Good reputation is key to for any organization in a competitive market. And, good reputation is an important condition to get stakeholders’ support and it is a critical factor to shine in the financial markets. “The Intersection of Corporate Governance and Reputation” was the topic discussed by AnnaMaria DeSalva, Global Chairman & CEO, Hill+Knowlton Strategies.
We are in a special moment, when reputation has never really mattered more, she stated at the beginning of her talk. And in India, which is a very important market for many companies, the market is experiencing both challenges and opportunities of this moment, in an extraordinary way. The practice of reputation management is changing to directly impact business strategy and launch value creation. As a result, it is emerging as an exquisite strategy discipline for management teams as well as a corporate governance matter for boards of leading companies.
Reputation is the currency of tomorrow
“Reputation is the currency of tomorrow,” she declared and explained that according to Lloyd’s of London and KPMG, intangible assets made up 80-85% of a company’s market value, and corporate reputation is the largest part of that. The last several years has been re-setting the relationship between business and society; and now, the pandemic has effected society and propelled disruption with scale and speed. All this has been occurring amid a shift in geo-political scene, the emergence of new geo-economies and new trade dynamics, plus taking into account the way crisis in health is growing along with the climate change and concern for sustainability.
Elevated global risk is on the rise again, she said. Businesses experiencing this disruption are progressing successfully and many companies are pushing amazing transformation. And, opportunities have been on the rise too. “It’s created an incredible balance-sheet of outsized risks on one side and opportunities on the other side; and, I see business leaders urgently focused on strengthening this balance-sheet, reducing the risk and converting the opportunities to create long-time sustainable value and doing that competitively and faster,” she revealed. It is dynamic – the degree of disruption, the incredible nature of risk, the rising power of stakeholders, the increasing activity of governments and now, more than ever, reputation strategies are required. And because reputation management matters, it is part of our job to as experts to make it understandable, she pointed out.
Reputation is what your stakeholders expect of you and how you perform against these expectations. There are three key levers for reputation: engagement (ongoing effort to shape, inform and understand stakeholders’ expectations), action (making strategic choices, operational activities that drive the business, new outcomes and experience) and amplification (to communicate, express purpose and performance)
Business leaders need to be far more proactive
Business leaders need be far more proactive regarding communication risks associated with climate change that’s increasing risk management, reputation and future business strategies. Another trend that is driving building reputation capital is integration of adjacent disciplines, communication, public & government affairs, policies on sustainability and investor relations. The focus on ESG is creating another change and a convergence and we see this across many domains like communication, consulting, accounting and legal. And, a strategic approach to the changing needs of stakeholders has been the core competence of the communication discipline.
The change is happening. Now there is a rise in progressive boards around the world, this has resulted in communication professionals playing a greater role in governance. She went on to add that the shift can be seen clearly today and presented a formidable list. Coca Cola has a Public Policy & Sustainability Committee, AT&T has a Public Policy & Corporate Reputation Committee, Bank of America has an Environmental & Social Risk Policy Framework, Goldman Sachs has Public Responsibilities Committee, JP Morgan Chase has Risk Committee, Citi Group has Group Reputation Committee, P&G has Governance & Public Responsibility Committee, Pfizer has Audit Committee and XPO Logistics has Nominating, Corporate Governance & Sustainability Committee. “The importance of reputation management is ascending to the highest level and I personally feel so motivated with what is happening today,” she shared.
In the Q/A session, Seema Thareja Kathuria, Russell Reynolds Associates touched on the skillsets required and AnnaMaria disclosed that “In my case, I was showing up to difficult work which progressively led to a different kind of role”. Regarding leadership attributes she brought in behind her leadership role, she highlighted – “to be courageous and take risks with humility”.
Concluding the session, her advice to communication leaders was – “be a business leader, don’t think yourself as a communications leader. Be appropriate, but don’t wait for permission”.
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