Background

1
PR Ethics Reputation
Presented by John Dalton Director of LSPR
Worldwide Dalal Nageh Course Director
2
PR Ethics Reputation

• PR and its practice cannot be divorced from
  business ethics
• Since the collapse of ENRON WorldCom PR and
  applied ethics has become as focus for western
  companies
• Evidence shows that compliance and an ethical
  approval helps sustain long term - growth.

3
Background

• Corporate Governance (CG)
• Socially Responsible Investment (SRI) Ethical
  Investment
• Corporate Social Responsibility (CSR)
• CSR and Reputation Management
• How to manage Reputation
• Stakeholder theory reputation management

4
Introduction

• Corporate Governance Business Ethics
• Standard and Poors defines corporate governance
  as
• Corporate governance refers to the rules and
  incentives by which shareholders control and
  influence a companys management so as to
  maximise profits and the value of the
  corporation.

5
What issues does CG deal with?

• Compliance with laws and regulations
• Accuracy of corporate financial reporting
  providing accurate corporate data
• Transparency allowing shareholders and others
  access to information the question of
  disclosure.
• Accountability who are the directors
  responsible to?

6
What issues does CG deal with?

• General standards and principles
• Developing accounting standards ensuring
  auditor independence
• Monitoring and measuring the performance outcomes
  of CSR initiatives the impact of corporate
  citizenship
• Role responsibility during merges and
  acquisitions - problems of hostile take overs

7
What issues does CG deal with?

• At the centre of CG is the recognition of the
  need to separate ownership from management
  control, thereby preventing conflict of interests
• Conflicts of interest will inevitably occur
  e.g. what influence should institutional
  investors (pension funds insurance) have on
  individual corporations

8
What issues does CG deal with?

• In the UK, pension funds represent 1/3 of the
  total market capitalization of the London Stock
  Market.
• Following the meltdown of ENRON and corporate
  scandals surrounding TYCO WorldCom in the US,
  the SEC introduced a host of new governance
  measures backed by George W. Bush.

9
What issues does CG deal with?

• In the UK, in January 2003, the Higgs report
  tackled the problems associated with non
  executive directors

10
Why has Corporate Governance become so important?

• Historical the term was hardly seen a decade
  ago, but following high profile scandals such as
  BCCI, Barings, Robert Maxwell Enron, the media
  and public have rightly became highly suspicious
  of corporations.
• CEO Board Behaviour
• Failure of corporate reporting systems
• Attitude of MNEs to human rights, pay and
  conditions

11
Why has Corporate Governance become so important?

• The influence of institutional investors and the
  issue of proxy votes made by mutual funds not
  being disclosed
• Rise and power of NGOs and campaigning
  organisations
• Rise of shareholder activism and ethical
  investing

12
Socially Responsible Investment (SRI) Ethical
Investment

• Screening
• Shareholder activism
• Cause based investment community investment

13
Corporate Social Responsibility (CSR) licence to
operate

• The European Commission defines CSR as follows
• essentially a concept whereby companies decide
  voluntarily to contribute to better society and a
  cleaner environment
• The concept of the triple bottom line
• economic
• social
• environmental

14
Benefits of CSR

• Reduces exposure to risk and accusations of
  irresponsible behaviour
• helps cushion vaccinate during time of crisis.
• Enhances employee recruitment
• Improves stakeholder communications
• Reduces risk exposure, improves investor
  confidence and the ability to raise capital

15
Benefits of CSR

• Encourages innovation
• Encourages a more inclusive corporation

16
CSR, Reputation Financial Performance

• Does CSR Pay?
• What issues does CSR address?
• Pollution of the environment
• Supply chain management
• Human rights
• Ethical investment
• Good governance
• Political social
• Employee rights
• Training
• Stakeholder engagement and dialogue
• Clean technology
• Overall reputation

17
CSR Initiatives

• The Global Reporting Initiative (GRI)
• OECD Guideline for Multinational Enterprises
• ISO Standards
• SA 8000
• UN Global Compact
• Ethical Trading Initiative (ETI)

18
The Concept of Sustainability

• The Dow Jones Sustainability Index
• The FTSE4Good Index

19
Risk

• Uncertainty of outcomes, based on probabilities
• Risk uncertainty (or probability) x impact
• Pre entry risk
• Ongoing risk issue management

20
Risk

• Categories of risk
• Operational
• Strategic
• Marketing
• Brand reputation
• Financial
• Intellectual Property
• Technology and e business
• Human or personal
• Price or market
• Merges and acquisitions
• Event based political, terrorism, weather

21
Good PR and reputation acts like a vaccine

• Brands, especially corporate brands, are the best
  psychological vehicles for delivering meaning and
  value
•   This raises the question of the role of PR,
  brand and relationship management within
  corporations
• Does PR now equal reputation management? If the
  answer is yes, what are we doing about it?

22
What is Corporate Reputation?

• The interplay of identity and Image
• A single precise definition does not exist
•  Whatever definition is agreed upon, reputation
  must be considered in its historical context i.e.
  the track record of a company.
• Whereas corporate image refers to the latest
  beliefs someone holds about a company, corporate
  reputation represents the long-term collective
  assessment of a corporations integrity.

