Corporate Reputation is Your Full-Time Job, Mr. Director!
In today’s fast-paced business world, a company’s reputation calls for constant scrutiny and managing it is no longer optional. Every decision, every public comment, and even every silence, can make or break the image of the company.
Reputation management is not just a Public Relations agenda; it’s a strategic asset critical for earning trust, ensuring commitment, and driving shareholder value. Protecting and upholding the company’s integrity, transparency, and goodwill is an indisputable board responsibility, one that forms the very basis of the company’s right to function and sharpen its competitive advantage.
Importance of Corporate Reputation
A business’s reputation can be considered as the ‘trust capital’ of the company – essential for it to stand out, whether to draw in stakeholders and investors or to foster and maintain loyalty amongst them. When reputation suffers, so does the trust and brand value. It is essential to understand that it directly influences valuation, risk management, and stakeholder relations, making it critical for leadership to continuously safeguard and promote it.
It is important to note that a company’s reputation can be damaged by its actions and communication; its products, services, and personnel might be viewed negatively by stakeholders. Take the case of Qantas Airways. The airline’s post-COVID-19 strategy attracted criticism for prioritising financial and commercial gains over the needs of customers and employees. This ultimately led to the resignation of Qantas’s long-serving CEO and a substantial penalty from his final exit benefits. Along with him, several directors, including the Chairman, were replaced in an effort to restore the company’s reputation with its stakeholders.
The Director’s Role in Safeguarding Reputation
Managing reputation is no longer seen as a one-off task; rather, it is a key element within every business decision and leadership responsibility. Amidst growing internal and external challenges, including geopolitical situations, market volatility, rising Environmental, Social, and Governance (ESG) expectations, and stringent regulatory compliance and scrutiny, the company board has to ensure complete transparency and proactiveness to preserve and enhance the corporate reputation.
Directors serve as custodians of stakeholder trust and long-term value within the organisation, with their accountability encompassing culture, ethics, ESG commitments, and risk, all essential to building and sustaining a positive corporate reputation.
How Directors Can Foster and Sustain a Positive Corporate Reputation
For a company’s reputation to truly thrive, board members must recognise that effective reputation-building starts at the highest level. Consequently, directors should:
Align Reputation Strategy with Business Strategy: Managing the reputation of the enterprise should be treated at par with financial performance and operational risk. The reputation-related goals need to be integrated into the company’s long-term planning, steering decisions on brand positioning, stakeholder trust, and public responsibility.
Conduct Regular Stakeholder Benchmarking: The board membersshould seek regular, periodic qualitative and quantitative assessments of how key stakeholders—customers, investors, employees, regulatory bodies and other Bizfluentials™—know, think and feel about the company. These insights can help identify the white spaces, potential risks, and areas where trust needs to be reinforced and nurtured. Astrum, India’s first and only science-based reputation management consulting firm that I Chair, has created this unique position on the basis of this investment in mining bespoke stakeholder insights to inform the reputation strategy that is developed for their clients.
Demand a Swift, Transparent Crisis Response: Reputational crises are often sudden and unprecedented. Therefore, directors must ensure that the organisation has a resilient, scalable crisis management plan with laid out protocols for rapid, transparent communication to handle any adverse event arising due to any internal or external factors. It is the board’s responsibility to ask hard questions, insist on accountability, clarity, and action from the leadership from the get-go. Importantly, it is critical to invest in effective ‘crisis preparedness’ to ensure responsiveness and alacrity in a 24/7 news cycle world.
Champion Purposeful Leadership and a Values-Driven Culture: Purpose-driven leadership that cherishes and lives by values and beliefs form the foundation on which a strong corporate reputation is built. Directors, therefore, must set the groundwork from the top by promoting integrity, fairness, and transparency, and by holding management accountable for living and driving these values every single day. Qantas, for instance, has won back its reputation by focusing on key areas of service quality, timeliness, transparency in communication, and overall customer experience, led by a purpose-driven leader focused on rebuilding trust and powering meaningful change.
Evaluate the Social and Environmental Impact of Decisions: In today’s value-driven business ecosystem, ESG goals must focus on driving sustainable growth, creating enduring value, and strengthening stakeholder confidence. A company’s responsibility goes beyond delivering quality products or generating profits; it must strive to establish itself as a socially responsible and environmentally trusted entity. The board, therefore, needs to evaluate every strategic decision through the lens of its impact, not only on shareholders, but beyond the walls of the company – on society and the environment.
Learn from Past Reputation Crises to Build a Better Future: We have many real-world examples that demonstrate how inadequate and short-sighted management and skewed priorities can hurt the company’s reputation, one that can take years to recover from. Directors should use these lessons to improve governance, align leadership objectives, and protect the company’s goodwill against any future reputational risk.
Having the Right Mix at the Table – a Mandate: Bring diverse voices, yet sharing a unified vision for the organisation, to the table is a mandate that is imperative for building and driving sustainable and scalable reputation management strategies.
Directors who showcase honesty, openness, and accountability are the ones who win lasting trust for the company and for themselves. As the company’s public face and ethical guide, directors must treat reputation as part of their core responsibility- every day, not just in crisis.
The article was originally published in the two special bumper issues of Board Stewardship. Links for the original article are given below:
August – Dr. Lalit Kanodia and Datamatics
Chairman
Sunil Lulla is the Chairman of Astrum, India’s first specialist reputation management advisory, combines the science of persuasion with ethical public opinion shaping.
Sunil is known for his success in growing sustainable businesses, building enduring brands, and shaping organizational cultures. He brings deep insights into Indian consumers and in managing growth, business, and competitive strategy, mentoring the Promoter/ Next Generation/ CXO. Sunil continues to serve on Boards of listed companies and is very familiar with the governance principles and management of Boards.
For most of his storied career spanning close to four decades, Sunil has been in a leadership position, ensuring profitability, building marketplace success, and driving high employee engagement. These include MTV, SONY, The Times Television Network, Indya.com, HMV, Diageo, Balaji Telefilms, JWT, GREY group and BARC. He is the Chief Evangelist of The Linus Adventures, an advisory service focused on enabling businesses to compete, grow their brand and build their culture.