyzing mechanisms" – but that they focus on and identifying and addressing loss / risk issues.
I recommend that all companies make these committees or forums mandatory.
Reputation Risk Definitions
Definitions create the lenses through which we look at the world. The renowned psychologist, Abraham Maslow said that if the only thing you have is a hammer, you tend to treat everything as a nail.
I start every workshop and presentation with definitions, so that I can establish a common framework in which I can work with my audience.In particular there are three definitions to describe reputation risk, each serving a slightly different purpose.
The first definition is that Reputation risk is the risk that an activity, action or stance performed or taken by a company or its officials will impair its image in the community and/or the long-term trust placed in the organisation by its stakeholders, resulting in the loss of business and/or legal action.
A practical example of that right now is highlighted by the headline: "Nokia postpones deal because of Siemens bribery probe!". Cell phone maker Nokia and telecommunications equipment maker Siemens are postponing the merger of their mobile-network units because of an ongoing investigation into allegations of bribery at Siemens.
The deal, which will create a new company called Nokia Siemens Networks, was supposed to be finalized January 1, 2007. But in a press release Thursday, Nokia said it expects the deal to close in March.
Nokia said it is postponing the deal because it is concerned about the ongoing bribery investigation that has already led to the arrest of several former Siemens employees, including Thomas Ganswindt, former head of the German company's telecommunications equipment division.
The second definition is that Reputation Risk is the loss of earnings that occur in a situation of negative public opinion. It normally results in loss of sales, share value decreases and breakdown of relationships. Many a crises have led to stock price decreases and impact in other areas of the business.
The 3rd definition is one that I use in my Stakeholder Reputation workshops. Reputation Risk emerges when the reasonable expectations of stakeholders are not met.
This definition requires a different view. It essentially involves taking a look at each stakeholders needs and expectations, matching the drivers of an organisation's reputation and minimising the gaps that exist.
From the above definitions it must be clear that essentially all risks and all related components of a company potentially impact on reputation risk. This implies that reputation needs to be systemically managed in organisations.
I start every workshop and presentation with definitions, so that I can establish a common framework in which I can work with my audience.In particular there are three definitions to describe reputation risk, each serving a slightly different purpose.
The first definition is that Reputation risk is the risk that an activity, action or stance performed or taken by a company or its officials will impair its image in the community and/or the long-term trust placed in the organisation by its stakeholders, resulting in the loss of business and/or legal action.
A practical example of that right now is highlighted by the headline: "Nokia postpones deal because of Siemens bribery probe!". Cell phone maker Nokia and telecommunications equipment maker Siemens are postponing the merger of their mobile-network units because of an ongoing investigation into allegations of bribery at Siemens.
The deal, which will create a new company called Nokia Siemens Networks, was supposed to be finalized January 1, 2007. But in a press release Thursday, Nokia said it expects the deal to close in March.
Nokia said it is postponing the deal because it is concerned about the ongoing bribery investigation that has already led to the arrest of several former Siemens employees, including Thomas Ganswindt, former head of the German company's telecommunications equipment division.
The second definition is that Reputation Risk is the loss of earnings that occur in a situation of negative public opinion. It normally results in loss of sales, share value decreases and breakdown of relationships. Many a crises have led to stock price decreases and impact in other areas of the business.
The 3rd definition is one that I use in my Stakeholder Reputation workshops. Reputation Risk emerges when the reasonable expectations of stakeholders are not met.
This definition requires a different view. It essentially involves taking a look at each stakeholders needs and expectations, matching the drivers of an organisation's reputation and minimising the gaps that exist.
From the above definitions it must be clear that essentially all risks and all related components of a company potentially impact on reputation risk. This implies that reputation needs to be systemically managed in organisations.
Wednesday, 13 December 2006
Powerlines 67 now available
The latest edition of Powerlines, REPUCOMM's e-mail newsletter about strategic reputation and crisis management is now available by request.(REPUCOMM is the name of my consulting practice).
