PR execs had better watch their backs...and their heads. E-activism is on the rise, and it ain't always pretty. Meanwhile, CEOs' ears are perking up now that there's proof in the pudding that reputation management can be measured in terms of ROI.
This was the message behind a keynote speech presented by Fleishman-Hillard Senior VP/Partner Emilio Pardo at the 22nd Annual PRSA Chesapeake Conference. Pardo's presentation, "Managing Reputation - The Ultimate Asset on the Balance Sheet," focused on how and why reputation management has moved to the forefront of communications. Among his observations:
Reputation affects merger deals and stock prices. According to a 1998 survey by Ernst & Young LLP, 35 percent of investment decisions (made by both sell-side and buy-side analysts) are now driven by non-financial considerations, or "reputation capital."
Reputation capital is calculated as the amount by which a company's market value exceeds the liquidation value of its assets. The valuation usually reflects the company's financial performance (investment value), employee and community relations, philanthropy and character, and the quality of its products and services.
CEOs care about reputation management. Pardo cited a study by Chief Executive Magazine in which 96 percent of CEOs said they believe that reputation is very important and 65 percent said they dedicate more time to this subject than they did five years ago.
Activists have the power to damage reputation. The growth of the Internet has made corporate brands more vulnerable to attacks by activist groups. Activists are leveraging the Web to generate funds, solicit new members, and, in some cases, make a big stink about a company's doings.
Meanwhile, online activity is a bear for PR people to monitor - particularly when the measurement strategies call for unorthodox practices such as infiltrating chat room discussions.
Companies that invest in their reputations wins kudos. GE, Coca-Cola, and Microsoft poured bucks into reputation management last year. They also claimed leading spots in Fortune Magazine's 17th annual ranking of America's most admired companies. (202/659-0330)
Reputation Rules
Fleishman-Hillard Senior VP/Partner Emilio Pardo outlines key strategies for enhancing corporate reputation:
- Listen to stakeholders and engage in dialogue with them.
- Do the right thing. Don't just rely on regulation. Complying with the law is the lowest ethical standard.
- Monitor and measure public perceptions of your brand. Know where you stand and walk the talk.