Online Training: Learn How To Mitigate Stakeholder Reputation Risk (Online) Stakeholder Reputation Risk is regarded worldwide as one of the most difficult risks to manage. Stakeholder Reputation Risk emerges when the reasonable expectations of stakeholders are not met. To adequately understand this dynamic, delegates need a thorough grounding in understanding both Stakeholder Management and Reputation Risk Mitigation processes. To create this training, I have combined key takeaways from my Stakeholder Reputation, Reputation Risk Management, and Crisis Management training masterclasses with the latest thinking from reputation risk management practices, strategic communication, risk management, ethics, community relations, marketing, stakeholder management, organizational behavior, sustainability, and corporate governance literature. The online program is designed to show business leaders and managers how to establish an excellent reputation with; and maintain positive, mutually beneficial relationships with stakeholders and minimize potential risk. An Organisation’s reputation is derived from how stakeholders perceive the organization, its communication, and behavior in the markets in which it operates. Risk emerges when these perceptions and tools do not fulfill their reasonable expectations. In order to effectively manage the interface between an organization and its stakeholders a number of issues and topics have to be taken care of, including: – Understanding How and Why Reputation Risk emerge; – Understanding how to profile stakeholders i.e. Who are our stakeholders and what do they want and need? – Being clear on what we want from and need from our stakeholders; – Understanding the strategies that need to be in place to mitigate risk and satisfy stakeholder needs and wants and create long-term collaborative relationships; – Understanding the processes that need to be put in place to enable the execution of strategies and minimize risk; – An understanding of the capabilities that need to be put in place to make these processes work; – Understanding how to mitigate both reputation erosion and reputation risk events if and when they occur. The workshop offers an integrated framework for managing stakeholder management relationships, as well as practical tools that can be used for developing and improving existing relationships, and mitigate potential reputation risks. It is also important to take a look at my standard Stakeholder Reputation Management Training Course‘s outline and learning agenda as I incorporate and weave most of that information into this training. Email me for more information and a registration form.

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What is Stakeholder Reputation Risk and why is it so dangerous? For the past few years, Reputation Risk has featured in all the prominent Risk surveys – always as one of the top risks facing an institution.

One definition of Reputation Risk is that it is the current and prospective impact on earnings and capital arising from negative public opinion. This affects the institution’s ability to establish new relationships or services or continue servicing existing relationships. This risk may expose the institution to litigation, financial loss, or a decline in its customer base (and investment downgrades by Rating Agencies).

Reputation risk exposure is present throughout the organization and includes the responsibility to exercise an abundance of caution in dealing with stakeholders. This issue is addressed in no uncertain terms by the new King Code 4 on Corporate Governance.

The Code recommends becoming a stakeholder inclusive company.

However, what many executives may not know, is that Reputation Risk can be defined in four different ways.

This is an important consideration because how you define something, will influence how you mitigate or treat it.

In my Reputation Risk Management Master Classes, this always raises much discussion.

Of the four definitions, international and local research has proved that Stakeholder Reputation Risk is the most difficult risk to predict and manage.

Stakeholders do not always play by your rules. They can rapidly change their views or positions on an issue. The way in which they perceive your company’s behavior, performance and communication influence their decision-making and support of the organization.

Sometimes, stakeholders may use their power and influence in ways that can destroy public sentiment or create the wrong impression.

An example of stakeholder reputation risk gone bad is the State Capture issue and the subsequent closing of the Gupta family’s banking accounts in South Africa. It is also well known that when relationships sour, how difficult it is to open up communication and restore trust – if ever.

It is therefore crucial that Boards and executives address Stakeholder Reputation Risk as a strategic issue.

In my opinion, Stakeholder Reputation Risk is the risk that emerges when the reasonable expectations of stakeholders are not met.

What are those expectations? How do we inform, communicate and engage our stakeholders?

How can we manage our stakeholders if we do not have a system, a structured approach to managing the web of relationships with a diverse group of stakeholders?

