Ipsos Corporate Reputation

When does reputation turbulence become a full-blown crisis?

In a world of information overload, communications leaders must be able to separate the signal from the noise in order to defend their companies when it matters most.

Communications leaders need the tools to spot a potential crisis amongst the background turbulence, as well as the corporate resilience to weather the storm when it hits.
Experience, internal networks, planning, and measurement & management tools are crucial in separating turbulence from a crisis.
Council members identify two important factors in building resilience: a thorough track record of stakeholder engagement to build reputational strength, and prior planning to understand potential triggers and team roles across the business when an issue arises.

Full-blown crises pose a genuine threat to a company’s continued survival or licence to operate. By contrast, reputation turbulence is an issue, or series of issues, which impacts the impressions of stakeholders without posing a sustained threat to the company.

The number of Council members who believe that every issue must be treated as a potential crisis, until it is proven otherwise.

For the vast majority (79%) of Reputation Council members, being able to differentiate between the two is seen as very (59%) or fairly (20%) useful. The remainder don’t make this delineation. They believe that EVERY issue must be treated as a potential crisis, until it is proven otherwise. But without doubt, communicators have a limited amount of time and resources. They  need to identify and prioritise the emerging issues that matter the most to their business.

Experience, internal networks, planning, and analytics each play important roles in helping to prepare, prioritise, react and regain a state of ‘equilibrium’.

"Our philosophy is to actively manage outside of crisis situations – like engaging in diet and exercise rather than going to shock trauma. You want to know the number for emergency services, but you don’t want to live on a bench outside the hospital. Actively managing in advance means engaging with stakeholders and communities you need in case of a crisis."
IS THE DISTINCTION BETWEEN REPUTATION TURBULENCE AND CRISIS USEFUL TO COMMUNICATORS?
How do you distinguish a crisis from turbulence?

Unilever’s Paul Polman notes that “reputation has a habit of arriving on foot and departing on horseback.” Is it possible for corporate communicators, in the heat of the moment, to distinguish between an emerging crisis and something that’s just background turbulence? A cool head, in-depth knowledge of the business, and detailed data can all help:

Experience

Like much of a communicator’s job, telling the difference between day-to-day turbulence and a business-altering crisis is as much art as science, drawing on both intuition and knowledge built up through years of experience. The key is to have a process in place which ensures that each issue gets due attention and is escalated only when necessary. A common theme among Council members is that it is the role of the communications professional to be the dispassionate ‘cool head’ in the room; one goes so far as to suggest that keeping executives calm and correctly diagnosing a crisis are core competencies of the communications leader.

Understanding

The main filter for determining whether an issue is turbulence or a crisis is its likely impact on the business’s core activities, purpose and values. In order to assess this ‘salience’, Council members say it is important for the communications function to be integrated into the business. The more information it has about operations and leadership, the better it will be at judging the likely impact of an issue. Internal networks which can be leveraged in times of crisis are critical.

Measurement and monitoring

What indicators or early warning systems can communicators draw on to help them make this judgement? While social media and the digitisation of traditional media have greatly increased the volume of turbulence that Council members face on a daily basis, they have also equipped them with more sophisticated diagnostic and predictive tools.

The volume and velocity of ‘noise’ are important; if an issue gains traction over a series of hours, then it is more likely to be heading toward a crisis. But this must be understood in the context of the news cycle, as well as the credibility of the sources and commentators. As one member points out, a big ‘Trump story’ will suck up all of the oxygen that would be devoted to less prominent issues.

An issue that provokes strong stakeholder sentiment will also demand more attention than one that does not. Especially if analysis shows that these perceptions are key drivers of stakeholder behaviour.

"Research, media monitoring, social media monitoring, talking with stakeholders and engaging with them on a regular basis. Doing polling on a regular basis to understand attitudes towards particular issues. Stakeholder discussion groups. To the extent that you can get a 360 approach going, so much the better."
How do you build resilience?

