Reputation Gurus

I read an article today about John Clare, DSGI’s departing CEO, who said something that really struck me.  When the reporter asked him if he had any failures, he said, “I haven’t made any mistakes.  You recognize mistakes quickly and you get out of them quickly and then they’re not mistakes then they are just learning experiences.”

After I chuckled (out loud, which is a no-no on a proper English train platform), I thought, “Hmmm … He’s got a good PR person behind him, but he also has a head for smart reputation management.”

Actually, I know he has a good PR person working with him, because it’s my friend and former client Kai Boschmann, who leads all of DSGI’s corporate communications.  But Mr. Clare clearly has a good sense of how to use mistakes as a way to make the business better — and as a way to talk about failures without saying that he (or the company) failed.

There’s a lesson here.  Everyone makes mistakes, but it ’s the smart executives and companies that learn from them quickly and move on.  The trick, of course, is recognizing when that mistake is made — and looking past the situation to learn from the error.  And, it’s the even smarter executive who can talk about those learning experiences to the media and other influencers without sounding defensive.  Every spokesperson can take a page out of Mr. Clare’s handbook.

As the global director of GCI’s Corporate Practice, I have the fortune of working with corporate reputation expert all over the world, and there are many best practices to share. 

For example, something that is coming out of the Nordic region is the concept of employer branding — an area that will, I’m sure, catch on soon in both the UK and the US, in addition to other countries.  It’s based on the very true reality that the ability to attract and retain the best and brightest has become a challenge for employee communications experts, who find themselves working with HR people struggling with the same challenge. 

This is where the concept of “employer branding” comes in, a communications discipline that changes how the company communicates to current and prospective employees.  With Gen Y comes the fastest growing pool of talent, and they expect to be communicated to in a different way – including a heavy emphasis on online networking.  At the same time, there are plenty of Boomers and Gen Xers out there who want to be recruited in a different way. 

The “employer branding” concept examines the types of employees that companies want to attract and retain, and then markets the company to those groups in the way they want to be courted, through a mix of external and internal communications tools.  It’s an interesting approach that we’re excited to bring to other parts of the world.

So much has been written both in MSM and in the blogosphere about the Mattel toy recall that it’s almost not worth commenting on it in this blog.  As far as we can tell, nearly every reputation/crisis management expert out there has applauded Mattel for how they’ve handled the crisis to date, and they really do seem to be doing everything right from a communications view.  Some experts have commented (for example, in today’s Boston Herald) that this could be the worst thing to happen to a toy company, and they’re probably right.

The Mattel situation comes on the heels of concern over many things either made or sourced in China — toys and food being the most obvious examples.  Clearly, China has a far bigger reputation problem than Mattel or any individual manufacturer who sources product from China.

So, here are a few predictions.

First, we believe that Mattel will weather this storm beautifully.  The company has made much-loved toys for generations and they have a multitude of consumers who believe in Mattel, and will continue to buy their toys.  Most people will have forgotten about all this by the time the Christmas buying season is here, particularly if Mattel can continue to anticipate the news cycle and respond to it in a smart way (they need to watch the blogosphere, which is one area where they may be falling down).

Second, there will be more recalls and crises coming from products sourced in China.  This seems to be a tidal wave of negative findings regarding Chinese-made products, which puts the country and its businesses in an interesting position leading into the Olympics. 

Finally, if China can’t fix its own problems — and fast — businesses in the US and elsewhere are going to have to re-think how they source their products.  No company can afford to remain ignorant of how their products are made in China any longer.  If Chinese businesses can’t guarantee safety, then their business partners in other parts of the world will need to find alternative partners to get the products made — it’s as simple as that.

Where will they find new partners?  Could be another region of the world, or maybe in their home country.  Will this increase manufacturing costs?  No doubt, and chances are that it will then increase consumer costs.  Will consumers pay more for a toy today than what they paid yesterday?  If the toy is of value, yes.

This is an interesting house of cards to watch, and an interesting time for China, particularly with the Beijing Olympics just one year away.

There have been a number of major articles about the Canadian-based company Mega Blocks, and the company’s crisis with its Magnetix toy (which, under full disclosure, is a favorite toy of both my children — it’s a great toy that inspires creativity). 