Effective Stakeholder Management is critical to achieving not only a formidable reputation but key to the delivery of the strategic plan objectives.

Organisations need support from stakeholders, and building effective relationships with a dynamic range of stakeholders is not only crucial but a daunting task.

Footnote: I facilitate Stakeholder Reputation Risk Management Master Classes in-house, at selected venues or online using Microsoft Teams.

This intensive 2-day training provides delegates with a deep dive into Stakeholder Management and its impact on Corporate Reputation and Reputation Risk.

The training incorporates best practices from both my Stakeholder Reputation Management and Reputation Risk Mitigation courses and best practices from Crisis management inc. how to deal with conflict and adversaries like activists all rolled into one.

This will give delegates a thorough grounding in Stakeholder Management incorporating risk & crisis principles.

More info on both courses:

https://www.deonbinneman.com/stakeholder-reputation-management/

https://www.deonbinneman.com/reprisk/

This is an opportunity to get advanced insight and it will help delegates to safeguard their organisation against Stakeholder Reputation Risk.

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Being well informed and able to anticipate issues and incidents are two vital skills for any budding Reputation Manager. So is the ability to see linkages between seemingly unrelated incidents and issues.

This process I call dot connecting. It has its origins in systems thinking.

Since December 2016 I have received countless of emails with consultant and expert predictions and trends analysis. Here is my analysis of the “common threads”. Hopefully I have connected some dots for you.

Lack of Trust

Lack of Trust will increase. In a world where fewer and fewer organisations and individuals, TRUST politicians, corporations and the processes that create our lives, some companies and individuals will realize that they have to act responsible and become model corporate examples.

The divided landscape in SA and the US clearly illustrates the need for stakeholder identification, earlier engagement and more robust trust building.

Other studies show that cconsumers listed trust and good service as the biggest factor influencing the reputation of companies. The rise of social media has also helped to amplify customers’ feedback, giving rise to a new kind of public accountability. Think VW and medicine such as the Ancel Keys revelations.

The 2017 Edelman Trust Barometer has revealed that the South African population’s trust in its government, media and business, is in steady decline. The barometer, which measures peoples’ trust in four institutions – government, media, business and nongovernmental organisations (NGOs) – has revealed that above-average levels of fear about corruption, immigration and the erosion of social values are having an impact on the way South Africans perceive their country.

Ways and means to build and restore trust in organisations will become a top priority.

Attempts to Improve Trust will escalate

Attempts to engender trust through corporate social investment, transparent reporting and stakeholder engagement will increase. Unfortunately this will be of little help unless there is change in listening practices and concrete actions. In the South African context lack of listening is epitomised by contant burning of tires by communities, changes in political management at municipal levels and heightened security practices at Parliament level.

In many industries stakeholders will take management teams to task and these companies will face an uphill battle to respond timeously to stakeholder demands, activist actions and public opinion. Some companies will realise that they need to go beyond the obvious and demonstrate real commitment to sustainable transformation, especially in the Southern African context. In general, companies will need to heighten their stakeholder communication and engagement practices.

The Rise of 3rd Party Social Auditing

The demands for social and environmental audits of corporate reports, codes and practices will increase and stakeholders will no longer be happy with just being told. They will want proof  and will demand independent auditing (Example – annual ISO audits) and verification of responsible citizen behaviour, accountability, transparency, governance and reputation building practices.

Companies will need to work closer with stakeholder experts and auditors. Studies like The Harris Poll Reputation Quotient, measures public opinion of the US most recognizable companies and respondents are asked to rate companies based on six components: emotional appeal, products and services, vision and leadership, workplace environment, social responsibility, and financial performance. These areas reveals the companies with the best (and worst) reputations.

In the South African environment there are a number of organisations providing research services in this important fact finding exercise.

Crises will Increase due to Heightened Scrutiny

More and more companies will incur crises simply because their risk, stakeholder and auditing departments are not doing a proper job to uncover both tangible and intangible risks.