If resilience is the organisational ability to withstand crises, what does it take to become resilient?

"To have resilience, a company has to have a capacity to keep cool. Many issues can be amplified within the company. When a reputational problem appears, people can take this from a very personal side, feel hurt, and subjectivity can make you see a crisis in any turbulence. So, in order to be resilient, it is really necessary to have very well-established processes, but also to count on experienced professionals who have accurate analytical capacity, so that this ‘crisis management team’, with all its expertise, can do the correct diagnostic and convey a certain tranquility."

Building reputation strength before a crisis

Across geographies, Council members agree that building a solid reputation through a track record of stakeholder engagement is the best way to build resilience. This provides a thorough understanding of what drives your reputation, which issues are important to stakeholders, and which communications and initiatives are most effective.

"Our CEO is always talking about something that Steve Jobs told him; he said he broke it down and made it very simple. What you do is either a brand deposit or a brand withdrawal, and you need to have a lot more brand deposits than brand withdrawals. And the simplicity of that is, the consumer will give you the benefit of the doubt if you have been making consistent brand deposits."

It’s often said that you can’t communicate your way out of a crisis that your behaviour created. Reputation resilience means that corporate communications must be genuinely aligned with behaviour, both within and outside the business.

Planning

The second essential requirement for resilience is prior planning. Council members are united in the belief that thorough analysis and planning can not only enable a business to weather a crisis, but also to emerge from it stronger. Members highlight several important elements of planning:

  • Triggers

    To anticipate potential crisis triggers, connectivity with business lines is key. As one communicator put it, “crises are caused by operations, not by communications.” Access to data is critical. But at the same time, members emphasise the need to communicate internally; keeping internal audiences informed can help keep pressurised situations from spilling over to external audiences. Internal and external networks will be precious if a crisis hits.

  • Teams

    In a crisis, everyone needs to understand their role. Communicators need to be able to execute the plan in a dispassionate manner.

  • Practice

    The ability to keep a cool head comes from multiple rounds of practice. All of the planning needs to be pressure-tested so that when a true crisis hits, it’s second nature.

Ultimately, the ability to weather a crisis is significantly linked to prior preparation. This preparation comes from a total business perspective of building reputation resiliency beforehand, as well as within the corporate affairs department in building networks and plans, and making sense of data. Communicators’ hard-won knowledge and experience is key here. Those who are best equipped will have the strongest chance of identifying and weathering reputational crises.

"Having plans of action against specific negative events, as well as being able to manage difficult situations with clarity of mind and rationality, are strategies for building resilience. Never overlook signals, even those that appear insignificant or negligible."

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018.

Read more from the Reputation Council...

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The AI Paradox: Businesses must not overlook their responsibility to reputation as investment in this technology grows

Digital technologies, from social media to Artificial Intelligence (AI), have undoubtedly altered peoples’ lives – some for the better, some for the worse. We’ve seen the rise of intelligent assistants like Siri and Alexa, grown reliant on communication platforms to keep in touch with friends and family, and have witnessed the positive impact of wearable technology in healthcare.

According to a 2017 PwC report[1], AI technology could deliver a 10% increase in the UK’s GDP by 2030, provided that different types of AI technologies are invested in. To nurture this potential, in early March the government outlined a plan to position the UK as the global leader of artificial intelligence[2]. The plan incorporates investing in R&D, helping people develop skills for the new age of AI, and supporting sectors in boosting their use of AI and data analytics technologies. The hope is to create resilience among the UK’s workforce as the use of AI becomes widespread across sectors and helps boost the economy.

The indication that AI is the future is evident among business leaders too. In a recent study by Ipsos, the authoritative Captains of Industry, three in five stated they have already invested in digital technologies such as machine learning and artificial intelligence. Another third plan to invest in the next five years, as businesses prepare for the utilisation of AI technologies, align with government priorities, and foster the potential for economic growth – especially in a post-pandemic world

However, while the benefits that could be reaped from digital technologies are limitless, it doesn’t come without its challenges. In an Ipsos poll published by the World Economic Forum, four in ten adults across the world said they are worried about the use of artificial intelligence, and nearly half of adults globally agree that the use of AI by companies should be regulated more strictly than it currently is[3]. In another poll, less than one in five adults in the UK believe their job will be automated in the next 10 years, and almost four in five feel confident they already have the skills to carry on with their current employment in the future – contrasting senior leaders’ perspective of digital technologies potential.

