By Sharon Fishburne
Businesses of all sizes are having to think more seriously about their reputations. A reputational crisis not only damages consumer confidence in a business but can also have a dramatic impact on a business’ share price.
According to recent research, the reputation of the world’s biggest 15 publically listed businesses accounts for a third of their share price. On one hand, this shows the tremendous upside of boosting the reputation of a business. On the other hand, it also shows the damaging financial impact of getting it wrong.
As we come out of the other side of the coronavirus pandemic, I wanted to explore the key reputational trends that should be playing on executives’ minds right now.
1. Social media activism
The emergence of social media has radically changed the way that the public can hold companies and corporates to account. It has empowered many consumers to raise questions and issues with businesses directly online. In fact, what people say about companies on social media has become a proxy for their reputation.
As people continue to spend more time on Twitter, Instagram, Facebook and other networks, companies will become much more judicious about how to manage their reputations on these platforms. While social media has conventionally been seen solely as a marketing channel for businesses, that is now starting to change; corporates are starting to see it as a window to potential reputation risk.
In response, I expect companies to bring new expertise into their social media teams, including professionals from communications, business strategy, as well as company and personal reputation management.
The public, governments, investors and other stakeholders are demanding that companies improve their environmental impact. In fact, over the last 12 months, we have seen investors start to rapidly divest from industries with higher levels of pollution, such as fossil fuels and mining.
But I expect companies to go one step further over the coming months. While a number of companies are started to proactively move away from unsustainable activity, such as a dependence on fossil fuels and non-recyclable material, I believe corporates will start to approach sustainability more positively.
In particular, I expect them to proactively launch new schemes within their business to make a positive difference on the environment, such as schemes to provide funding to green charities and other activity. They will then be able to leverage that activity in a positive way in their marketing material and advertising rather than viewing sustainability just as a reputational risk.
3. Tax planning
The coronavirus pandemic has prompted renewed discussion about inequality. In particular, there has been a wave of media about how the pandemic has increased the divide between the wealthiest and poorest in society, with large conglomerates, such as Amazon, seeing their revenues increase substantially.
I expect this to trigger a wider discussion about the amount of tax that our biggest companies pay, as well as potential new taxes, such as the wealth tax that has been mooted over recent days. In response, I would not be surprised if some larger companies started to think more proactively about the reputational implications of their tax strategies.
In fact, we might start to see companies reshoring aspects of their businesses with a view to actually increasing the amount of tax they pay; this information can then be leveraged to improve their reputations in the eyes of the public and policy-makers.
4. Executive leadership
In the past, reputation was thought of as something that is solely attached to a company. This is now starting to change. A number of high-profile company leaders to chosen to use their own executive profiles to improve the standing and reputation of both themselves and their businesses.
For example, Tim Cook, CEO of Apple, has recently taken a visible and personal stand on diversity in the face of the Black Lives Matter campaign, pledging the company will be “a force for change” in the world. In the past, these types of comments might have been put out in the name of the company itself rather than an executive.
Going forward, I expect more companies to put their moral and ethical leadership in the names of their CEOs and owners, with a view to putting a face to their business.
Reputation is increasingly becoming one of the headline topics in corporate and company boardrooms around the world. This is an area where there is a substantial amount of change, and it is important for businesses and company leaders to stay abreast of the latest trends, challenges, and opportunities for their companies.