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Can PR Take Ownership Of Reputation?

In business as in life, reputation is everything. Few corporate CEOs will deny that a company’s reputation colors every aspect of business, including marketing, talent recruitment, employee relations, shareholder relations, and even customer experience.

In fact, the 2017 U.S. Reputation Dividend Report calls reputation a “cornerstone of corporate value” and quantifies the dividend that corporations with a five-star rep enjoy. The report calculates that in 2017, $1 out every $5 in market capitalization came from “confidence underpinned by company’s reputation” among those in the S&P 500. And reputation’s value seems to grow as a company scales. Reputation accounts for 20% of the average company’s value, yet the highest-ranked corporations derive far more value from reputation. Those in the top spots, like the Walt Disney Corporation and Johnson & Johnson, can claim that over 50% of their market cap comes from reputation. That’s real money.

How PR and reputation intersect

Reputation’s soaring value is good news for PR and corporate communications professionals. Yet, even though reputation management is prized, it’s not always well understood. It’s often confused with crisis management, but while the two overlap, they are distinct. Crisis management involves responding to a simmering or sudden event that negatively impacts reputation. Case in point: the 2017 United Airlines fiasco in which a passenger was violently removed from his seat. According to research by B2B research platform Clutch.co, the widely publicized PR storm actually made some fliers feel less safe. Even seven months later, some 30% of consumers said they would not fly on United. The airline’s slow response and initially poor crisis management compounded the damage, though its share price did rebound.

Reputation management, on the other hand, is more proactive than the firefighting that characterizes crisis management. It can help an organization weather a crisis situation because a well-earned reputation is like money in the bank. This should mean that the internal stewardship of reputation falls to the chief communications officer. Yet reputation management isn’t always in the CCO’s purview, at least not solely. Risk management, compliance, legal counsel, brand marketing – all may have some ownership when it comes to corporate reputation. But in most organizations PR and reputation management work together, or at least they should. For that collaboration to succeed, the role of PR and the skills involved may need to evolve.

Understanding of audiences is key

The connection between communications and reputation management means that PR officers need to adopt new skills and even functions. One is a greater grasp of research. Not all PR people have a sophisticated understanding of market research. Some think of it as a tool for measuring ROI, but it can uncover valuable insights about stakeholder and public perception. It’s impossible to monitor and measure reputation without that baseline intelligence.

Reputation management is risk management

We deal in perception, which is an intangible asset. PR people tend to be comfortable with intangible and hard-to-measure attributes. Yet those trained in communications may lack the grasp of organizational risk and compliance issues faced by many companies. More importantly, a CCO rarely has oversight responsibility in that area.

C-level access is critical

Access to senior management is all-important here. The good news for corporate communicators is that the function has been elevated in the past few years. According to a study by the Arthur Page Society, as the communications role has become more crucial and more complex, CEOs place greater value on the CCO role. The Page report, which is based on data from interviews with 31 CEOs at companies earning more than $2 billion in revenue, suggests that CEOs have expanded expectations the role of the chief communications executive. Yet only 39% of CCOs report in to the CEO.

Can the CCO speak truth to power – and make it stick?

For chief communications officers to grow into the reputation management role, they need the attention and respect of the CEO. Most importantly, an effective reputation management officer must have the authority and the courage to tell senior officers what they may not want to hear. They must be perceptive in flagging risks and persuasive in offering advice and urging change. Not every communications officer has that blend of skill, influence, and authority. But those who do will be an invaluable asset to any organization.

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