It contains articles entitled "Avoid Reputation Risk when contracting with the Government; Are you managing your Online Reputation?; Redesign your Business from the customer's point of view; Why should you train your staff in Reputation awareness?" as well as our latest news and random thoughts.
This notification is sent to you in the interest of your organisation's biggest asset and risk - its reputation.
If you would like a copy to read, just send a mail to deonbin@icon.co.za
It contains articles entitled "Avoid Reputation Risk when contracting with the Government; Are you managing your Online Reputation?; Redesign your Business from the customer's point of view; Why should you train your staff in Reputation awareness?" as well as our latest news and random thoughts.
This notification is sent to you in the interest of your organisation's biggest asset and risk - its reputation.
If you would like a copy to read, just send a mail to deonbin@icon.co.za
What is the Golden Thread?
The magazine Fast Company is running a brilliant slide show depicting how some international brands faced a crisis and rebounded.
Visit http://tinyurl.com/yk2vyy to view the slide show.
Unfortunately the slideshow does not paint a true picture of the damage and impact the crises had on the organisations, but it does encapsulate briefly the response taken.
What is the golden thread amongst these examples in your opinion?
Every one of these examples clearly show that an organisation can make lemonade out of lemons, i.e. deal positively with any crises and issue , if they think through the process clearly and never loses sight of the vision and values of the organisation.
Howver for me, the golden thread is Prevention. Prevention is better than cure! Proactive Crisis Management is still better than post-event reactive management,
Visit http://tinyurl.com/yk2vyy to view the slide show.
Unfortunately the slideshow does not paint a true picture of the damage and impact the crises had on the organisations, but it does encapsulate briefly the response taken.
What is the golden thread amongst these examples in your opinion?
Every one of these examples clearly show that an organisation can make lemonade out of lemons, i.e. deal positively with any crises and issue , if they think through the process clearly and never loses sight of the vision and values of the organisation.
Howver for me, the golden thread is Prevention. Prevention is better than cure! Proactive Crisis Management is still better than post-event reactive management,
Introduction to my Blog
The word "insulation" means to protect. This blog will be a must-read for any Reputation manager, PR professional, Risk manager and Corporate Affairs executive.
It is my aim with this blog to make management realise why damage to Reputation is the number one risk organisations face worldwide and to assist them to design and implement robust reputation risk management frameworks that will protect against the destruction of this asset.
Numerous studies including the Corporate Risk Barometer survey by the Economist Intelligence Unit have shown that the most significant issues facing business today, are reputational risk (defined as the threat of any event that can damage a company's reputation) and regulatory risk (defined as problems caused by new or existing regulations).
These two risk categories received the highest scores in the Risk Barometer, indicating that they are seen as more significant issues than market risk, foreign exchange risk and country risk by the majority of executives in the survey.
Why should organisations protect itself against Reputation Risk? Unfortunately many companies damage their carefully crafted reputations either inadvertently or through blatant and incredulous acts.
Most of the damage occurs when there is not a careful crafted strategy for building, sustaining and protecting the organisation's biggest risk and asset - its reputation.
The new order of the day seems to be accounting principle restructuring, companies seeking to improve trust building, governance and ethics principles and practices, stakeholders seeking disclosure and shareholders becoming more and more frustrated.
Yet, there still seems to be a general lack of understanding the true value and potential of an organisation’s reputation. And, as long as management do not understand how reputational risk manifests negative articles and doubt about company practices will continue to dominate headlines.
Unwanted actions and negative publicity leads to reputation risk. And reputation risk manifests when perceptions and opinions are influenced by negative experiences, impressions, beliefs, feelings and knowledge that stakeholders have about a company. It often results in loss of sales, share value decreases and breakdown of relationships.
Companies should be asking themselves about what actions they are taking to protect and insure their good name against all types of crisis – especially those that are sudden, smouldering and perceptual !
More and more companies are finding that their once hidden “smouldering crises” are now becoming fully-fledged combustible crises. (A smouldering crisis is any serious business problem which is not generally known within or without the organisation, which may generate negative news coverage if or when it goes “public” and could result in fines, penalties, unbudgeted expenses or unwanted scrutiny).
