When Reputation Intersects With Ethics & Compliance

An Organization’s Ultimate Differentiators

Using Reputation to Stand Out in the Marketplace

In the past, I’ve talked about how an organization’s focus on ethics and compliance can be a differentiator in the marketplace. Lately, I’ve realized there’s a different, but related, component that can truly set a company apart from the competition: reputation.

do business and ethics go hand in hand

Like ethics and compliance, a carefully architected reputation can be an essential tool for leaders. When leadership needs to build trust in their organization with consumers and stakeholders, reputation can be the key to success.

Bonnie Caver, the president of Reputation Lighthouse, is the person responsible for bringing this connection to the front of my mind. Reputation Lighthouse is an innovative brand communications and reputation marketing firm that helps CEOs elevate and protect the reputation of their companies.

Perhaps not surprisingly, there are many ways in which ethics and reputation go hand in hand. Today, I’m going to share some insights from a recent conversation I had with Bonnie. As you read, think about your own organization’s reputation. Is it good, bad, somewhere in the middle?

If you aren’t quite sure how to tell, don’t worry, because we’ll talk about that, too.

How is your organization perceived in the marketplace?

What do people think about when they think about your company? Are their thoughts generally positive, or has a recent scandal knocked your reputation down a notch? Regardless of the marketplace perception, taking ownership of your organization’s reputation is something that must be done strategically. It’s something that must be actively worked on, but how?

The idea of “reputation” might sound like something that can’t be measured objectively, but it most certainly can be. Much like the ethical health of an organization, there are certain metrics and categories you can assess to determine the reputational health of a business.

How reputation is measured

Image courtesy of Reputation Lighthouse.

There are several organizations that evaluate and measure corporate reputations but Bonnie relies on the Reputation Institute, “as the standard for reputation measurement.” RI’s RepTrak® model discovers the most reputable organizations and governments around the world while capturing annual trends.

It’s similar to how we use key performance indicators (KPIs) to make ethics measurable (and therefore actionable). In fact, when Bonnie works with organizations to enhance their reputations, she uses the Reputation Institute’s data to say, “Here are the areas we need to influence within your corporation structure in order to own and architect your reputation.”

Through the RepTrak measurement model, reputation can be measured using seven key dimensions:

  • Products and Services: Consider this your baseline — if the products and services aren’t there, nothing else matters. According to Reputation Institute’s 2018 Global RepTrak 100, wholly 21.6% of reputation is dependent upon this category.
  • Governance: Internal controls, and how a company responds to government regulations, have a large impact on reputation. After products and services, this is the most important piece of the pie that can influence reputation — to the tune of 15%. Look at Volkswagen as an example: their products weren’t necessarily faulty, but their governance sure was. Ethics and compliance must have a presence here, especially when meeting regulatory requirements. How you make and execute on decisions can also set your company apart.
  • Citizenship: Citizenship is another area where you’ll see ethics playing a big role, and this category is responsible for 14.1% of reputation. Corporate social responsibility is an important factor that consumers pay attention to, like when a company decides to phase out single-use plastics for environmental reasons. But, these initiatives can’t be “best kept secrets” if you’d like them to influence reputation.
  • Innovation: An organization’s technological innovations play a role, especially in today’s fast-paced and technology-driven marketplace.
  • Performance: It’s no surprise that a company’s reputation depends partially on its financial performance in the marketplace.
  • Workplace: More leaders are looking at employee engagement as a measurement for reputation initiatives, because they see that a lack of engagement is a challenge to successful reputation management, let alone reputation architecture. What is it like to work at your company, and do people want to work there? If talented employees don’t want to work for you, or if employees aren’t engaged, it could point to a reputation issue.
  • Leadership: Of course, a company’s leadership has an impact on reputation. For proof of this, look to Papa John’s recent leadership struggles. The company even lost its PR agency in the ordeal, demonstrating that the impact of a poor reputation can be felt far and wide.

Connecting the CEO to the brand

If you look at the above diagram that shows how Bonnie works with clients on their reputation, you’ll notice “Living Brand” is at the very center. That’s because in order to own your corporate reputation, your brand must influence the seven dimensions of reputation. In her work, Bonnie has also realized that there’s something important missing in many companies: connection to the brand.

