A study into what organisational reputation is, what threatens it, how it can be measured, managed and protected and how particular companies have responded to a reputation crisis. Researched and written as part of the Chartered Institute of Public Relations' Chartered Practitioner scheme.

1. The Reputation Challenge
The role of public relations in managing organisational reputation
CIPR CHARTERED APPLICATION STAGE 2
December 1, 2010
By: Jon Clements

2. The Reputation Challenge 1
“O, I have lost my reputation! I have lost the immortal part of myself and what
remains is bestial…” (Cassio in Shakespeare’s Othello, c.1602)
Introduction
As the quotation from Shakespearean tragedy, Othello, suggests, the value of a sound
reputation – and the impact of its loss - cannot be underestimated, be it on a personal or
corporate level.
In a year rife with organisational reputation challenges – the BP Deepwater Horizon oil
spill, Toyota’s international recall of cars following a safety issue and the mid-air explosion
of a Rolls Royce aircraft engine, to name a few – a critical question remains: have
organisations learned from their own and others’ experience by placing a value on, and
managing effectively, their reputation?
There’s no shortage of learning materials on the topic: numerous examples of both good
and bad practice going back several decades, a wealth of insightful and instructive
literature, increasingly professional counsel from the public relations community and a
developing opportunity to engage with stakeholders via social networks. However, even
organisations with reputations of the highest order – and their most senior executives -
have demonstrated decidedly mixed abilities when tasked with protecting their greatest
strength.
This study will consider what organisational reputation is, what threatens it, how it can be
measured, managed and protected and how particular companies have responded to a
reputational crisis.
As an organisation’s reputation is not the sole responsibility of public relations
practitioners, why should it matter to us and be a consideration of paramount importance
to Chartered-level PR professionals ? As PR Week editor, Danny Rogers, says in the 25
Years of PR Week supplement (p.3, Sept 2010):
“Finally the argument has been won. Reputation is the biggest asset an organisation or
individual has. And, if communication is poor or reputation neglected, all other
achievements fall by the wayside.”

3. The Reputation Challenge 2
What is organisational reputation?
Discussion of reputation as a great but intangible and immeasurable asset should be
relegated to the dustbin of history.
And those organisations that renege on their responsibilities to earn and maintain a solid
reputation should wonder why their prosperity is inhibited, stalled or destroyed
altogether.
As Ronald J Alsop asserts simply, “Reputation Capital” is “like opening a savings account for
a rainy day” (p.17). Quoting Bill Margaritis at FedEx, Alsop emphasises that “a strong
reputation is a life preserver in a crisis and a tailwind when you have an opportunity”
(p.17)
The term reputation capital was used also by Gary Davies, Professor of Strategy and
Director of the Reputation, Brand and Competitiveness research group at Manchester
Business School, in 2003 when he placed reputation alongside other assets, lower capital
costs and human intellectual capital as drivers of corporate competitiveness.
When managed well, reputation capital helps create a “corporate personality” that breeds
satisfaction and loyalty among employees and customers and has a direct link to both
turnover and sales, says Davies (foreword, xi).
In its report of November 2010, the Chartered Institute of Management Accountants aligns
reputation with “increased employee morale and productivity leading to greater
shareholder value and broader market opportunities” (key findings, p.1) and attributes it
with a “cash value in the short and long-term” (introduction, p.2). Report author, Leslie L.
Kossoff, also seeks to distinguish the development of corporate reputation from brand
building. While a “brand” is the organisation’s public face, reputation is “the internal
execution that creates the external image” (p.2) and is the real reason people choose to
continue doing business with you, or not (p.3).
And yet, while reputation management is central to the success or failure of a brand, the
relative level of interest in addressing the former versus the latter appears unbalanced: a
snapshot from Google Trends showing the volume of searches for each term suggests that
“brand building” remains the higher concern on the agenda:

