August 16, 2010
There is a company known to nearly everyone in the US –Campbell’s. The company has been in business for 140 years. Quite an accomplishment.
Campbell’s website is indicative of a well run company. First, on the Our Company page we see a reference to their “Success Model”, but notably there is even a link to a rare product problem. This is unusual indeed, and contributes to the visitors perception of credibility and trustworthiness.
Next there is a separate page for the “Success Model” (going to the Annual Review, integrated into the corporate site).
Noteworthy is the visibility and commentary from the two top executives.
There is also a further discussion on the three components of the success model; click on each component and more information is displayed. Nicely done: the company does a good job explaining how this model drives corporate strategy.
It is interesting to note that there is another display of the success model in the Corporate Social Responsibility report for 2010–
Integrity is added and a link to a comprehensive comprehensive Code of Business Conduct and Ethics is provided. While this addition is laudable, I suggest it should be prominently displayed with the other three components throughout the site.
In sum, Campbell’s conveys credibility and transparency as well as an engaging way of communicating their success model.
July 5, 2010
There is always something happening in Corporate Governance.
Two recent notable items are –
- Corporate Governance is Top Challenge for Companies Considering an IPO, KPMG Survey Series Finds
- Annual Global CEO Survey by Price Waterhouse Coopers (PWC)
KPMG and the New York Stock Exchange-Euronext recently offered IPO Bootcamps for companies considering an initial public offering (IPO). Participating companies were asked to name their top three challenges in preparing for an IPO. The results are a bit surprising. The top three items were -
- improving corporate governance (64 percent)
- preparation of a robust business plan (40 percent) and
- preparation of financial track record (36 percent).
Often, it’s the small details that companies overlook that can cause headaches down the road. For example, while many companies realize that corporate governance is a demanding issue, when selecting board members, many don’t consider that an important role for directors is working with management to ensure the right tone at the top for ethics and compliance. (Aamir Husain, a partner in KPMG LLP)
This is encouraging. Fostering compliance and ethics at the early stage of a company’s formation increases the likelihood that these issues will be properly executed as the company grows.
The PWC CEO Survey is extensive but some key items stand out:
- most CEOs outside of financial services believe the economic crisis has not changed public perceptions of their industries. They believe the trust issue is restricted to the banks and isolated to countries that experienced the worst banking crises.
- The view that companies can rebuild trust through new remuneration models appears to be held by a minority of CEOs from virtually every country.
While small start-up companies realize the importance of trust and ethics, CEOs at large established companies (at least according to the PWC Survey) still don’t get it.
June 11, 2010
In the financial sector, the trust stakeholders have placed in companies has been damaged both at industry and company level whether due to failures in governance, risk management or ethics, or due to excessive reward structures.
Companies need to take this issue seriously to rebuild their reputations. So what should they do?
There are three key groups of actions.
Demonstrate good practice and compliance
To start with:
- Given the visibility, dissection and discussion of the various problems that occurred in the sector, companies need to demonstrate good practice in all these problem areas even if during the crisis some or all of the issues did not impact them.
- If the company have been affected by issues, they should show how those areas have been addressed and verify that the actions have been done.
- They should be among the first to address new recommended industry practices (e.g. the Walker recommendations) and to communicate their compliance with them – and how they have met them.
Apply crisis management techniques
The second group of actions is related to standard crisis management techniques.
Few companies responded to the financial crisis by applying crisis management techniques to their online communications, for instance by:
- business leaders acknowledging mistakes
- empathising with stakeholders and indicating how seriously they take the issue
- describing the root causes of the problems
- stating the lessons learned
- providing their action plan to address the issues.
Even now, as we wonder if the storm has passed or if there is another to come, there is still an opportunity for companies to take a leadership position by communicating what their sector has learned from this.
