31 August 2011 – Reputation Management
A new defintion of ‘reputation’
An excerpt from a speech by David Van at the Reputation Management Conference, Sydney Australia, August 2011
There are many definitions of reputation out there and to an extent they all reflect what is a difficult thing to define. The Reputation Institute defines corporate reputation as “aggregate perceptions and interpretations of a company’s past actions and future prospects.” This is absolutely correct however we don’t find it helps us with actually managing Reputation. I believe there are dimensions required to be added to this definition to help us actively manage reputation.
De Wintern define reputation as: ‘the expectation stakeholders have of how the organisation will impact them or their interests” By including expectations you not only include perceptions but you draw in a temporal component.
Why is this useful in managing reputation? Because it introduces a forward looking element you are not just working historically.. that is what has caused your reputation to be X.. you can work to change and set expectations of how the company will impact stakeholders in the future.
Our definition also brings a degree of relativity to reputation management and this is important as no two entities are the same. For example we have different expectations of a high court judge than we do a car salesman, yet in managing their reputation we shouldn’t try to make a salesman seem like a judge. What we do need to set is an expectation of how dealing with either will affect their stakeholders.
Not only does an entities job play a part but also other factors such as quality and price. For example we don’t have the same expectations of JetStar as we do of Qantas and by setting stakeholder expectations appropriately we therefore can manage reputation better.
8 July 2011 – Investor Relations
Carbon cost disclosure
The impending announcement of details of the Federal Government’s carbon pricing scheme on 10 July brings with it a continuous disclosure question. In particular, companies will need to consider whether the scheme will have a material effect on the price or value of its securities, within the meaning of ASX Listing Rule 3.1. If it will, a market announcement will need to be made unless one of the Listing Rule exceptions applies. As reported in The Australian Financial Review, the ASX has warned that it will be closely monitoring listed companies’ disclosure in relation to the carbon pricing scheme’s impact.
Since the Government announced its intention to introduce a carbon tax, a number of companies have lobbied against the proposal, with some making strong (and specific) statements about the likely impact it will have on their operations. Some companies have suggested that the tax could see the closure of some of their operations as a result of the scheme, amongst macro business impacts.
This offers a broader reputational lesson from the carbon tax debate – that listed companies must always be mindful of the future continuous disclosure implications of their lobbying efforts. Of particular interest will be the way in which companies that made strong statements against the carbon pricing scheme now deal with their disclosure obligations following the Government’s upcoming announcement. Any new statement that is inconsistent with earlier statements (without good reason) could expose those earlier claims simply as political posturing, damaging a company’s credibility going forward. Such inconsistencies are also likely to be met with ire from shareholders and regulators, if not more serious questions of misleading conduct (as mentioned in the AFR article).
Putting aside the technical legalities around disclosure obligations, the upcoming AGM season may well put the screws on companies likely to be affected by the carbon pricing scheme – both those who have previously made noise about the proposal, who will be pressured to quantify and specify expected impacts, as well as those who have stayed mum but from whom shareholders will now be seeking disclosure.
June 2011 - Investor Relations
‘Two strikes’ board spill rule will have significant investor relations implications
On 20 June 2011, the ‘two strikes’ rule, which will allow shareholders to spill a company’s board if the company’s remuneration report receives strong ‘no’ votes over two consecutive years, passed into law. Whether or not you agree with the new law (and it has been controversial), companies will need to consider the investor relations implications.
The new rule can be seen to empower minority interests, as a ‘no’ vote of only 25% or more in two consecutive years will trigger a spill resolution (which, if passed, will require the board to call a further general meeting at which all of the directors who were directors of the company at the time the board approved the directors’ report (other than the managing director) will face re-election). Accordingly, companies will now have a greater imperative to engage with and understand the concerns of all shareholders, not just focus on institutional or large shareholders.
Parliamentary Secretary the Hon David Bradbury MP stated that the new rules will give shareholders ‘unprecedented power to have a say over executive remuneration’. While the two strikes rule will provide shareholders with a new and influential tool to hold boards accountable for remuneration decisions, what Mr Bradbury’s statement fails to recognise is that there is, of course, nothing stopping the remuneration vote from being used to send a message to the board in relation to any number of issues concerning shareholders. In any event, general company performance and other issues of concern to shareholders ultimately link back to whether shareholders consider the board is delivering as it should, and therefore whether directors are earning their keep.
A company that receives a strong ‘no’ vote on its remuneration report in one year will, of course, have until its next annual general meeting to address shareholder concerns and avoid a second consecutive strong ‘no’ vote that will require a spill resolution. Nonetheless, companies will need to ensure that they are aware of and address all significant issues or potential issues, through a consideration of all shareholders, well ahead of general meetings.
