Best practices and future challenges in Corporate Reputation management
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The document discusses the importance of managing corporate reputation by overcoming internal barriers and leveraging stakeholder segmentation to develop effective strategies. It highlights the need for companies like Iberdrola and Vestas to focus on non-financial indicators that reflect stakeholder perceptions and commitment, integrating these insights into overall business strategies. Additionally, it outlines key factors that successful reputation management entails, such as alignment with business logic, intelligence and analysis, management control, and effective implementation.
Best practices and future challenges in Corporate Reputation management
- 1. However, it may be even more challenging and important to overcome divisional barriers that exist within organizations, establish processes and procedures for reputation management and tap into the research on intangibles management. Executives responsible for managing intangible assets will have to face these challenges in the near future. Segmenting the stakeholder universe José Carlos Martínez Lozoya, Iberdrola’s Director for Corporate Reputation, believes that a lot of information is obtained through an in-depth and detailed segmentation of the stakeholder universe. This information is then used for developing strategies and action plans focused on corporate reputation. The executive argues that such segmentation is necessary since the success of strategies and plans largely depends on their capacity to capture the demands and expectations of various stakeholder groups. Extensive use of social networks and digital technologies in relations with the stakeholders facilitate this segmentation and provide detailed information about these groups, their interest in the improvement of the company’s activity, their demands and expectations. This information also helps to anticipate potential reputational risks. Currently, direct and indirect experience of dealing with the corporate brand or umbrella brand (which fundamentally determines the value represented by reputation) has to do not only with consumers, customers or users, but also with the multitude of other stakeholders (especially employees, investors and shareholders), as well as their interaction and the fact that their roles may change depending on the moment of contacting the company and sharing their opinion about this company. The culture of reputation Anotherimportantaspectofreputationmanagement in companies that, like Iberdrola, are the leaders in developing reputational strategies and corporate Most of the efforts aimed at improving corporate reputation today are focused on the impact that reputation has on business, gauging this impact and obtaining the information necessary for defining reputational strategy and placing intangibles in the centre of the overall business strategy. Strategy Documents I57/2015 Best practices and future challenges in Corporate Reputation management Reputation Insights & Trends This document was prepared by Corporate Excellence – Centre for Reputation Leadership and among other sources contains references to the statements made by Carlos Martínez Lozoya, Iberdrola’s Director for Corporate Reputation, Morten Albaek, Vestas Global Vice President for Marketing, Communication and Corporate Relations and Kasper Nielsen, Partner and Director of Reputation Institute Denmark, made during the 17th International Conference on Corporate Reputation, Identity and Brand Competitiveness: The Reputation Journey, organized by Reputation Institute in Barcelona on June 5 - 7, 2013.
- 2. Insights & Trends 2 Best practices and future challenges in Corporate Reputation management intangibles management, is the need to develop an internal culture based on reputation, aligned with reputation and driven by reputation. According to Martínez Lozoya, knowing the directions and, maybe more importantly, the obstacles for building reputation is probably more important than developing a reputation plan. When Iberdrola started its reputation journey back in 2004, it defined the following 5 axes of the process: 1. Product: it should be the key. 2. Culture: it should be inclusive. 3. Segmentation: it should be accurate. 4. Experience: it should be excellent. 5. Feedback: it should be ongoing. Traditionally, financial indicators are viewed as the key business indicators. However, non-financial indicators place on emphasis on those aspects that have to do with the company’s behaviour towards its stakeholders and, above all, stakeholder’s response to these actions of the company. Satisfaction and commitment, relations and recommendations, loyalty and fidelity, innovation and differentiation are reflected by the so-called non-financialindicatorsthataccordingtoIberdrola’s Director for Corporate Reputation, truly represent the profitability and sustainability of the company’s business, its economic efficiency and success in the long run. A project focused on reputation In this sense, the case of the Danish company Vestas is truly paradigmatic. The company, like Iberdrola, works in the power generating sector, and assumed a strategic sustainability approach, focusing on the wind energy and wind as the driving force of social and environmental changes – thus linking its activity to prevention of the climate change. Morten Albaek, the company’s Vice President for Marketing, Communication and Corporate Relations, says that the corporate information of this Nordic firm speaks for itself: in 2012, when Vestas reached a record high level of perception by its customers, it reported the highest turnover since the moment of its merger and re-launch in 2003. Vestas organized its business strategy around a clear goal: becoming the world’s most recognized company by contribution to the positive environmental change achieved though intelligent use of the wind energy. Vestas defines four key stakeholders, whose cooperation is fundamental for creation of shared value and building reputation: 1. Customers. 