Show – not tell – trustworthiness
The last area is for companies to outwardly demonstrate trustworthy behaviours in their actions and communications:
- better transparency means more explicit information on how you ensure effective oversight of the company, how you manage risk and how you incentivise your senior people
- better ethics means going beyond the standard code of ethics – and talking about how you embed ethics in your business through your training and compliance processes
- better listening means demonstratively providing the means to listen to – and interact better with – stakeholders through the channels you use – including the website.
June 22, 2010, London
“The past year has seen tremendous change in the financial services sector…
It is time, however, to look forward, to put the lessons from the past in context and look to see how communications professionals can focus on their reputation and position their companies, their products and their brands.”
I could go on – indeed we’ve written a whole strategy piece on it (do contact us if you’d like to discuss it) – but I’m sure you get the idea.
The Communicate Magazine’s conference next week on Reputation in Financial Services explores strategies for managing corporate reputation, and will bring together industry experts and advisors to share best practice; there’s a strong programme, and many expert speakers lined up.
Do read the programme, and consider attending – it looks good.
March 27, 2009
I saw this old management dictum in an Ivey Business School article, “LESSONS FOR EXECUTIVES FROM THE FINANCIAL CRISIS OF 2008″.
A good scare can be a once-in-a-generation chance to get tough but needed things done that would never be possible otherwise: the likes of completely changing the business model, drastically cutting jobs and costs, culling the product line, changing senior management and selling off or closing major divisions. Very unpleasant stuff, though every business needs this kind of therapy once in a while.
What instantly came to mind was something I wrote in an earlier post about ethics/integrity/trust — “I’d like to be optimistic that the current financial crisis inflicted so much pain that Boards and C-Suites will finally get it that ethics matters. We shall see.”
When I wrote this, I was skeptical that anything would change. My skepticism, though somewhat diminished, remains. However there are signs that maybe, just maybe more Boards and members of the C-Suite will finally realize that issues of trust, ethics and integrity “have legs”.
Here are some headlines –
“Most importantly, consumers have high expectations that companies will not only produce quality products and services but also will act ethically in their creation and distribution.”
(This is an excellent article by Steven Covey)
Think about it this way: When trust is low, in a company or in a relationship, it places a hidden “tax” on every transaction: every communication, every interaction, every strategy, every decision is taxed, bringing speed down and sending costs up. My experience is that significant distrust doubles the cost of doing business and triples the time it takes to get things done.
By contrast, individuals and organizations that have earned and operate with high trust experience the opposite of a tax — a “dividend” that is like a performance multiplier, enabling them to succeed in their communications, interactions, and decisions, and to move with incredible speed. A recent Watson Wyatt study showed that high trust companies outperform low trust companies by nearly 300%!
Corporate reputation is the foundation for business health and commercial success. A large company’s reputation is typically worth 20 to 40 per cent of its stock market valuation and can be as high as 70% or more for companies that rely heavily on their reputation and brand values (Sources: Oxford Metrica, Reputation Institute, University of Kansas research). We can all think of recent cases where reputation has been 100% and a matter of survival. Conversely, getting reputation risk management right means competitive advantage, higher ROI and performance.
Managers in all functions and Internal Audit need to understand reputation risk. This is important for everyone, not just Brand and Communications staff. Respected corporate reputations depend on these skills and a raised awareness of how reputation underpins successful business strategy and performance – the business case.
These are just a small sampling of writings in the recent past. Seems that dramatically falling equity prices, the news media feeding frenzy and the increased consumer emphasis on Trust and Ethics have finally penetrated many organizations. These tangible threats provided the pain for those organizations that have been ambivalent on Ethics and Trust to finally see ethical business practices as a serious corporate-wide issue.
Here are some additional references –
The Practice of Leadership site has these worthy articles –
- The critical importance of trust in times of adversity
- How leaders build trust
- Factors that leaders should manage to encourage trust
- Behaviours that create or break trust…
- David Maister on the Four Dimensions of Trust
Finally visit Vanno The Reputation Index and see what others are saying and interact.
In future posts, I will highlight some good practices.