4. The Reputation Challenge 3
Fig.1 Google Trends showing search volumes for “brand building” and “reputation
management”.
Reputational risk
So, if reputation has a tangible relationship with the fortunes of an organisation, how
serious a risk is reputational threat? The verdict from commentators is unequivocal:
Kossoff, alluding to certain organisations’ recent experience, says that “hard hit
reputations…all had financial implications for the companies involved – and their
shareholders” (p.2) Alsop comments that “reputations can be lost in a flash” (p.19) and
Leslie Gaines-Ross, quoting from Peter Firestein goes even further: “a risk to its reputation
is a threat to the survival of the enterprise” (Intro, xvii).
While high profile examples of corporate reputation meltdown pre-date the Millennium –
such as the Exxon Valdez oil spill in the 1980s and the scandal of compensation for victims
of the sedative drug, Thalidomide – the organisational duplicity since the turn of the new
century has created what Gaines-Ross calls a “new genre in the reputation field” (Intro, xii).
The Enron scandal and the bursting of the dotcom bubble in the early Noughties were
defining moments after which a “new language and discipline” entered the rubric:
“reputation recovery” (Gaines-Ross, xii).
Speaking about executives of “good repute” as being “rather lonely these days”, Alsop says
their more venal colleagues “lived for today and destroyed their corporate reputations”
(Alsop, xi), while Griffin describes companies as being on a “perpetual collision course with
the world at large” (Intro, p.5) and experiencing a poor return on reputation management.

5. The Reputation Challenge 4
The resultant level of trust in business and business leaders has suffered as a consequence:
Griffin quotes an Institute of Business Ethics Survey from 2007 in which 70 per cent of
British people consider business leaders “liars” (Intro, p.5). Last year, an Ipsos Mori Poll –
in the wake of the “Credit Crunch” – ranked business with its lowest net trust score since
the poll began in 1983 (Guardian, 27 Sept 2009). Trust in politicians fared no better
following the Parliamentary expenses scandal, with the same poll revealing them as “least
likely to tell the truth.” In December 2010, the British Social Attitudes Report revealed that
trust in banks had dropped from 90 per cent in 1983 – when their reputation for being well
run and managed was higher than the BBC and the police – to 19 per cent today, a lower
score than the media or trade unions (The Independent, 13 December 2010, p.7).
With such little reputational “credit in the bank”, organisations today are even more
vulnerable when their actions are held up to examination. And the scale of scrutiny that
faces them has never been more overwhelming. Twenty-four hour news provides an
insatiable outlet while the “army” of what Gaines-Ross calls “Reputation Snipers” (Intro,
xvi) are ready to expose the truth behind an organisation’s carefully-crafted corporate
veneer.
In this context, journalists make no bones about their modus operandi. The Times’ home
editor, Martin Barrow, told a PR Week crisis communications event: “If we know you’re
lying, we will work extra hard to ensure we expose you and your company” (www.pr-
media-blog.co.uk, 27 Nov 2008).
And while the more ethical elements of the Fourth Estate continue their work to uncover
corporate sharp practices, it is the unregulated and ungoverned mass of internet users that
has added to the pressure on those in authority. Firestein calls it a “public super-
consciousness”, with access to a plethora of online channels, including blogs, micro-blogs,
video sharing and social networking platforms such as Facebook.
Gaines-Ross says: “The internet has leveled the playing field between large corporations
and individual activists. Although some antagonists are truthful, not all of them are. Often
their diatribes are only partly true; sometimes they are entirely, demonstrably false. Those
who take on large companies single-handedly are almost always highly emotional, if not
irrational. And business leaders have no advance notice or time to reflect” (Harvard
Business Review, December 2010).
But the reputational threat from seemingly hysterical, but often unfocused, private citizens,
pales next to that posed by the Wikileaks phenomenon.
At the time of writing, Wikileaks’ publishing of confidential, US Government diplomatic
cables is shredding the reputations of politicians worldwide. However, there is allegedly
more in store, and this time Wikileaks has the corporate world in its sights.
As E.R. Boyd describes, Wikileaks has a “treasure trove” of private company documents
ready to release and summarises the threat this poses to all organisations:

6. The Reputation Challenge 5
“When an employee can walk out of the door with gigabytes of data on a thumb drive, the
likelihood that your company gets hit one day just got that much larger”
(Fastcompany.com, 2 Dec 2010).
And the threat can have a tangible impact on a company’s fortunes by virtue of rumours
circulating even before full disclosure of facts. According to Jim Nichols, the mere
suggestion that Wikileaks has a 5GB hard drive from the Bank of America has “caused the
bank’s stock to drop more than 3%” (Forbes.com, 1 December 2010), placing its reputation
in “digital freefall”.
Yet, in the face of such threats, companies don’t appear sufficiently match fit to respond. A
Harris interactive poll showed only nine per cent having crisis protocols in place (E.R. Boyd
in Fastcompany.com, 2 Dec 2010).
Regester and Larkin highlight the likely outcome of such unpreparedness in a crisis: “If a
company is seen to be unresponsive, uncaring, inconsistent, confused, inept or unable to
provide reliable information, the damage inflicted on its reputation will be lasting – and
measurable against the bottom line” (Kitchen, 1997: p.215).
If a company is to recover its reputation following a crisis, it needs to be ready for a
campaign lasting not months, but years. Gaines-Ross estimates that corporate reputation
takes, on average, four years to rehabilitate (Intro, xvi).
But then, if the reputation is not rebuilt on firm foundations, there is a chance the
organisation will cease to exist. As Phil Stott comments, the power of Wikileaks may mean
“taking the unethical players out of the equation and allowing ethical companies to
prosper” (Vault.com, 3 Dec 2010).
Public relations practitioners of the highest level – accomplished in managing crises in
which the media is the principal focus - need to be recalibrate their approach and coach
their teams to respond to the changing nature of the reputation challenge; one that is often
no longer mediated, but a direct dialogue between an organisation and its audiences - and
increasingly on the audiences’ terms.
Measuring organisational reputation
To reiterate, the value of a strong corporate reputation is both tangible and measureable. It
attracts customers, investors and talented employees, leading to higher profits and stock
prices (Alsop, p.10). It also, as Alsop opines, gives a “halo effect”, building trust and giving
organisations “the benefit of the doubt during rocky periods” (Alsop, p.10).
But how – and when - should an organisation accurately assess and monitor the state of its
reputation? Alsop says “you can’t manage what you can’t measure” and implores
companies to measure not only when they’re in trouble but consistently, over time (p.25).

7. The Reputation Challenge 6
The international Reputation Institute, positions itself as “devoted to advancing knowledge
about corporate reputations and to providing professional assistance to companies
interested in measuring and managing their reputations proactively”. Its RepTrak™
measurement tool claims to provide a measure of reputation across 23 corporate
attributes. But not all are convinced by such an approach: “Convoluted and completely
unhelpful” says Anne Gregory (p.13), who prefers the close analysis of case studies
involving organisations where reputation was damaged. She also references lists such as
Forbes Most Admired Companies as more salient guides to reputation.
Alsop is circumspect about the “beauty contest” rankings of published customer
satisfaction surveys, though supportive of the Harris Interactive Reputation Quotient
measure – until 2005 a joint enterprise with the Reputation Institute. But what he does
recommend is companies commissioning bespoke research focused on factors relevant to a
particular organisation (p.27).
Once there is a clear understanding of where a company’s reputation stands – and there is
accountability for maintaining or improving that reputation – then it can be managed.
Quoting from Mark Bain, vice president of corporate communications at Alticor, parent
company of US direct selling operation, Amway, says: “If reputation is part of a
department’s plan…it will get focus and attention. (Alsop, p.28).
Managing and protecting organisational reputation
The BBC’s director of communications, Ed Williams, told the Public Relations Consultants
Association conference, “Emerging from Recession”, that the way organisations build public
confidence and rebuild reputation could be summed up in one word: openness (http://pr-
media-blog.co.uk/are-you-a-trustworthy-business-then-say-it/12 Oct 2009).
Clements, in the blog post “Are you a trustworthy business? Then say it!” (Ibid.) says: “It’s not
always possible to tell a happy story each time your organisation speaks…it could include
having to apologise when your business has messed up. Being proud and vocal about your
achievements while maintaining transparency about your shortcomings is all part of
building trust.”
In the work I’ve done over several years helping to prepare company executives for dealing
with the media – more commonly known as media training – I’ve aimed to ensure that the
learning gained is not solely about performing effectively in a journalist interview and
delivering well-rehearsed key messages; it is, more importantly, an exercise in developing
reputation management skills and recognising that willing and able spokespeople are
entrusted with the company’s reputation every time they address an audience of
stakeholders.
We have the former Labour Government and its communications team to thank for helping
the term “spin” to enter the corporate lexicon and be used with such ubiquity.