As it stands, the fallout from the Gupta state capture issue is still reverberating. How come the misuse of “power” and “influence” was only detected so late? Who is next in South Africa? Whose job responsibility is it anyway to guage thought leadership, and the undue influence of power? Surely the In-house Stakeholder Relations experts should have reported on this?

Media outlets will report new allegations about improper behaviour by CEO’s and CEO’s will be even more scrutinized than in the past. Some of this reporting may be fake news. CEO’s will realize that their decision-making approaches and ethical behaviour need re-evaluation, and that stakeholder reactions and expectations will have to be taken into account. The use of strategic communication interventions and platforms using the CEO will become vital.

Crisis Communication Preplanning will become more important

Crisis Communication Preplanning will become more important. Budgeting for enhanced security will become an ongoing additional cost moving forward and needs to be taken seriously as anyone who doesn’t believe that events that took place in Paris and other European locales couldn’t take place in other countries is sadly mistaken. Already the SA Government has intercepted suspicious individuals with terrorist ties at our borders.

The increased security may cause delays in events for instance and communication with customers will be necessary to educate them to be vigilant and understand threats without scaring them. Not everyone will automatically understand your messaging and constant reeasearch on the efefctivesness of security communication will be necessary.

The poor handling of the Ford Kuga recall illustrates the need for more time to be spent by management teams on brainstorming and preplanning for crises. Thought processes, actions and protocols should be examined and tested BEFORE events happen. BUT, what about restoration of trust and reputation AFTER a crisis?

What happens after a recall or crisis? How does the business recover? How does a company manage the impact on its employees, its customers, and its reputation? The truth is, after the event, the work – the hard work – really begins. Designing an approach that focuses on the impact of an event and subsequent of trust is quite different and requires a different approach than designing a plan that focuses on the initial occurrence of the event. Both processes are different and will deserves much thought.

Cybersecurity risk will increase

Cybersecurity risk is a growing concern, Crisis practitioners will need to prepare for potential data breaches and other cyber-threats and the reputation risk it may bring. An article “Businesses Fear Brand Damage More Than Security Breaches – Organizations struggling with risk management are more concerned about brand damage than cyberattacks, a new Ponemon study shows. Can you afford to ignore cyber security? An article in the Financial Director asks.

The Velocity of Social Media will continue

The velocity with which information flows will continue to catch executives by surprise. Deloitte reports in an article “Explore 10 trends shaping the future of risk” – Analysis: Reputation risks accelerate and amplify” that in today’s hyper-connected world dominated by mobile devices, social media, and evolving expectations from society, information can spread like wildfire. This convergence of mobile and social media is intensifying the impact of reputation risks for organizations and is driving them to fundamentally rethink their approaches to risk management and proactively address these accelerated, amplified risks.

Already the IoT (Internet of Things) predictions are heating up. In an article by HP  Futurists Explain Why Technology Will ‘Disappear’ in 2030 there is a quote that illustrates the increased use of big data in our lives- “Humans aren’t the best at understanding or mitigating risks.”

The Rise of Fake News

A recent study by Dr. Jonathan Albright of Elon University, show that there is significant concern about the destruction of reputations through fake news sources. Add in the recent explosion of online rating websites and the need for public relations professionals to actively work to protect brands is even more apparent. There is little doubt this phenomenon will continue to be a growing challenge. It cannot be solved with one-click algorithms from “IT firms” who send out generic responses to complaints. Rather, this new reality requires thoughtful consideration from communications professionals.

Your organisation will have to reevaluate its website and ways in which it shares information, to ensure that you are a trusted news source. Read this article “5 Key PR Trends to Watch in 2017” for additional thoughts on this.