The damage of a reputational crisis can be direct and indirect. These costs could include penalties incurred because of a lack of legal compliance, litigation, media conferences and advertising costs and the hiring of crises communication consultants to put forward positive messages after the wrongful deeds. BUT what about the indirect costs, the effects on various stakeholders? The customers that do not return or stakeholders that takes their business interests elsewhere?
I believe that managers have both a professional and a moral duty to try to protect their company’s reputation. The way to minimise their company’s reputational risk is to be vigilant and report anything, which they believe, could erupt into an issue of unwanted publicity and to act to rectify it. But they can only do that if they understand what reputation is all about and how it can be managed and damaged.
I therefore assist companies with minimising and mitigating reputation risk and advise them on how to react and manage any crisis or issue that might destroy reputation, relationships and market share. A large part of my work involves speaking at conferences, capacity building by facilitating workshops around the globe on Reputation, Crisis Management and Crisis Communication response and helping organisations design and implement robust reputation risk management frameworks.
It is my aim with this blog to make management realise why damage to Reputation is the number one risk organisations face worldwide and to assist them to design and implement robust reputation risk management frameworks that will protect against the destruction of this asset.
Numerous studies including the Corporate Risk Barometer survey by the Economist Intelligence Unit have shown that the most significant issues facing business today, are reputational risk (defined as the threat of any event that can damage a company's reputation) and regulatory risk (defined as problems caused by new or existing regulations).
These two risk categories received the highest scores in the Risk Barometer, indicating that they are seen as more significant issues than market risk, foreign exchange risk and country risk by the majority of executives in the survey.
Why should organisations protect itself against Reputation Risk? Unfortunately many companies damage their carefully crafted reputations either inadvertently or through blatant and incredulous acts.
Most of the damage occurs when there is not a careful crafted strategy for building, sustaining and protecting the organisation's biggest risk and asset - its reputation.
The new order of the day seems to be accounting principle restructuring, companies seeking to improve trust building, governance and ethics principles and practices, stakeholders seeking disclosure and shareholders becoming more and more frustrated.
Yet, there still seems to be a general lack of understanding the true value and potential of an organisation’s reputation. And, as long as management do not understand how reputational risk manifests negative articles and doubt about company practices will continue to dominate headlines.
Unwanted actions and negative publicity leads to reputation risk. And reputation risk manifests when perceptions and opinions are influenced by negative experiences, impressions, beliefs, feelings and knowledge that stakeholders have about a company. It often results in loss of sales, share value decreases and breakdown of relationships.
Companies should be asking themselves about what actions they are taking to protect and insure their good name against all types of crisis – especially those that are sudden, smouldering and perceptual !
More and more companies are finding that their once hidden “smouldering crises” are now becoming fully-fledged combustible crises. (A smouldering crisis is any serious business problem which is not generally known within or without the organisation, which may generate negative news coverage if or when it goes “public” and could result in fines, penalties, unbudgeted expenses or unwanted scrutiny).
The damage of a reputational crisis can be direct and indirect. These costs could include penalties incurred because of a lack of legal compliance, litigation, media conferences and advertising costs and the hiring of crises communication consultants to put forward positive messages after the wrongful deeds. BUT what about the indirect costs, the effects on various stakeholders? The customers that do not return or stakeholders that takes their business interests elsewhere?
I believe that managers have both a professional and a moral duty to try to protect their company’s reputation. The way to minimise their company’s reputational risk is to be vigilant and report anything, which they believe, could erupt into an issue of unwanted publicity and to act to rectify it. But they can only do that if they understand what reputation is all about and how it can be managed and damaged.
I therefore assist companies with minimising and mitigating reputation risk and advise them on how to react and manage any crisis or issue that might destroy reputation, relationships and market share. A large part of my work involves speaking at conferences, capacity building by facilitating workshops around the globe on Reputation, Crisis Management and Crisis Communication response and helping organisations design and implement robust reputation risk management frameworks.
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