Reputation Trends for 2017

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January 01, 2017

Reputation Trends for 2017

Here we are at a most pivotal point in America’s history. Donald Trump, perhaps one of the most surprising people to have ever been elected President of the United States, will soon be inaugurated.

For better or worse, the reputation of this nation hangs in the balance. Will America’s reputation be burnished or burned? Hard to say just yet. But one thing is abundantly clear. President Trump is likely to be a sharply different type of President than we are used to. His words and deeds will undoubtedly impact us not just during the next few years, but for years to come. As a businessman, and as someone who has appointed numerous other business people to hold significant posts in his administration, his words and deeds will also impact the reputation of American business and business leaders.

I must confess that as I pull together my reputation prognostications for 2017, I am less than confident that the reputation of American business will fare well during the first years of the Trump administration. Given President-elect Trump’s campaign statements, I expect that at the very least, presidential tone and policy will change significantly over that of previous administrations. Such change is likely to be disruptive even if ultimately beneficial and even if eventually financially-rewarding. Business simply flourishes best in an atmosphere of predictability.

Even though I am fully aware that such expected volatility makes prognostication a particularly hazardous undertaking, I once again offer my crystal-gazing observations for the coming year.

1. CEO Activism Becomes Normalized. Back in 2004, Marilyn Carlson Nelson, CEO of the global travel and hospitality company, Carlson Companies, spoke out against human trafficking. Business colleagues cautioned her against taking this stand because she was “in the happiness business.” Nelson, however, persisted. She argued that Carlson’s resources should be used to fight against child sex trafficking and that the “conspiracy of silence” had to be broken. Businesses, she argued, have to be responsible even on matters that don’t directly affect the bottom line. Carlson was ahead of her time. Today, more CEOs are taking a stand on hot-button social issues that are not central to their business. At Weber Shandwick, we’ve been keeping a list of such bully pulpit CEOs and we’ve seen a steady surge in the past year. Our research with KRC Researchon CEO activism found that nearly four in 10 Americans believe that CEOs have a responsibility to speak up on controversial issues. This is not just an American perception. In new research we will be launching in 2017, a comparable percentage of global consumers and executives report that companies should express an opinion or take action on issues that may be contentious, issues such as race, gender, immigration or the environment. Activist CEOs and their companies are more willing than in years past to speak out in the name of company values, inclusiveness and human decency. As one corporate communicator recently explained, “There is also a price to reputation if you say nothing.” He has a point.

2. Company as Platform. Howard Schultz, CEO of Starbucks, showed up in Rufus King Park in Jamaica, Queens last September to urge people to vote in the presidential campaign. Since when do CEOs pound the pavement to get out the vote? Schultz’s response: “We really think of Starbucks as a platform. He could not be more right. As the founder of this coffee giant and long-time activist CEO, Schultz continues to use his company’s reputational stature to encourage a national conversation about various social issues. Pharmacy giant CVSHealth also served as a platform for national issues when it banned the sale of cigarettes in its stores and then launched Be The First, a five-year $50 million initiative to deliver the first tobacco-free generation. Companies are building their reputations not only by delivering financially but also by taking a stand on public issues.

3. Company as Sanctuary. In many workplaces, people are introduced to diversity for the first time. For many, life outside of work is decidedly less diverse. In research we conducted this year with the Institute for Public Relations (IPR) and KRC Research, we found that more than one-third of Americans (34%) agree that they experience more diversity at work than in other aspects of their personal lives. In effect, the workplace serves as a refuge from divisiveness. Companies, both large and small, bring culturally and ethnically diverse employees together who would never be exposed to one another in their personal lives. They are the modern day melting pots of America. They are sanctuaries where people not only exist together but work together, a form of intermingling and bonding that encourages each employee to recognize the humanity in the other in a more profound way than has yet to be experienced elsewhere. Increased recognition of the workplace as a safe haven where people overcome their differences in pursuit of a common goal might become more widespread in the year ahead and become a new filter upon which employees judge the reputation of an employer.

4. Fake News is Deadly to Reputation. This year, fake news will spread like wildfire, and its impact on brand reputation will be equally swift. The insidious spread of intentional and not so intentional misinformation will destroy more than a few good company names in 2017. A case in point is how a widespread, baseless conspiracy theory motivated a gunman to enter a D.C. pizza restaurant, Comet Ping Pong, and open fire. The shooter said he was investigating online reports that Hillary Clinton’s campaign chairman was involved in a child sex operation. This near-deadly incident demonstrates how fake news may harbor very real and various serious reputational issues. Hopefully, a technological solution will eventually arise to identify and expose news that is unreliable if not outright erroneous. Until then, companies must do what they can to identify such hoaxes and correct the record as quickly as possible so as to mitigate reputational damage. Vigilance in the face of fake news threats will be the watchword for 2017 and may motivate more companies to take on responsibility for telling their own stories.