While government and businesses are working toward unlocking AI’s potential, efforts will need to be put in place to convince employees of AI’s positive societal impact, the need for upskilling, and the benefits it could bring to jobs in the UK. Uplifting the reputation of AI and automation will need to be at the forefront of the government’s transformational strategy – especially as trust in the sector[4] hit an all-time low in 2020, according to the Edelman Trust Barometer.

Companies such as Microsoft have already taken some steps toward convincing the public in their efforts toward responsible technology by publishing six ethical principles to guide the development and use of artificial intelligence[5], with focus on working closely with employees and teams across the company to enable this effort. The government is also taking steps on this by launching an independent Centre for Data Ethics and Innovation that will advise on the ethical use of data, ranging from evaluating its social and economic impacts through to its fair and responsible application across businesses.

These efforts are a step in the right direction. Digital technologies are notorious for their fast evolution, with policies and regulations coming too late to resolve issues that have already left a negative mark on society and employment. Governments, businesses, and industry experts will need to work coherently and transparently when implementing AI, and work toward foreseeing issues with its implementation before they happen.

Building trust with the public will be key, alongside convincing the UK workforce of the benefits for upskilling, with a focus on fully communicating how utilising digital technologies would affect society and employment, both positively and negatively. Turning the UK into a global AI leader will be a challenging endeavour, but as long as we remember that having the capability to create technology is not all it takes for its success, realising all of its social and economic benefits are very much within our grasp.

Article links

[1] https://www.pwc.co.uk/economic-services/assets/ai-uk-report-v2.pdf

[2] https://www.gov.uk/government/news/new-strategy-to-unleash-the-transformational-power-of-artificial-intelligence

[3] https://www.ipsos.com/en-us/wef-artificial-intelligence-press-release

[4] https://www.linkedin.com/news/story/were-losing-our-trust-in-tech-5042340/

[5] https://www.microsoft.com/en-us/ai/responsible-ai?activetab=pivot1:primaryr6

For more information please contact:

Nadya Valkova
Research Manager, Corporate Reputation

Nadya.Valkova@Ipsos.com

What drives judgement of an organisation’s reputation?

An important focus for Ipsos Corporate Reputation is to help our clients understand what drives their reputation, in other words, what are the issues stakeholders think about when they make judgments about companies and organisations. In this article we will show what are the key aspects organisations should be mindful of according to MPs and business journalists who we regularly interview.

What exactly drives reputation will vary from one organisation to another – there isn’t a single, off-the-shelf answer to this. Feeding into an organisation’s reputation will be elements of what it does (for example, product quality and innovation), what it stands for (such as business acumen, ethics, corporate social responsibility and ESG performance), expectations and perceptions of the sector it’s in, expectations of business and industry, and other wider context issues. Furthermore, an organisation’s delivery against its corporate promise needs to match or exceed the expectations it creates.

There will be many tangible benefits that an organisation gets from building reputation value. It will, for example, help ensure your point of view is heard in policy making and regulation, make stakeholders more receptive to communications, build resilience to draw upon during times of crisis, and strengthen your employer brand.

Factors shaping reputation will vary from company to company, as reputation isn’t formed in a vacuum. It is shaped by perceptions of the sector, by the ongoing socioeconomic climate and policy agenda, as well as the behaviour, performance and communications effectiveness of a company. However, MPs and journalists have told us which issues they tend to consider when they from opinions about companies and organisations, which we’ll discuss here.