It seems that Mega Blocks has become the most recent poster child for what a company can do wrong and, ultimately, right in the fact of a crisis, and those of us who help companies deal with product recalls/safety issues on a regular basis are familiar with those lessons. 

One interesting part of this situation is that Mega Blocks — which is now doing anything it can to protect the consumer and restore the reputation of this much loved toy — has taken one step further than other consumer product companies.  The company, of course, recalled the toy to make it more safe for children, but it now has an employee who focuses on online sales websites like eBay to purchase old product from people — on the CEO’s own personal credit card.

This is impressive, and certainly another indication of how the eBays of the world continue to change the way companies do business.  It’s a smart lesson to keep in mind for the future if your client or company is facing a similar crisis.

While many companies are waking up to realize that their overall reputation management is as critically important as managing their bottom lines, some still see it as more of an art than a science.  That’s where they’re mistaken.

Don’t misinterpret what I’m saying … there is a tremendous amount of art and creative strategy that goes into managing a corporate reputation.  But, without the scientific part — the quantitative and qualitative research that grounds the art and science with true insights into the company’s stakeholders expectations, the corporate reputation efforts can be likened to chasing fireflies.

Solid reputation research should start with the company’s employees — what do they want the company to stand for?  What’s important to the DNA of the company?  And, then it should move to external stakeholders — analysts, community leaders, customers, etc.  The employee research should serve as a foundation for exploring what those external stakeholders expect from the company — what’s important to them so that they will recommend the company’s stock, or buy the company’s products, or allow the company to operate in their community.

Once the research is conducted, then it’s important to examine the gaps between what the company wants to stand for, and what stakeholders expect.  Ideally, those gaps are not too large.  If they are, then the company must do some true soul searching to determine if there are operational issues that need to be resolved.

This research not only helps to ground the reputation strategy, but it also helps to serve as a benchmark for measurement, as well as the foundation for a solid issues and crisis management program.

From the head of GCI’s media relations practice, Bill Crane:

Be careful of too much ado…

We’ve been following Lucy Kellaway’s diatribe in the FT about Deloitte’s employee communications with amused interest, and even blogged about it a few weeks ago.  Last Monday, she devoted an entire column to the fact that she had been invited to Deloitte that very morning (9 July) to get a “state-of-the-art corporate bollocking.”  She then proceeded to complain that corporate bollocking today is not what it used to be, since the “PR people have taken over and emotion has been outlawed.”  The FT even recorded her column for a podcast, which can be accessed from their website.

Since, then, we’ve waited to hear how the “corporate bollocking” went for poor Lucy.  Today, she makes a short mention of it at the end of her column about a completely different topic.  She states that the meeting with Deloitte “went very well indeed” and she seems to have been impressed by John Connelly, Deloitte’s global chairman.  In fact, she complimented him for keeping his emotions in check and for asking her what it is that Deloitte has to do in order to get her to write a positive column about the company.  She even admits that “Global chief of Deloitte sends perfectly okay e-mail” doesn’t make for a compelling headline.

And, that … as far as we can tell … is the point.  Although she complained about PR people getting involved, they clearly made a difference here, helping the chairman prepare for the meeting, and ameliorating the situation with her sarcastic (and oh-so-fun-to-read) pen.  And, like any journalist, Lucy is looking for compelling headlines.  It will be interesting to see how long she waits before writing about Deloitte again in the future.

The Financial Times gives us so much fodder for this blog!  Their columnists seem to comment on issues impacting the PR business almost daily.

There are two stories today worth commentary.  First, Lucy Kellaway continues her rant about Deloitte, writing a column yesterday about having an appointment to meet with them as a result of her recent columns, and then a podcast about the meeting.  More on that tomorrow when we’ve had a chance to listen to the podcast.

The other is a commentary written by John Kay, who has focused today’s column on the confusion between branding and products.  He brings up some interesting points (e.g., “With restaurants or wine, a strong brand is not so much a guarantee of excellence as of its opposite — McDonald’s and Gallo are names to conjure with for accountants and brand managers, not gourmets or wine connoisseurs” and “The name is a means of labelling what we know; the brand is a means of conveying information about what we do not know”).