8. The Reputation Challenge 7
Even at the most innocent level of companies’ new product launches, I have had to
discourage corporate communicators from exploring ways of “spinning” their story.
Recognising the value of reputation against the risk of spin enables businesses to embrace
impartial advice about reputation management. Firestein says: “Becoming a participant in a
dialogue enables the company to exert an influence that it could never achieve as a mere
transmitter of spin” (pp.20-25)
And this can involve overcoming their perceptions of a supposedly malevolent media, hell
bent on doing them harm, misquoting their representatives and misrepresenting their
activities. On the contrary, companies attentive to their reputation with the media should
have nothing to fear and everything to gain.
So, how does an organisation instil a culture – or at least a robust operational approach – of
reputation management?
R.F. Owen places the public relations function alongside the Chief Executive Officer as
principal managers of corporate reputation because “[the CEO] is the public guardian of the
company’s reputation and…must be deeply concerned with and closest to the public
attitude towards the company” (p.61). Interestingly, Owen committed this view to paper in
1964.
Firestein updates that view, saying: “If you’re a CEO, developing a solid corporate
reputation – and repairing it when necessary – is Job One” (p.13). Alsop puts figures on the
CEO factor in reputation management, referencing a Burson-Marsteller survey which
showed a 40% increase over six years in those who believed a company’s reputation was
attributable to that of the CEO (p.11). Quoting Gaines-Ross, Alsop calls the CEO: “The
embodiment of the brand and the official storyteller” (Ibid.).
Therefore, being close to the CEO should be the essential role for corporate communicators
– either in-house or in agency – to help the most senior organisational spokespeople
manage and protect reputation. As Gregory puts it, “for many public relations
professionals, a sign of having ‘arrived’ is obtaining a ‘strategic’ role by having a seat on the
board” (p.48).
More than that, having PR represented in a senior management role is testament to the
organisation acknowledging that it has a strategic importance. Gregory adds: “By knowing
stakeholders well and what motivates them…the PR professional can bring an invaluable
perspective to management thinking” (p.54).
But there needs to be caution when selecting who speaks publicly for the organisation, as
this can have a direct impact on reputation. While the professional communicators may be
the most capable (and not all CEOs are), this could be seen as allowing real decision makers
to hide behind the corporate message machine. PR Week’s Danny Rogers illustrated this
problem with reference to Toyota communications chief, Scott Brownlee’s prominence in
the media following this year’s major recall incident.