No company will be immune from its Industry’s reputation

That’s why Stakeholder engagement and collaboration is key even between competitors. Industries have their own reputations and an industry can certainly affect a specific company’s reputation, either positively or negatively. The BP Gulf of Mexico was an oil industry disaster not just a BP disaster. However, while industry reputation is a factor, a company’s reputation can still be traced to its practices. Companies with terrible reputations are hated in large part for behaviors many consider reprehensible. Whether its gross environmental violations, perceived corruption, or consistently abysmal customer service, these companies have earned their poor reputations. However companies can transcend their industry’s reputation by positioning themselves differently and paying attention to those things abhorred by stakeholders. What is a common driver is that of quality customer service. Direct contact with a company plays a far bigger and direct impact role than the media yet most companies still favor the PR/Media Relations approach.

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I will deliver a “Are You Deriving Value From Your Stakeholder Management Function – Tips On How To Audit Intangibles” presentation on the 9th February at the Institute of Internal Auditors South Africa (IIA SA) Public Sector Forum at Emperors Palace, Johannesburg.

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Definitions create lenses through which we view the world. Revisiting definitions is crucial to creating shared meaning.

So, why do I talk and write about Stakeholder Reputation?

An Organisation’s reputation is derived from its stakeholders. Their perceptions, attitudes, expectations, feelings and knowledge towards a company will influence and impact on the actions they take towards an organisation.

Numerous case studies document the bottom-line advantages to companies that develop long-term, highly interdependent relationships with groups of stakeholders. Researchers have found that it isn’t just the existence of the relationship that is important, but the qualities of the relationship that matters. In every relationship, trust was the ingredient for success.

For me, stakeholder reputation is key in managing and protecting a company’s biggest asset and risk.

“Any organisation that values its good name will proactively build and manage relationships with its key stakeholders. Many believe they do, but research often shows gaps and opportunities for strengthening the ties that binds organisations and stakeholders together,” said Binneman. Only a few organisations have designed performance indicators to show the effectiveness of their efforts.

Reputation Risk normally emerges when the reasonable expectations of stakeholders are not met. Reputation Risk is the highest order risk that companies can face, according to international research.

Stakeholders offer organisations both opportunity and threat. For instance if you have a good reputation with stakeholders they may give you more latitude to operate. On the other hand a poor reputation with the regulators may result in laws being passed that can make it more difficult for you to operate. This seminar examines amongst many things the steps, hints and practices necessary to build lasting collaborative relationships, which should ultimately result in a better reputation.

The first core competency required is to identify and profile stakeholders. This should in fact be done for every project and campaign as stakeholders evolve over a time. For example a person might be a manager, but he or she is also a parent. If children’s lives including your own are in danger because of potential pollution, those same managers may become activists, vocal or latent.

Proactively trying to build a company’s reputation has tangible benefits to the bottom line that should not be discounted. The King 3 report on Corporate Governance advocates effective stakeholder relationships -“The modern approach is for a board to identify the company’s stakeholders, including its shareowners and to agree on policies as to how the relationship with those stakeholders should be advanced and managed in the interests of the company”.

According to Steve Hamilton-Clark, CEO of TNS MENA “Reputation capital is the sum of the value of all corporate intangible assets, which include business processes, patents, trademarks, reputations for ethics and integrity, quality, safety, sustainability, security, and resilience. He goes on to say that “Indeed, companies must understand and influence the relationships they have with stakeholders – from customers, investors, business partners, influencers, the general public and employees. The ability to attract, maintain and motivate talented employees, as well as customers rests in a good reputation”.

According to Elliot Schreiber, the President and CEO of Brand and Reputation Management: “Reputation is a stakeholder’s expectation of value vis-a-vis an organization’s peers and competitors. Each stakeholder has different expectations of value. For example, employee expect, among other things, a good workplace and fair compensation; a customer expects a product or service that is considered “worth what’s paid for;” and an investor expects a good return on their money. By promising and meeting expectations over time, the organization builds trust with its stakeholders. The more organizations differentiate their value with their various stakeholders versus competitors, they build a trusted relationship that creates both a barrier to competition and a hedge against reputation risk should a crisis occur.”

Why?

Think about it for a moment. People invest in companies with a good reputation. If a company does not have good governance it won’t have a good reputation.

