Internal partnerships for more effective reputation management

When the recent furore over tax avoidance by five global brands erupted in the UK, we can imagine the kinds of conversations taking place inside the companies. Some would be trying to explain and justify the corporate position to counter the backlash from customers, the media and activists; others trying to assess the damage to sales, market share and brand equity; a few others trying to prevent a slide in staff morale and concentration. Almost all would be in some crisis planning mode to try and limit damage to the company’s reputation.

In such circumstances, it is easy to take a pragmatic view and say despite the best risk assessments, unforeseen events do occur; it is possible to be blind-sided.  That may be so. But the reality is -as show by public’s reactions -stakeholders take an unforgiving line if they perceive a disconnect between a company’s actions and its statements on corporate behavior. Proclamations on corporate and brand values and CSR principles begin to sound hollow. How could they begin to reconcile a company’s vow to dedicate itself to earning the trust and respect of its  publics by being responsible and doing things that are good for society with its actions to minimise its contribution to the public services coffer?.   It is at times like these that the value of achievements resulting from CSR programmes and brand campaigns – in fact, from all good deeds across the company – takes a tumble.

The companies argued that their activities were legal. They obeyed European taxation laws. And they have a duty to minimise corporate liability and maximise shareholder value. That may be right and proper. However, it is good management to be also sensitive to the broader unintended consequences of such decisions. And not leave the company open to accusations of any malpractice – in this case, tax evasion.  You cannot assume that the public has a deep knowledge or understanding of corporate laws and regulations. It merely sees a company’s actions as being ‘good’ or ‘bad’ and almost always in emotional, visceral rather than cerebral terms.  Any artificial depression of profits and other measures to reduce the tax bill and hence not contribute to public services is likely to be seen as just plain ‘bad’.

As external pressures build up, some companies sought to make appropriate reparations. To its credit, Starbucks accepted public criticism of its tax affairs and stepped up to pay some corporate tax voluntarily.

A sceptic might respond by asking if things have to go wrong first before they can be put right. No, they do not. Some prevention is always better than a cure. Some foresight built on insights is better than myopia. However plausible reparations might be, they are a short term fix. The deep down core problem remains. The de facto way of managing reputation in most organizations is still built on territorial and hierarchical lines, where decisions may be taken to uphold the supremacy of a particular function and where a pecking order of influence on corporate decisions prevails. How often do CSR managers feel that they have the clout and reach in their organizations to influence the Board or finance or corporate strategy decisions?

Chances are that the impact of decisions in one area are not always validated in terms of their consequences on another equally important area, creating huge imbalances in the way the company’s behaviour is perceived and rated. If the company has built a credible CSR track record, this can be easily undermined by poor governance, financial, marketing or human resources decisions which took no account of the impact on CSR. A huge crack appears in the minds of stakeholders in terms of what the company says and what it does. It reinforces the beliefs of the anti-business lobby that business shows schizophrenic and sociopathic tendencies in its dealings with society. Any attempts to appear to be responsible are mistrusted.

So what is the solution?

At the strategic level, it is about remodelling and incentivising the responsible business management approach to make it more rounded, collaborative, interconnected and interdependent. At the practical level, it is about creating collaborative systems and ways of working – such as internal partnerships – to facilitate better decisions  for delivering societal obligations.

Responsible business management is the one area where clichés around ecosystems actually hold. The codes of conduct, attitudes and actions of a company towards its shareholders, customers, employees, suppliers and distributors, communities and the environment are symbiotic.  A very simplified illustration – good governance structures and enlightened leadership create well run companies. Sound workplace and HR practices with respectful treatment of employees engenders a productive and committed workforce. Good eco-friendly and ethically sourced products and inclusive marketplace behaviours generate sales and loyalty. Effective community involvement and sound environmental practices create social goodwill. All of these have a positive effect on financial performance, which satisfies the shareholders and encourages more investment.

In reality, this harmonious picture may not always be there. Instead, it is more likely that the functions which look after shareholder/investor, customer, supply and distributions chain, employee, community and environmental stakeholders work largely in isolation of each other, with some nominal and perfunctory overlap of shared interests. The proof of this lies in the way crises emerge, leaving you wondering if they could have been avoided if there had been a more substantive bond between the functions and the people who lead them.

So where do you start in practice?

The company’s annual strategy management process is a good time to do a health check on how its  key functions interact ; its code of  business conduct/ethics; its corporate governance /accountability and transparency procedures ; its decision-making protocols/processes; its leadership and management approach (performance measurement and development) and its values systems  and communication culture.  And where gaps arise, these can be fixed through temporary internal partnerships between the relevant functions and led by influential managers.

You might begin by setting up an internal partnership to make systemic changes in the communications culture and modernise your communications systems.  This would bring together investor relations, communications , marketing, CSR/sustainability, HR, legal and operational decision-makers and practitioners to provide strategic oversight of reputation building as one coherent and cohesive activity, look at the impact of decisions in one area across all other areas, contribute substantive content for corporate narratives, and create opportunities for richer dialogues between the company’s external and internal ‘markets’.

You may then want to set up an internal partnership to review the different codes that define your corporate behavior  and synthesise them into one superior code. The next step would be to help embed the combined code in all business operations from sourcing to product design to product creation to manufacturing to marketing to environmental affairs and in all support functions from corporate strategy to HR to finance to communications.

Internal partnerships may seem a strange notion given that the usual way to finding solutions is to set up steering groups/’tiger team’s,  projects and project teams. In my experience, partnerships and projects have different attributes, perform very different roles and deliver very different outcomes. Partnerships deliver more transformative outcomes, more lasting changes in behavior. Internal partnerships are an effective and sometimes a radical way of delivering business, cultural and organisational transformation, including the integration of responsible business practice into core business operations. Project management is just one of the several methodologies available to support the partnering process.

Partnering is not easy. It critically depends on establishing strong working relationships between key individuals with often parochial and positional interests. It requires a radical change of mind-set and behavior together with a willingness to think and act in new ways. Partnering effectiveness requires specific skills, self awareness, persistence, courage, tenacity and imagination in those involved – and leadership.  The upsides of collaborative ways of working across functional boundaries and management hierarchies are, however, considerable.  They make it possible for a company to withstand the impact of unintended consequences from a much stronger position.

 

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