23
Factors that build Corporate Reputation

• Corporate Advertising
• Quality of products and services
• Brand value
• Innovation and creativity
• Customer satisfaction
• Corporate citizenship
• Financial performance
• Organisational structure and culture
• Vision and leadership
• CEO performance and reputation
• Internal communications/employee satisfaction
• Core competencies
• Collaborative networks

24
Corporate Identity self-presentation

• This has traditionally referred to the physical
  ways a corporations defines itself i.e., the
  identity mixe.g
• Logo and trademark
• Products and packaging
• Colours
• Annual reports
• Web design
• Staff communications
• Uniforms, signage and livery
• Advertising
• Building design
  
  
  
  
  
  
  
  
  
  
  

25
Corporate Identity self-presentation

• However, identity is more than just the visual
  elements of a corporation and how these
  differentiate one company from another. 
• It must also take into account the day-to-day
  operational reality, which employees, suppliers
  and other key stakeholders (including consumers)
  experience. 
• In this regard, identity and image overlap.

26
Corporate Image perception is all

• Corporate image reflects the set of beliefs or
  attributes that people ascribe to a corporation.
  It is in part identity, but is evaluated on what
  consumers perceive at specific points in
  time. 
• Image is a construct of cognitive and emotional
  (psychological) attributes that are holistically
  evaluated by consumers. It is affected by
  identity, positioning and how the company behaves
  i.e. peoples experience of the product/service.

27
Corporate Image

• Once corporate identity and image are established
  (over time), a corporate reputation emerges,
  either positive or negative
•  
• If an individuals own values accord and fit with
  the companys image, then that individual will
  probably be of the opinion that the company has a
  good reputation 
• Therefore, corporate reputation is the sum of all
  the values that stakeholders attribute to a
  company based on their perception and the
  interpretation of the image that it communicates
  and its behaviour over time 
• Reputation represents the long-term and
  collective assessment of a corporations
  integrity 

28
Stakeholder Conflict

• No one corporate image exists  
• Every one has their own image, hence the problem
  posed by stakeholder conflict 
•  One of the key challenges that exist for PR
  practitioners is to manage this conflict

29
Benefits of Good Reputation

• Attracting new business partners
• Securing investment
• Cash flow and profits
• Attracting new customers
• Entering new markets
• Influencing legal and political affairs
• Human capital attracting good employees
• Better M A
• Better relationships with NGOs
• Issue and risk management
• More effective brand extensions
• Sustainability in the market
• Better relationships with suppliers and
  distributors

30
The Growth of Reputation Capital

• Globalization and the rise of MNEs 
• Recent scandal poor corporate reporting 
• Investigative journalism pluralism 
• The demand for company metrics extension of TQM
  and BPR
• The rise of knowledge management The Balanced
  Score Card

31
The Growth of Reputation Capital

• NGO activity
•  The ascendancy of corporate citizenship
•  Technology
•  The emergence of non-financial performance
  indicators

32
How to Create Image from Identity

• The Experience of Products and Services
• Behaviour and Attitude of Employees and CEOs
• Corporate Social Responsibility
• Organisational structure and Culture
• Corporate Communications
• Physical Environment 
• Innovation and Creativity
• Managing Shareholder Value

33
The Role of Branding and PR in Reputation
Management

•  Brands the smart delivery systems 
• Intangibles 1. Brands2. RD3. Intellectual
  Property (IP)4. Infrastructure assets5. People
  employees6. Customers7. Reputation The
  Impact of Relationship Marketing

34
Stakeholders

• Context why is stakeholder theory important?
  What is the link with reputation management? 
• The emergence of stakeholders a licence to
  operate?
• Who is a stakeholder?
• Multiple Stakeholders a relationship model

35
Stakeholder Audience Typology
Influence
Shareholders
Employees
Recruitment
Organisation
Suppliers
Customers
Partners
36
The Six Market Domain Model

• 1.      Customers
• 2.      Internal markets
• 3.      Recruitment markets
• 4.      Suppliers and alliance markets
• 5.      Influence markets
• 6.      Referral markets 

37
Modelling the communications mix, Stakeholder
typology and communications interface concepts.
customers
suppliers
Marketing Communication
partners
Organisation Communications
Management Communications
recruitment
influence
Organisation
shareholders
employees
Audiences
Main Communication interfaces
38
Supplier and Alliance market

• Managing the supply chain and understanding the
  origins of products and services is now a complex
  process in certain industries. Yet it these very
  industries and markets that are most at risk from
  reputation damage by investigation from NGOs and
  journalists. Examples  
• Nike
•  Cadbury Schweppes UK

39
Supplier and Alliance market

• Alliances and new technology 
• Influence markets 
• Referral markets

40
Measuring Stakeholders Views

• Image surveys
• Attitude Surveys
• Perceptual mapping
• Customer satisfaction surveys
• Awareness surveys
• Retail audits
• Consumer reports
• Postal surveys
• Competitor intelligence
• Online research and focus groups
• Marketing method research

41
Conclusion

• Risk cannot be managed through insurance
• Risk and reputation are linked
• Corporate governance CSR initiatives reduce
  risk
• Corporations need to became more inclusive
• Brands need to become citizen brands
• Reputation management does pay