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The new normal – a hyper-connected world where media anarchy rules and transparency is expected – has rebuilt the landscape within which corporate affairs teams operate. It has also created an unprecedented opportunity to influence corporate reputation.
The path of development of corporate reputation has become more clearly defined in the wake of the coronavirus pandemic. Trends around what corporate reputation means for businesses and how it is quantified, which were coalescing at the start of the new decade, have been catalysed by the international health and social crisis.
Corporate reputation is being recognised as a tangible business asset, making up an average of 63% of companies’ market value. And it also being recognised as omni-driven, influenced by more than a score of factors, with quality of products and services, corporate ethics, purpose and culture, employee satisfaction, environmental responsibility and community engagement among them. These factors are even more important in the wake of an outbreak which has tested businesses’ resilience, and their commitment to social responsibility. Accountability, authenticity and transparency are now at the heart of building and protecting corporate reputation.
In a business landscape where the social contract has been redrawn, there has also been an awakening around the role of the corporate affairs team. The need to communicate with multiple stakeholder groups, highlighting their company’s direction and decisions to a diverse audience, on issues that were previously outside the company’s sphere of activity or concern, has thrown a spotlight on this often-misunderstood function.
Senior leaders have realised the necessity of publicising their policy on popular issues – Black Lives Matter being a powerful example. Businesses need a voice to outline how they are handling the fallout from Covid-19, giving greater exposure – and influence – to the work of corporate affairs. The pandemic and popular movements of 2020 have not only catalysed the evolution of corporate reputation but catapulted the corporate affairs team to the heart of it.
The post-pandemic era will see a heightened influence – and a seat where there wasn’t one previously – at the executive for the corporate affairs function, perhaps even as a combined corporate affairs director and crisis management lead. It offers corporate affairs professionals an opportunity to step up and address the issues that are resonating with stakeholders, and thereby mould corporate reputation. With so many areas of stakeholder engagement falling within this remit, their power to mitigate reputational risk and guide reputation management has never been greater.
Alongside external communications aimed at the media and general public, the modern corporate affairs function encompasses responsibility for employee engagement through internal communications, government relations, social impact, and environmental policy. And overarching all of this is the responsibility for reputation risk management. They are also ideally positioned to report back to board level on how the actions of the business are being received and interpreted by key stakeholder groups.
With both internal and external lines of communication running into their department, a competent corporate affairs director will be in a position to foresee the consequences of business decisions among each stakeholder group: a perspective which may be denied to other members of the leadership team who are focused on their individual area of operations. Consequently, they will be able to assess the reputation risk of those decisions.
The increasing influence of corporate affairs leaders has opened the door for their evolution into an even more valuable role: The Connecting Leader. The hyper-connected nature of the new normal, giving everyone access to real-time reporting; media anarchy where citizen journalists can publish and tag their views on any subject via social media; and unprecedented transparency, with corporate behaviour scrutinised and held to account, has created a landscape in which businesses need to adopt a new approach to their communications
As the next-generation communications director, the connecting leader will act as an ‘outside-in’ agent, bringing the views of external stakeholders to the boardroom table, highlighting their likely reactions to business decisions. Internally, they will be able to draw out a consistent voice from across multiple business units or departments, to unite a diverse internal audience. They will also be responsible for projecting communications from the inside, out. The external connector will focus on how stakeholders, including shareholders, government, and customers, are interconnected. This new breed of corporate affairs leader will communicate along all of these channels to each stakeholder group. And in so doing, will effectively perform the role of reputation risk manager.
The parameters of such a role are outside those currently fulfilled by most corporate affairs leaders, but by encompassing these elements, they are far better positioned to counter threats to a business’s reputation. To do so, they will need to monitor and interpret vast amounts of perception data and employ a connected intelligence service to pull all of the strands together. But before the technology is installed, the first step will be the recognition of the value of such a role within a business.
The changing attitude to reputation in recent years, and vital work of the corporate affairs function throughout the pandemic, have opened a door of opportunity for communications professionals to rise to the challenge of managing reputation risk within a multi-stakeholder environment. Holding responsibility for so many of the key elements that comprise corporate reputation, corporate affairs is in an unprecedented position to help shape business decisions. They have an opportunity to redress any imbalance in the social contract between the business and its constituents. Their growing influence at board level, as they evolve into connected leaders, will result in all stakeholders being both better informed and consistently listened to.
All of which adds up to the conclusion that, if not held solely in their hands, then corporate reputation is at least as much the responsibility of the corporate affairs director as that of the CEO. In the new era, corporate affairs and corporate reputation management may well become synonymous.
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