March 2011
Turning crises into opportunities
Major, and even minor crises are often the stuff of nightmares for CEOs and senior management. But many organisations don’t understand and appreciate that if adequate preparation, communication and careful management is undertaken before and during potential crises, they can actually represent a significant opportunity.
One of the better examples I’ve seen of a CEO using a significant crisis as an opportunity was in New Zealand in 2008. On Friday 28 November 2008, an Air New Zealand training flight went down in Perpignan, France, killing all eight staff on board instantly. Immediately rumours hit the media that the pilot was at fault.
To give you some context, the airline was already in a sorry state of affairs. Just ten days earlier on 19 November, Air New Zealand announced that it was laying off 200 full-time employees as a result of the global financial crisis. On 22 November I watched as CEO Rob Fyfe spoke with a tear in his eye at a wine show sponsored by the organisation – little did we know things were about to get a whole lot worse.
Three and a half years later Rob Fyfe is still CEO of Air New Zealand and is one of the most respected and liked CEOs in New Zealand. The company is prospering. How did Fyfe and the company pull through such adversity?
Firstly, Fyfe acted immediately. He did not accept blame, but fronted up to everyone – families, staff and media. In the twelve hours following the crash Fyfe spoke to families of the missing men, personally briefed hundreds of staff and fronted three press conferences.
Secondly, Fyfe showed compassion. As he flew to the crash site with one of the widows, Fyfe said, “I’ve got one goal – and we’ll do our very best to achieve it – and that’s to bring our team members and loved ones home to their families.” Fyfe personally remained at the site until recovery efforts were exhausted.
Thirdly, he did not accept blame without evidence. Despite widespread accusation that the pilot was at fault, Fyfe refused to speculate or comment on the cause of the crash until adequate investigation was complete. Instead he focused his efforts on the families.
Finally, Fyfe demonstrated that he is a real person, and showed emotion. “I found that a very difficult time personally…I was pretty emotionally cut up. There were tears from all of us.”
Fyfe was rewarded for his compassion, honesty and action. When he checked his Blackberry en route to Perpignan, he had more than 300 emails from staff, business partners, and members of the public wishing him all the best. Fyfe had responded to every one of those emails personally by the time he reached Perpignan. I saw one of those emails, sent to a colleague, and it stays with me to this day as a fine example of a fantastic CEO prospering in the face of adversity.
November 2010 - Technology PR
700 million more internet users in Asia underpins the argument for the NBN
The opportunity for e-commerce is underlined by a recent survey by McKinsey.
The survey of 13,000 individuals in China, India and Malaysia found that there will be 700 million new Internet users in five years time. This is in addition to the 500 million people who are already connected to the Internet in these markets.
The opportunity this presents for the technology industry in general and the e-commerce industry in particular is enormous with McKinsey putting it at approximately $80 billion. We would include media and entertainment companies in this as much of this growth will be driven by a desire for content including music, movies, sports and news.
The opportunities for device manufacturers (including mobile phones), communications infrastructure, content and web services are obvious and all these companies must be progressing towards or developing strategies for entering these markets. The opportunities for Australia do not arise just because of our proximity to these markets but because of the chance provided by e-commerce to take advantage of this growth and sell to these massive markets.
E-commerce provides an opportunity to take advantage of these markets equally to a widget seller in regional Australia as it does to a business in Silicon Valley. However we must have the correct infrastructure to take advantage of this opportunity. That means not only do we need world class broadband as promised by the NBN but we also need better logistics to move goods to these markets. E-commerce provides a level playing field for all but improved infrastructure will tilt the field in our favour.
For more information about the survey please go to the McKinsey site
October 2010 – Reputation Management
Litigation: a real risk to corporate reputation
Published in PRIA (Vic) monthly newsletter October 2010
Litigation PR is a relatively new practice area in Australia and should not simply be seen as an extension of crisis management, because different disciplines are required.
Litigation presents a real risk to corporate reputation. Litigation attracts media attention, as parties in conflict always make a good story. Public opinion is often formed in the early days of any legal issue and that opinion often sides with whom ever has initiated the action. The initiator of the action usually sets the agenda, but effective public relations can reverse this position or enhance it.
Public pressure and risk to reputation is now clearly counted as a weapon in the legal arsenal, with regulators even using it as a tactic.
Lawyers are often blamed for restricting public comments in order to protect the legal position of their client. The inherent requirements for confidentiality and privilege often dictate a response of ‘no comment’ which leaves litigants open to implied guilt.
Experienced litigation PR practitioners are able to set a communication strategy to support the legal priorities and still deliver a good public relations result..
With the right practitioners legal and PR can work together to ensure that the client not only achieves its legal aims but also its reputational objectives. Litigation can in fact become an opportunity to enhance reputation, given the platform that the media interest creates.