9. The Reputation Challenge 8
He says: “There is some doubt about whether it enhances the reputation of organisations
themselves. Ultimately, the media and the public expect the power behind the organisation
to show his or her face and take full responsibility” (PR Week, Opinion, 10 Feb 2010).
While the CEO may be the one who has to face the music publicly, it should be a
combination of managers and their departments behind the scenes who have developed
the necessary action plan to implement once a reputational crisis strikes.
In larger organisations, this may cut across marketing, sales, customer service, the
technical department and compliance; each prepared to ensure a seamless flow of factual
information when the organisation is under pressure to produce it.
Boyd cites the need for scenario planning, risk assessment and developing action plans that
are: “a core operational function, not just an afterthought left to the PR department”
(Fastcompany.com, 2 Dec 2010). Nichols focuses on the need for speed, where
organisations need to “ensure their side of the story is frankly represented” but warns
against an “outsized show of force” Forbes.com, 1 December 2010).
The wisdom of this advice was evident in the example of a client that was about to embark
upon legal action against an online forum set up by disgruntled customers. Spotting the
potential for “David and Goliath” headlines – not least as the customers had a genuine
grievance – we counselled the client to engage with their detractors in the full spirit of
openness. The net result included previously aggrieved customers getting their cases heard
and being converted to supporters of the company’s approach online.
In this example, the crisis had precipitated the first instance of engagement in a public,
online forum between the company and its customers. Ideally, organisations should be
proactively creating and building their presence online – within owned or earned media
platforms – as part of their reputation management plan. If this is not already underway
and a crisis erupts, it places the organisation in a dangerous learning curve and playing a
game of catch-up when its reputation is on the line. Nichols favours building “an engaging
and interactive digital presence to gather ‘fans’ who will help defend your reputation when
under fire”.
However, if communications are to be effective, they need to be supporting a genuine
business response to a reputational threat. In other words, what is being conveyed to the
world at large should mirror clear restorative actions being taken by the organisation. As
Firestein comments: “Narratives cannot work unless they reflect some fundamental
reality. If they don’t, the truth will emerge over time anyway and then the damage may be
virtually limitless” (p.24).

10. The Reputation Challenge 9
Reputation management in practice - the bad…
Toyota
Former Toyota president, Fujio Cho, was quoted in 1999 saying: “We will not be caught off-
guard” (Gaines-Ross, p.139) And he had every reason to be believed, with the “Toyota Way”
management principles focused on fixing production line problems without hesitation. But
reputation management is a constant journey and commitment, as the company
experienced at the start of 2010.
Kossoff describes how the company’s strategy change to become the largest car maker in
the world had affected its renowned reputation for quality (case study, p.6). When the
potentially fatal problems with vehicle braking systems came to light, the company’s speed
of public response was woefully slow.
Furlong PR’s case study on the Toyota recall shows how the company’s video apology,
coming two weeks after the announcement, was criticised in the USA for being “too late and
too centralised”. It also highlights some of the market share fall-out, with competitors
“conducting opportunistic marketing campaigns to woo disgruntled Toyota customers”.
(Furlong PR.com, 2 Feb 2010)
The financial result was a 20 per cent loss in market value in the two months after the first
recall was announced (Kossoff, p.6). Presciently, Alsop – quoting a Stanford University
study – said that companies known for reliability – “such as Toyota” – are particularly
affected by “market share drops following recall announcements” (p.13).
As the Toyota example shows, even the most stringent management standards cannot
prevent every potential problem and the response to a reputation crisis – while the
organisation is at its most visible and vulnerable – is critical.
Rolls Royce
When a Qantas A380 Airbus was forced to make an emergency landing after one of its Rolls
Royce engines caught fire in mid-air, the response from the manufacturer was said to “have
a whiff of BP about it”, referring to the company’s communications in the wake of the BP oil
spill in the Gulf of Mexico.
Lewis PR COO, Paul Charles, said Rolls Royce’s post-event statement left more questions
than answers, such as how long the inspection process would last and how long the Airbus
planes would be grounded (PR Week, 12 November).
Similarly, the speed of public response by the CEO, Sir John Rose, came under fire. His first
comments came eight days after the incident and though the company’s share price went
up by five per cent as a result, more than £1bn had already been taken off its value (The
Independent, 18 November 2010, p.41).