5. Culture is the Beating Heart. The reputation damage at VW over emission-cheating practices is closely tied to its aggressive management culture, described in The New York Times as “confident, cutthroat and insular.” Failure was just not acceptable even though missteps are all but inevitable today. Not to acknowledge and learn from failure and missteps, however, is the greatest failure of all. Such cultures are not uncommon in business and remind me of a story about a shareholder activist who was finally granted a meeting with a company’s CEO on the 90th floor of a Chicago skyscraper. The person escorting the activist investor reportedly said that this was the first time bad news has made it above the 78th floor. Companies that do not listen, have no empathy, hide problems, and do not learn from their mistakes are at great reputational risk.

6. Employee Activism Intensifies. In recent weeks, two employee incidents startled me. They made me realize that employee activism is more than people poorly rating their bosses on Glassdoor or simply telling friends and family to buy their company’s products or services. Employee activism has gone much deeper. People are more closely identifying with what they see as their company’s values and are internalizing those beliefs. As mentioned earlier, more companies and their leaders are taking stands on social issues. The flip side of such stands is that there will always be those who take issue with them. At IBM, an employee resigned in a public letter to CEO Ginni Rometty because she had offered incoming President Donald Trump “the backing of IBM’s global workforce in support of his agenda.” The employee argued that Rometty was not fully representing all employees. In another incident, an employee at Oracle resignedupon hearing that the co-CEO was joining President-elect Trump’s transition team. He said that his opposition to Mr. Trump’s policies forced his resignation from “a once great company.” Even though 2017 will see more CEOs speaking out on major societal and environmental issues, we should also expect employees and other stakeholders to speak up and hold CEOs equally accountable.

7. Business Needs to Improve its Reputation. Business reputation is at an all time low. As one commenter wrote in response to an article in the Wall Street Journal last summer, “Business is finally getting the kick in the behind that it deserves. They can buy politicians, but they can’t buy the voters who oppose off-shoring jobs in search of low wages…Make no mistake. American business is booming, they just don’t want to share the wealth. The villagers are angry and the pitchforks are out.” Indeed, anger over globalization, tax loopholes and perceived stacking of the deck was a primary motivation for many voters this year. In the face of this discontent, business – and big business in particular – remained largely silent. Business needs to respond and show how it benefits the average American. Unless business connects in a very human way to the lives of its everyday citizens, it will continue its decline in reputation.

8. Shame on Boards. Boards now recognize that preparing for reputation risk is central not only to their companies’ agendas but also their own personal reputations. When companies face reputation-damming scandals, the media and investors investigate individual board members’ expertise and raise doubts over whether board members are asking the right questions to uncover misbehavior. A director who isn’t questioning company conduct and keeps his or her head in the sand risks public shaming and lost professional opportunities. As Nir Kossovsky, CEO and director of Steel City Re, reported in an article regarding the proceedings at the 2016 RIMS Annual Conference and Exhibition, the opportunity costs of public humiliation and its consequences are estimated to average $2 million per director. That’s no small change.

9. Women Leaders Catch the Blame and Still Face a Steep Upward Climb to the Top. Ever wonder why female CEOs don’t seem to catch a break? I do. A new study by the Rockefeller Foundation and Global Strategy Group found that female CEOs were more often blamed for a crisis than were male CEOs. A large 80% of media and digital stories blamed female CEOs while only 31% blamed male CEOs. How are female CEOs to succeed if they are disproportionately blamed for their company’s problems? Why would a woman executive want to be a CEO under these conditions, regardless of how great a reputation she might have? No wonder then that only 21 companies on the 2016 Fortune 500 list had female CEOs, compared to 24 the year before. The goal of the Rockefeller Foundation’s 100X25 program is to produce a 100 female Fortune 500 CEOs by 2025. Commendable for sure, but where are these women to come from? In our own 2016 research, the GFP Index, only 10.9% of senior executives at the world’s largest 500 companies are women. Not one company (0%) had an equal representation of men and women in their top ranks, and nearly 40% had an all-male senior leadership team. If women do not have the training, mentorship and experience of being on the front lines of senior leadership, how will they become CEOs of Fortune 500 companies?

10. Reputation Returns to its Roots. During 2017 and thereafter, corporate narratives that the average person can relate to are likely to increase. Riding the wave of populism sweeping many countries, such corporate narratives will hint at a company’s origins and give voice to local roots and customs. We can therefore expect a de-emphasis by big business of international prowess, such as how many global markets a company is located in, and a re-emphasis on locality such as how a company’s original start lifted up a community economically, culturally and individually. I recall reading, for example, an article in The Economist about how the founder of Unilever, William Lever, regularly slept on his rooftop. When Paul Polman took the reins of the consumer goods superpower in 2009, he spent an evening sleeping under the stars on the very same rooftop in an effort to immerse himself in the company’s origins. During that rooftop slumber, as the story goes, the new CEO decided to proceed one year later with Unilever’s much acclaimed “Sustainable Living Plan” that meticulously measures the company’s positive social impact on society and the world. Origin stories such as this will become increasingly important because they tell a story, provide purpose, connect emotionally, rally cultures and bring giant companies down to a more human, eye-to-eye level.

*****

We clearly have our work cut out for us in the year ahead. The mood of the country is mixed, concern about the future is high, and the roulette wheel of reputation seems to be spinning faster. Business has a big job ahead this 2017.

[posted on LinkedIn 1.01.2017]

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.

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