The most common consideration for business journalists when judging an organisation tends to be its financial performance. Often, this is seen to be a hygiene factor which an organisation needs before it can start to credibly engage with other issues. As one national business journalist states;

“If you haven't got that [financial performance] you can't do anything else. If you're not a viable business nothing else really matters. You can be as nice as you like to everyone else but if you're going to go bust, there's no point.”

Other common considerations today among business journalists include quality of management, treatment of customers, treatment of employees, and how it engages with journalists.

Journalists tell us that there are three key benefits for an organisation from engaging well with them; it allows journalists to get an organisation’s message across in the pieces they write, it could position an organisation in a more favourable light, and it helps journalist to report more accurately and less one-sided. As a regional business journalist explains;

“You're never going to stop bad headlines if things go badly but engagement on a number of specific issues such as remuneration, climate change, you know if I have a full understanding of a company's policy and why it's doing something, I'm much less likely to shot from the hip. If I have a full understanding of that company's strategy and why something has happened, I'm probably going to have a more holistic, a fuller appreciation of what that is rather than just writing "This is a bloody disaster"”

Indeed, between 2015 and 2017 we saw that engagement with journalists rose in importance as an important factor (see illustration below), and it has maintained its importance ever since. It’s also interesting to note how treatment of employees has become an increasingly important factor for journalists; as Covid-19 lockdown restrictions start to ease and companies announce their plans for their employees (a return to office working or a continuation of remote, flexible or hybrid working), companies need to be mindful of how their demands of employees might be perceived and how this might impact on their reputations.

Meanwhile, the factors that MPs most commonly consider when judging organisations are treatment of employees, track record, financial performance, social responsibility and environmental responsibility.

When asked to rate each aspect in terms of importance, treatment of employees has over time continuously been rated as an important attribute by MPs, while social and environmental responsibility is becoming increasingly important:

However, which aspects are of most importance does to some extent depend on which side of the House an MP sits on.

For Conservative MPs, a company’s track record and financial performance are the key considerations – and financial performance is far more commonly mentioned by Conservative MPs than Labour MPs. As one Conservative Backbencher states;

“Longevity is important, successful track record in either financial terms or stuff they sell or market. The reality is you don't really know about their CSR. The brand reputation is hugely important.”

Meanwhile, the key aspect for Labour MPs is treatment of employees (a far greater consideration among Labour MPs than Conservatives), followed by social responsibility. As one Labour Shadow Minister sates, the way a company treats their employees can be seen to be a reflection of the wider ethos of a company;

“First and foremost, in terms of the management and the whole ethos, the way they treat their employees… how employees are treated is very important to me, are they on proper contracts, are they paid properly, do they have security of employment, do they have things like pensions.”

In line with the views of Labour MPs, our most recent wave of the Reputation Council showed that corporate communicators commonly view employees as a stakeholder group which is increasingly influential on company reputations (legislators, such as MPs, are also seen to be increasingly influential by corporate communicators). Employees are no longer an afterthought for corporate communicators and are increasingly treated “much more seriously as a sophisticated stakeholder audience” and a trusted and credible source of information about a company.

Once organisations understand how key stakeholders form their opinions of them and their competitors, and how they perform against these criteria, they can then put plans in place to target communications more effectively – as well as identifying how (and if) an organisation needs to ‘course correct’ to deliver against stakeholder expectations. In terms of planning a communications strategy, further insight on how best to engage with MPs can be found in our recent post: Creating relevant and engaging comms with MPs for effective corporate planning.

Ipsos MORI can help you better understand what drives opinions about your organisation among various stakeholder groups, and the steps you need to take to bolster the way you are perceived to perform on those key attributes. We provide tailored advice through bespoke research and/or through our syndicated stakeholder surveys among legislators, journalists, business leaders and investors.

Want to know more about our MPs and Business Journalists syndicated surveys (or our wider bespoke surveys)? Get in touch with Ipsos MORI….

For more information please contact:

Guto Hunkin
Associate Director, Corporate Reputation

Guto.Hunkin@Ipsos.com