Risky Business: A Discussion on Today’s Reputation Challenges

March 1, 2018

Corporate-communications expert Barie Carmichael, who co-authored the new book “Reset: Business and Society in the New Social Landscape” with the late James Rubin, says companies hoping to thrive in our current technological times need to make reputation management a top priority.

Businesses are seeing “simultaneous trends of decreasing trust and rising expectations,” says Carmichael, a senior counselor at global communications consultancy APCO Worldwide. She’s also a Batten Fellow at the University of Virginia Darden Graduate School of Business.

Carmichael took time to talk with Strategies & Tactics about the pillars of her new book, which explores how businesses can balance their corporate needs with earning the trust of key stakeholders in a time of extreme transparency and information.

How has business risk evolved in an era of hyper-information?

I think this is the question for C-suites and boards of directors. For decades, data has shown [the public’s] declining trust in, and escalating expectations for, big business.

This trust-expectations gap poses substantial risks for C-suites. As stated in the book, “What has not changed in this new landscape is the need to be profitable. What has changed is web-enabled stakeholder vigilance for how that profit is made.” The proof of meeting today’s rising expectations is actions taken, not pledges to act. Again, from the book: “What a business does is the authentic content for what it says.”

The risk of ignoring this new business context is not simply losing market share. It is losing one of the most consequential competitive races I have seen in my lifetime: attracting the next generation of talent.

This new social ecosystem requires that management [implement] an outside-in understanding of their social risk. A discrete corporate-social-responsibility initiative will not shield a company from inherent negatives in its business model if those negative impacts expand as the company grows.

Early in the book, you discuss UPS
’s decision to reduce its carbon footprint as a reputation-management strategy. Why is it important in today’s business environment for companies to vigilantly address their inherent negatives?

The long lead-time typically needed to address inherent negatives makes the fiduciary duty to anticipate them even more urgent in the hyper-transparency of the new social media era.

Addressing an inherent negative is good for business and society. This is the essence of finding the new three-way balance for business: profitable business strategies that meet customer needs and benefit society.

By cutting 100 million miles annually from its deliveries, UPS has reduced its cost of doing business, contributing to its profitability by reducing its annual fuel consumption by ten million gallons. By reducing its annual CO2 emissions by about 100 million metric tons, UPS is also mitigating the environmental impact of its business model. A win/win. UPS has been proactively working at this goal since early 2000. Companies like Patagonia, Danone and Unilever have also addressed their inherent negatives as a core business strategy.

How has reputation management evolved with technology and social media?

An unprecedented power shift has occurred in the control of corporate narratives, away from “establishment” sources of information and toward individual experience. Ironically, the same technology that has obliterated the control [once] exercised by curators of information and gatekeepers of visibility has also enabled corporations to monitor communities of thought forming on social media. Any business that is not monitoring its reputation on social media is potentially committing a bet-the-company error, given the speed with which crises can develop.

New monitoring technology, however, generates an overwhelming amount of information. The key is converting that information into actionable insight, where sometimes the right action is, in fact, no action.

The monitoring tools themselves will not deliver the insight needed for action. It requires a seasoned group of individuals, a team comprising people both internal and external to the company who together can provide a diverse perspective not constrained by the group-think of the corporate cultural bubble.

What’s the best approach for executives and brands that feel compelled to take a stand on social or political matters?

As mentioned in “Reset,” “While speed is a key factor in this new environment, no reputation was ever advanced by quickly articulating the wrong message.”

The urgency to respond does not negate the need for a thoughtful process to decide if and how to respond. Corporate employees are as diverse as the public itself, with beliefs and passions that are sometimes antithetical to one another. A corporate position that some employees advocate could offend others.

Companies that do it right combine intelligence gained from their external monitoring with protocols specific to their own cultures. Questions to ask include: Is the issue important to our business, including our key stakeholders? Is the issue central to our values? Would silence on the issue be inconsistent with our values?

While a thoughtful process is needed, however, it cannot be protracted, since speed is a legitimate factor. When a company needs more time to gather information, it can offer an initial message about the research underway to choose a [stance]. Taking a pause is better than rushing into a position. 

Dean Essner

Dean Essner is the editorial assistant for PRSA’s publications. A former resident of Washington, D.C., he holds a bachelor’s degree in journalism and English from the University of Maryland. Email: dean.essner@prsa.org.


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