2. Employees. 3. Technical and financial experts. 4. Communication media. These actors made it possible for the company to be perceived as the world’s best company in this sector. Vestas closely tracks its reputation with each of these stakeholders, monitoring progress or decline in their perceptions. According to Albaek, response time is another element that differentiates this company when it comes to implementation of action plans that have a direct impact on reputation, and, consequently, on the bottom line. The truth is that reputation not “Companies willing to become the leaders in developing reputational strategies need to develop an internal culture based on reputation, aligned with reputation and driven by reputation” Graph 1: Tangible and intangible indicators Source: José Carlos Martínez, 17th International Conference on Reputation, Identity and Brand Competitiveness, 2013. Indicators Profitability Sales Cost efficiency Technology Reputations Relationships Transparency Differentation Talent Satisfactio Innovation Culture + values Lo intangible Intellectual property Quality of employees Labor environment Unallocated goodwill Community support Sustainability Brad loyalty Tangible Values (Generally Audited Financial Information) Financial Capital Physical Assets
- 3. Insights & Trends 3 Best practices and future challenges in Corporate Reputation management only helps to strengthen the company’s competitive position, but also leads to better business results. Maybe one of the best examples in this sense is the special label created by Vestas for products developed with the use of the wind energy (WindMadeTM ), an idea that reflects the company’s tagline Wind: It means the world to us! Vestas believes that social innovation in its sector should move away from Green washing and stake on the transparency by using the labels that point to the kind of energy used in the production process, thus encouraging producers to choose wind as the energy source used in the operations. The commitment of Vestas to the social and environmental change is proven by its support of humanistic capitalism through integrating intangibles into the management process and creating shared value in the long run. Conclusion: four new keys After passing the initial stages of its journey (preliminary analysis aiming to define the strategy), reputation arrived to the next stage, characterized by measurement and showing its true impact on the business. Kasper Nielsen from Reputation Institute believes that there are several features that characterize best companies in the area of reputation management and that determine the key challenges that companies will face in the near future: 1. Business logic (present in 50 % of companies): a. Aim. b. Alignment. c. Reputation. 2. Intelligence and analysis (performed by 33 % of companies): a. Evaluation. b. Measurement tools and indicators. c. Procedures. 3. Management and control (performed by 26 % of companies): a. Planning. b. Management. c. Control. 4. Implementation (performed by 38 % of companies): a. Integration. b. Investment. c. Recommendation. Companies that are likely to make progress in the reputation journey have a narrative and a story that make different dimensions of this company’s activity meaningful, they find ways to relate to their stakeholdersandareawareoftheirreputationatevery point of their strategic decision-making process. “Reputation management is passing from the initial stage of analysis to the stage of measuring and demons- trating reputation’s true impact on business” Graph 2: (Why) Are we wasting our lives? Source: Morten Albaek, 17th International Conference on Reputation, Identity and Brand Competitiveness, 2013. HumanismCapitalism The Sweet Spot
- 4. Leading by reputation ©2015, Corporate Excellence - Centre for Reputation Leadership A foundation established by major companies aiming to excel in the management of intangible assets and facilitate promotion of strong brands with a good reputation and a capacity to compete on the global markets. Our objective is to become the driving force, which would lead and consolidate professional reputation management as a strategic asset, fundamental for building value of companies around the world. Disclaimer This document is a property of Corporate Excellence – Centre for Reputation Leadership developed with an objective to share business knowledge about management of reputation, brand, communication, non-financial indicators and public affairs. Corporate Excellence – Centre for Reputation Leadership is the owner of all rights to the intellectual property related to images, texts, drawings or any other content or elements of this product. Corporate Excellence – Centre for Reputation Leadership is the holder of all necessary permissions for the use of the document and therefore any reproduction, distribution, publishing or modification of the document without its express permission is prohibited.