11. The Reputation Challenge 10
Business editor of the The Daily Telegraph, Alistair Osborne, commented: “You’d think it
[Rolls Royce] would try to engage a little more with the ultimate consumer – the people
who catch the planes” (telegraph.co.uk, 12 Nov 2010).
PR Week editor, Danny Rogers, described the company’s social media nous in the context of
the crisis as “sluggish and out of touch” and that – along with an operational review – Rolls
Royce required an “intensive reassurance campaign” with detailed and transparent
communications across traditional and digital media” (Travolution.co.uk, 16 November
2010).
Reputation management in practice - the good…
Kellogg’s
Faced with accusations from the Channel 4 programme, Dispatches, about high sugar and
salt content in cereals, Kellogg’s Manchester-based PR team turned to online and social
media to redress the balance of opinion.
It posted information on its own website – featuring input from its head of nutrition –
giving its views on the subject and using Twitter to provide a real-time, background
commentary while the television programme was being aired.
Communications Manager, Paul Wheeler, said: “With digital PR and social media, the
contact is directly with the consumer, not via the media. We received a lot of positive
feedback after the Dispatches programme for being open, honest and providing timely
information” (North West Business Insider, August 2010, p.32).
Conclusion
It’s beyond the expectations of the media and the public that organisations remain
continuously flawless in their activities and operations. Life is simply not like that. Yet,
when things go wrong, the ultimate test of reputation management is learning from
mistakes and putting them right to the satisfaction of all stakeholders.
Yet there still seems to be a reticence among some organisations to engage fully and
promptly when required to do so. If this is founded on a belief that refusing to engage with
the media or individuals in a social network starves a story of oxygen, then they should
think again.
On the contrary, the world beyond the company walls tends to become ever more
aggrieved at the arrogance of corporate silence and more determined to make companies
account for themselves. Silence merely raises more questions about the organisation’s
integrity.

12. The Reputation Challenge 11
Firestein notes that this “resulting lack of transparency prevents investors…developing the
clear definitions of the company that engender confidence” (p.17).
Gaines-Ross, quoting from Marks & Spencer’s then-CEO, Stuart Rose, says: “Reputation
recovery is an epic voyage full of courageous daily actions and deeds that never truly slay
the twin dragons of doom and gloom” (p.135).
And it is at the CEO level that senior communicators need to engage to ensure effective
reputation management. As CIPR president, Jay O’Connor, wrote recently: “Excellent
planning, monitoring and building a trusted relationship with the board will help
organisations respond well in times of crisis, helping the organisation to retain and regain
reputational capital.”
JON CLEMENTS
December 2010

13. The Reputation Challenge 12
Bibliography
Alsop, Ronald J; The 18 Immutable Laws of Corporate Reputation, 2004.
Boyd, E.R.; Fastcompany.com – 2 December 2010.
Davies, Gary; Corporate Reputation and Competitiveness, 2003.
Firestein, Peter; Building Corporate Reputation in the Age of Skepticism, 2009.
Furlong PR; furlongpr.com, 2 February 2010.
Gaines-Ross, Leslie; 12 Steps to Safeguarding and Recovering Reputation, 2008.
Gregory, Anne; The Public Relations Handbook, 2004.
Griffin, Andrew; New Strategies for Reputation Management, 2008.
Kitchen, Philip J; Public Relations: Principles and Practice, 1997: p.215.
Kossoff, Leslie L; Reputation – why it matters and how you can manage it, Chartered
Institute of Management Accountants, November 2010.
Moore, James; The Independent, 18 November 2010: p.41.
Nichols, Jim; blogs.forbes.com – 1 December 2010.
O’Connor, Jay; cipr.co.uk, President’s Blog – 15 December 2010
Osborne, Alistair; telegraph.co.uk, 12 November 2010.
Owen, R.F.; The Handbook of Public Relations, 1963; p.61.
Rogers, Danny
- 25 years of PR Week supplement, September 2010
- PR Week, 10 February 2010 – Opinion
- Travolution.co.uk, 11 November 2010
Stott, Phil; Vault.com – 3 December 2010: Why Wikileaks will lead to better corporate
behaviour.