“Brand” is something CEOs tend to outsource marketing, but an organization’s leadership absolutely must play a role in brand development and bringing the brand to life.

When you create a living brand, it’s not just about what you do and say. It’s also about how you live. Think about a living brand as being operational — it influences decision making, how you communicate, how you deliver on promises, who you partner with, how you take products to market, what you stand for, how you live the Code of Conduct, who you hire… and, well, you get the picture.

Think about your company’s brand for a moment. How are you living the brand? Is there room for positive change? And, is the Ethics & Compliance department involved in the creation and execution of the brand?

The benefits of a positive reputation

Let’s assume you run a successful company in North America, and now you’d like to enter the European market. Your success will be largely dependent on your reputation, because the company is relatively unknown in this new regional marketplace. In Europe particularly, citizenship and governance are big differentiators.

As another example, think about a company launching a new software product. The new software will come with a higher price tag, but the last time a new product launched there were technology glitches galore. That means the way you approach this launch needs to be different, because you’re trying to get people to trust your brand again.

In both of these scenarios, a good reputation could make realizing success a lot easier. Companies with excellent reputations perform better than companies with weak or nonexistent reputations — sometimes, it can mean a three figure difference in revenues.

No other marketing initiative or PR push can make up for reputation. But, you can’t get a great reputation by doing business as usual or by only paying attention when there’s a crisis or issue to be managed. Similar to brand development, reputation development requires your attention.

Why is reputation so important right now?

Throughout many industries, corporations have lost the trust of consumers. The world is watching how companies behave, and they don’t always like what they see. Consumers have more of a voice than ever before, and it’s no longer enough to be a “good” company — you have to prove it.

Bonnie feels that this innate lack of trust is due in part to the fact that we only ever hear about the things that go wrong. There’s a huge opportunity for brands to architect their reputations by doing what’s right and telling those stories. As she says, “People give you the benefit of the doubt when you do the right thing over and over.”

It’s not just about making the right decisions, it’s about communicating those decisions.

Dick’s Sporting Goods is a great example of a company operating in accordance with their values. After the Parkland, Florida school massacre, the company decided to change some of its gun sale policies. Whether you agree with the decision or not, this became part of their reputation and external brand story, and they did a great job of communicating their complete story internally and externally. If future challenges arise for the company, they’ll already have some brand equity to draw on if needed.

Note that Dick’s didn’t make this move because a government regulation forced them to do so. They did it because:

  • Today’s consumers demand integrity from the brands they buy from.
  • The company saw an opportunity to do what they felt was the right thing.
  • It was an opportunity to distinguish their sporting goods store from others in the marketplace.

This is an important part of the story — people trust a company more when they make the right call using their own free will, not just because of a regulation.

How a poor reputation impacts business

Bonnie and I also talked about what happens when a company has a rotten reputation — like the Wells Fargo account fraud scandal, as one example. After the scandal, Wells Fargo went on a full rebranding and apology ad campaign. You’ve probably seen the ads on Facebook, elsewhere online, and even on TV. As Bonnie put it, “The savior of the television ad industry is companies who made bad decisions.”

To pull off a campaign of this magnitude, Wells Fargo needed a relationship with marketing, communication, and leadership. Everyone also needed to get comfortable being transparent. Getting buy-in from leadership can be tricky, especially when you’re responding to a scandal, but an organization’s leaders must understand that there is value in being an advocate.

The Reputation Institute has even studied CEO activism, and there’s a clear value-add to be had when the CEO assumes the role of, “Purpose-Driven Leader”.

An opportunity for CECOs

Bonnie and I agree that the process of architecting reputation represents a unique opportunity for ethics and compliance officers to be part of the brand. We “own” the Governance category, for starters. We’re often used to working internally, but we can help our organizations share their ethical stories to gain reputational equity.

But, if we want to share these stories with an external audience, collaboration isn’t optional. We don’t necessarily need to add anything to anyone’s workload, but we can do things differently. If you’re ready to start architecting your organization’s reputation, don’t miss Bonnie’s article on how to build a reputation team. It’s the perfect first step toward reputational, ethical, and organizational excellence.