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Dr. Leslie Gaines-Ross Headshot

Reputation Trends for 2013 -- Now and Ahead

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So this year's list brings you a mash up of reputation musings. Let's say it is a New Year's summary of what has passed and what may be in the future.

1. CEOs are reputation's first responders. Despite the media appeal of seemingly leaderless organizations such as the Tea Party, Occupy Movement and Arab Spring, leaders still matter. What has not changed according to the more than a decade's worth of research that I've done in this area is the importance of leaders. Nearly one-half (49 percent) of a company's reputation remains attributable to its CEO. What has changed is the increasing importance of a CEO's response to a crisis. Today it can make or break a company's hard-earned reputation. The odds are increasingly high that every company will face a crisis at some point in any five year period (AON Oxford Metrica Reputation Review 2012). A timely, sensible and forthright response by a CEO to this all but inevitable crisis is more important than ever to inspire confidence, maintain shareholder value and stabilize corporate credibility.

2. Internal is the next reputation frontier. Employees can dash corporate reputation overnight by sharing confidential documents, sending errant emails or tweeting the inappropriate. They can, however, also help build a reputation. Turning employees into advocates is an area ripe for expansion and experimentation. No better foundation exists upon which to secure a reputation than an informed workforce. Because recession- related layoffs demoralized many work places over the past several years, internal communications and culture changes have not received the attention they might have. In the year ahead, expect to see more companies compete for Best Places to Work accolades. Don't be surprised when we start seeing more employees praising their employers, not just criticizing them through such vehicles as Glassdoor.com. [Incidentally, Glassdoor.com has grown from one million members in June 2011 to more than 14 million today.]

3. Self-inflicted reputational crises cannot be overlooked. Due to my book on corporate reputation recovery, I often receive calls from executives of crisis-ridden companies about best practices in reputation repair and restoration. Almost always, the executive comments that his or her company's reputation has been unfairly damaged with unsupportable claims and that the reputational attack came without warning. Yet, most crises are, in fact, self-inflicted. They often could have been averted if only leaders were more in tune with the early warning signs of a future crisis. In the coming year, more companies will take advantage of the latest technologies so as to get serious about building better risk management dashboards, risk mitigation strategies and 24/7 social monitoring to identify vulnerabilities. Such new listening command centers will allow CEOs and their teams to bypass information filtered by intermediaries and directly ask more questions about near-misses and anomalies in the data. The need to do just this is now confirmed by hard evidence: on average, shareholder value declines 33 percent within a year after a self-inflicted and visible crisis rears its ugly head (Booz & Co.).

4. The quantification of reputation grows exponentially. Reputation today is increasingly measured by the numbers -- how many people visit a company's website, follow it on Twitter, like it on Facebook, connect on LinkedIn; not to mention how high corporate influencers score on Kred or Klout. If it can be counted, the implication is that it is reputation-verifiable. Nevertheless, reputation as a discipline is still largely perception-based and might not fit into easy-to-chart frameworks. As reputation researcher Graeme Trayner wrote this year, we cannot ignore how reputation is often formed by fleeting impressions, hearsay, advertising cues, mental shortcuts, intuition, what the crowd thinks and long-term associations. A preoccupation with metrics may not provide reputation's full picture and multi-dimensionality.

5. Corporate and brand reputation are nearly indivisible. Corporate and brand reputations are increasingly converging. As our research confirms, nearly 9 in 10 executives believe that a strong corporate brand is as important as a strong product brand. Finding the right balance is now the Holy Grail for CMOs and CCOs. Given the ubiquity of the Internet, corporate parentage of a brand is readily apparent nowadays. This can actually be a good thing because a brand's lineage can provide quality assurance to individual brands and push corporate brands to up their games.

6. Reputation loss is not to be taken lightly. When former McKinsey chairman Rajat Gupta was sentenced to two years in prison for leaking boardroom secrets to former hedge fund manager Raj Rajaratam, Gupta's lawyer said that he "tried to keep his client out of prison by arguing, unsuccessfully, that Mr. Gupta was a proud man for whom the loss of his reputation was a punishment far worse than incarceration. This is a fall from grace of Greek tragedy proportions." Whether the lawyer was simply doing his best to keep Gupta out of jail or not, he was right about one thing -- reputation loss can be horrific, often just as horrible as going to jail.

7. Reputations are being reshaped as corporations become political citizens. We are starting to see company reputations being further shaped by what is happening in civil society and the political arena. Whereas companies used to stay far away from such situations, some corporate leaders -- for better or worse -- are now taking stands that place their companies squarely in the line of sight. Many of the issues facing the nation or even the world at large are now deemed the business of business -- education, cyberbullying, civil rights, climate change, obesity, same-sex marriage, etc. CEOs of top companies, for example, began an advertising campaign in November warning Congress not to take America over the fiscal cliff. Also, Starbucks' CEO just asked employees the day after Christmas to write "Come Together" on cups for drink orders to send a political message about the current fiscal negotiations. The public square and corporate corridor are merging in unprecedented ways with not yet fully understood effects on many a corporate reputation.

8. Social reputation is next. 2013 will bring a greater focus on social reputations, be it for companies or CEOs. Companies that are truly social and engage their employees and customers in genuine conversation will be recognized as the new corporate leaders. CEOs who are social will be the next new thing. In a 2012 IBM study among CEOs from 64 countries and across 18 industries, only 16 percent participated in social media. Yet, that figure is expected to rise to 57 percent within the next five years. New research from Weber Shandwick to be released at the start of the New Year confirms that CEOs are increasingly mustering up the courage to go social and show their human side. As tasti-D-lite's chairman and CEO James Amos said in his new book on how his company went social, "the future is human."

9. Responsible reputation-making. As the year ends, a shout-out for building responsible executive reputation is clearly in order. In a conversation on Christmas Eve, I reminded guests that leaders did not use to have second acts following their executive tenures. Presidents, CEOs, mayors and others used to leave their prestigious jobs and take to the golf course. Today, we are lucky to have leaders such as Bill Gates and Bill Clinton who have devoted their next chapters to responsible endeavors that make a difference in this world. Reputations can be burnished in surprising ways.