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.