My Thoughts on McKinsey’s Rebuilding Corporate Reputations

June 09, 2009

My Thoughts on McKinsey’s Rebuilding Corporate Reputations

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Where do I start?  Several people sent me a copy of the recent McKinsey Quarterly article on Rebuilding Corporate Reputations.  Its sub-headline read, “A perfect storm has hit the standing of big business. Companies must step up their reputation-management efforts in response.”  Sounded like a home-run article to me.  It was already in my inbox because I subscribe but I had not had a chance to read it. My heart sank thinking that McKinsey had come up with the perfect strategy for rebuilding reputations and that all my advice and research in this area was for naught.  I Twittered the article on my ReputationRx Twitter saying that here’s an article that had to be read. After all it was from McKinsey which I greatly admire and religiously read. Soon enough I began reading the article. I stopped in my tracks. I deleted my Twitter instantly.
There are two major problems with this article.

First, the authors misunderstand the business of public relations.  A few select quotes from the article reflect a misunderstanding about the business of public relations when it comes to reputation-building.

“Now more than ever, it will be action—not spin—that builds strong reputations. Organizations need to enhance their listening skills so that they are sufficiently aware of emerging issues; to reinvigorate their understanding of, and relationships with, critical stakeholders; and to go beyond traditional PR by activating a network of supporters who can influence key constituencies.”

“Moreover, traditional PR spin can’t deal with many NGO concerns, which must often be addressed by changing business operations and conducting two-way conversations.”

“Reputations are built on a foundation not only of communications but also of deeds: stakeholders can see through PR that isn’t supported by real and consistent business activity. Consumers, our research indicates, feel that companies rely too much on lobbying and PR unsupported by action.”

Authors’ Sheila Bonini, David Court and Alberto Marchi are under the general impression that PR practitioners actually believe that reputations can be built on words, not deeds or action. This could not be farther from the truth. In addition, the authors imply in several sentences that PR is only about the one-way conversation, not the two-way dialogue.  Again, far from the truth.  Public relations has always been about the art of conversation with and perceptions of one-to-one or one-to-many stakeholders. The business has always been about developing relationships with many publics, no matter how small, how large or how hard-to-reach.

The second argument I have with the article’s direction is its premise that there are three new ways to manage reputational threats in uncertain times. They are 1) understanding key stakeholders and what matters to them (e.g., benchmarking competitors, quantitative research); 2) being transparent and action-oriented (e.g., more business activities, less lobbying); and, 3) engaging a wider portfolio of influencers through a variety of means to spread word of mouth (e.g., grassroots, partnerships with NGOs). These are good strategies for advising companies and their leaders about restoring and rebuilding reputation. No doubt about it.

These practices, however, are all commonplace in the public relations domain and have been for many years now. In fact, I would argue that this has always been the business of public relations – understanding a company or organization’s many publics, researching stakeholders on perceptions and concerns, getting the true story out, changing corporate behavior by doing the right thing, and engaging influentials in conversations that lead to deeper understanding.  These recommendations are part of the everyday toolbox employed by most PR professionals working now (and for decades). And in fact, PR professionals greatly expanded on these three recommendations years ago, particularly in the general public, corporate responsibility and social media space.

Today’s Financial Timeshad an article on business’ role in restoring reputation and mentioned the McKinsey article. The author seens to agree with me. Whew. Michael Skapinker wrote “This is all sensible but it strikes me as yesterday’s advice.”

Moving on….I do agree wholeheartedly with McKinsey’s conclusion that CEOs should lead a company’s reputation strategy. I have always said that CEOs are the guardians of company reputation. My first book on CEO reputation, CEO Capital(2003), argued exactly this point, as I am sure many others have too. 

After letting off some steam here, it occurred to me that PR firms have clearly not done a good enough job communicating what we do for clients or McKinsey’s authors would have known that their recommendations are core to PR engagements today. When I first joined the PR field from Fortune, I too had a limited understanding of what the industry did. Now that I have been in the field for nearly a decade, I recognize that PR is often misunderstood and we are partly to blame.

In short, it seems that McKinsey has succumbed to the stereotype of PR as an industry of spin doctors and no more. This is not true. And probably has never been true. McKinsey’s recommendations are not new and the best of them have been used by PR for some time now. What is needed is not as McKinsey proclaims, less PR but probably more PR.

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Leslie Gaines-Ross
Leslie Gaines-Ross

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 corporate and CEO reputations.

  • Paul Seaman
    Posted at 10:13h, 16 June Reply

    Super post. I have written about this as well, citing and linking to your site in the process.

  • Heather Yaxley
    Posted at 16:29h, 16 June Reply

    I agree entirely with your conclusion and PR does need to do a better job of raising its own profile as a strategic function.However, it strikes me as a lazy approach for an organisation like McKinsey to rely on stereotypes and not undertake even basic research into what PR involves in reality.

    My first year marketing undergraduates at Bournemouth Uni have a better understanding of PR than is evident here.

  • Keith Lams
    Posted at 09:36h, 20 June Reply

    Good post. I agree that it’s a shame that McKinsey see this approach as new, but the good news is they do seem to be catching up with Heather’s students at Bournemouth.There’s an opportunity here. Allow me to borrow a few words from a chief reputation strategist at a leading PR firm:

    It’s all part of understanding a company or organizations (e.g. Weber Shandwick’s) many publics (e.g. McKinsey as a thought leader), researching stakeholders on perceptions and concerns (e.g. by reading their article), getting the true story out (e.g. by posting a balanced response on a respected blog), changing corporate behavior by doing the right thing (e.g. by reviewing how key players in the industry communicate ‘what we do for clients’) , and engaging influentials in conversations that lead to deeper understanding …… Let’s go see Bonini, Court and Marchi.

    Based on the article, I get the impression that, in the past, Mckinsey would have been likely to advise CEOs to cut PR budgets, dismissing it as ineffective spin. Wouldn’t it be great if McKinsey were changing their tune and recommending investing in reputation management and could point to an organisation with a strong track record?

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