However, we find ourselves disagreeing with his overall premise.  While it’s true that people do confuse brands with products, he’s missing the very important concept that brands are only as good as their brand essence.  McDonald’s isn’t a brand that’s meant to appeal to a gourmet.  It’s a brand that stands for quick, inexpensive and uniform food in any McDonald’s restaurant in any part of the world.  Likewise, companies that have focused on building their corporate brands stand for something that business executives and investors appreciate — FedEx for service and dependable delivery; J&J for caring; Dell for made-to-order.

In addition, the columnist states, “Brands appeal to the underconfident.”  While we understand his point, we do not agree with it.  Building a brand means finding a way to resonate with your audience … whether it be the hamburger eating public, the wine connoiseur, or the investor.  By conducting in-depth research, we can now identify what most resonates with the company’s target audience, and then build a brand around their expectations and the promises the brand is meant to keep.

When Jim Quigley became CEO of Deloitte on June 1, it’s clear that he had a corporate communications team (and perhaps a PR agency) behind him to help introduce him as the new CEO. 

However, at this point, I wouldn’t want to be in their shoes. 

Lucy Kellaway, a well-known workplace reporter/columnist for the Financial Times, has brutally written about Deloitte’s two major employee communications missives.  First, she skewered his introductionary memo, saying that, in her opinion, it’s the worst motivational memo she’s ever read (FT, 11 June 2007).  Then, she followed up with another column this week, headlined “I’ve found the worst employee handbook ever” (FT, 1 July 2007), lambasting Deloitte’s “The Little Blue Book of Strategy.”

I haven’t read either pieces, and so I cannot comment on them.  However, there are clearly some important lessons here for those of us who work in the employee communications field. 

1) Make sure that your memos/emails to employees have clarity.  This seems obvious, but the columnist includes some pretty opaque quotations from Quigley’s memo.  And, while we’re addressing clarity, make sure that your language resonates with the staff.  A good communications team asks people at different levels of the organization to review important documents prior to distributing it globally.

2) Avoid platitudes.  Again, this one seems obvious, but communications professionals tend to rely upon platitudes way too frequently, which, of course, become hyperbolic and also interfere with the clarity of the message.

3) Always state what’s in it for them.  Employees want to know how they can make a difference at the company.  If your communications doesn’t outline how they can do that and what the rewards will be, then we’re back to corporate platitudes again.

4) Remember that everything you distribute internally gets distributed externally.  Someone at Deloitte sent these two employee communications pieces to this particular columnist.  She’s doing her job by reporting on it; it’s our job to make sure that it’s written so well that she decides NOT to write about it (unless, of course, she wants to applaud the clarity of the document).

Business Week’s cover story entitled “What Price Reputation” (July 9, 2007 edition) is an interesting and important read for anyone in the reputation management business.  There are many points of the article that resonate with us: 

1) There’s a new science of reputation management;

2) Savvy companies now realize a need for a more sophisticated understanding of the power of perception;

3) The trick is to decide which factors are most important to a company’s image — and those factors will differ vastly for each company;

4) Experts (including those at GCI) are out there to help Corporate Communications departments look at their reputations and “re-engineer” or build them.

In fact, it’s a fascinating time to be in this business, and we’re pleased to be working with companies like Darden and Dell in this arena.

However, there are a few important points of this article that we need to comment on … While it’s tempting to sell the idea of corporate reputation as a stock price boost, that’s only one part of the story.  Yes, a sterling reputation has tangible impact on the valuation of a company — anyone who works in this industry knows that, and it’s nice to see it recognized in an important publication like Business Week. 

But, corporate reputation should be looked at holistically, not just through the lense of market valuation.  Stock price is critically important, but a positive corporate reputation also allows companies “license to operate” in communities, to weather issues and crises better than others, and to attract the brightest and best employees, among other, less tangible benefits. 

Thus, truly savvy companies start their reputation “re-engineering” by researching many different stakeholders — including securities analysts, industry analysts, community leaders, industry leaders, customers, the general public, employees, critic groups, and even senior management of the company itself. 

By gaining a 360 degree view of a company’s reputation, we can then truly identify the expectations of that company and the gaps in those expectations, as well as the issues that are most important to them.