Certain studies have shown that reputation can be as much as 63% of a company’s share price (intangibles). Thus the link must become clear.

There is a very real business case for managing reputation and its inherent risks. Reputation is derived from the way stakeholders perceive the organisation. Thus a stakeholder performance model becomes a strategy for an organisation that realises that there is value in relationships that needs to be unlocked. 

“Many organisations do not have a dedicated stakeholder relations policy or outreach program. They have never decided on what to say, what not to say, the messages that they want to get across. They do not manage their relationships with strategic intent. Questions that managers need to ask include:

–  Do we manage our stakeholders with strategic intent?

–  What is the nature of our relationships with our stakeholders?

–  Have we benchmarked our policies and stakeholder programmes against best practice?

Working with Stakeholders deserves and asks for strategic management and practice.

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I recently responded to a request for tips on how to profile stakeholders. Here is a quick summary that might help readers.

In my Stakeholder Reputation workshops I teach these tips:

1. Create a laundry list of all stakeholders – Identify and list all stakeholders. These may be individuals, or stakeholder groups, or some combination. If stakeholders can be treated as a group, use groups. The most effective way of doing this is to list as many stakeholders as you can on a working sheet of paper. Get inputs from various sources – managers, employees, stakeholders and do some literature research.

2. Divide list into primary, secondary, core, strategic stakeholders etc. Use categories as you see fit.

3. First segment them as either internal or external. Segmentation criteria can be based on issues, concerns, interests and/or demographics shared by the internal/external key stakeholders AND other criteria. Based on the criteria, key stakeholders can be sub-segmented into target audiences as well as the times and the places where the target audience is most likely to be exposed to and to attend to the message.

4. You could then use methods to map these, such as a linear list; a mind map, a geographical map (Google Maps) or a matrix hierarchy. These help us to visualize the information about stakeholders. Personally I like to use mind maps as they are always open ended, and as we all know stakeholders can change positions or develop alliances such as splinter groups. Read this post of mine for more clarification about stakeholder positions.

What is vital is to remember that Stakeholder involvement is context-specific; what works in one situation may not be appropriate in another; and that Stakeholders change per project, time or situation – never stay static. Thus in my opinion identification & prioritization exercises are on-going projects and vital to achieving any strategy.

Example: As a stakeholder I may be neutral on some issues, very vocal on others. I may change my position on a matter very rapidly due to new information that I have obtained. If you are of the opinion that I am on your side you might be wrong.

Better to stay aware. Stakeholder Management is a very volatile discipline with many factors that can affect the levels of engagement and relationships.

Find out more about the why and how of Stakeholder Management and its impact on organisational reputation by attending my Stakeholder Reputation Management Masterclass in Johannesburg.

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I recently got asked: Dear Deon: I know stakeholder profiling is important, but surely it only has to be done once, as part of a strategic planning exercise. Any input?

This was my response:

Stakeholder profiling is a technique you can use to identify and assess the importance of key people, groups of people, or institutions that may significantly influence the success of your organisation, activity or project.

I recommend that profiling be done every time there is a new issue, incident, project or campaign being launched. Stakeholder involvement is context-specific; what works in one situation may not be appropriate in another.

Also, Stakeholders change per project, time or situation – they never stay static and can change their position on an issue overnight. A relevant example is that of Vodacom who discovered a few days prior to their listing that two of their stakeholders, ICASA & Cosatu had gone to court the night before to try and stop their listing.

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Do you know the Golden Rule?

The ethic of reciprocity, more commonly known as the Golden Rule, is an ethical code that states one has a right to just treatment, and a responsibility to ensure justice for others. Reciprocity is arguably the most essential basis for the modern concept of human rights, though it has its critics. A key element of the golden rule is that a person attempting to live by this rule treats all people, not just members of his or her in-group, with consideration.

Read more: http://en.wikipedia.org/wiki/Ethic_of_reciprocity – The rule is a guiding principle for stakeholder relations management, and justifies the importance of inclusivity.

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