The reputation challenge

by Zaiba Malik

Competing priorities among stakeholders might make a focus on purpose challenging for organisations, but research shows those committed to employees, diversity and inclusion and ESG will outperform their peers over the long-term. 

You’ll learn:

• Why commitment to purpose needs to be organisation-wide

• The impact that workforce activism can have on the bottom line

• How a focus on ESG can pay dividends for businesses prepared to put the work in

Reputation. It’s a big word and a big concept. We all want to protect and grow it, not put a massive dent in it. 

Through a whole series of events and cycles, we now find ourselves in a world where the reputation of a business or organisation is based upon the need to show (not just tell) that it hears and understands society, customers, employees, government, NGOs and investors, that it can be trusted, is fair, a force for good. It doesn’t take a genius to point out that this is by no means an easy task, not least because of competing and conflicting interests amongst stakeholders. 

But there is something to be said for corporate and consumer spheres at this current time – they have an opportunity, a chance to fill the vacuum left by politicians, journalists, charities and other entities that are supposed to serve our interests. 

Where once brands were selling us something, they can now be much more. The world today expects proactive purpose, ‘doing the right thing’. A clothes retailer can be about a happy and diverse workforce, an insurance firm can be about promoting mental health and a supermarket can be about supporting workers in the supply chain. 

This focus on purpose needs time, money and coordination but most of all it requires commitment at every level from the Board to the shop floor. This isn’t about a few bullet points added into the CSR section of the annual report, this is about long-term operational and cultural changes, a wholesale re-thinking of strategy. 

What’s in it for a business, why go through all that hassle? Well, the evidence shows that an organisation that demonstrates social conscience and ethical behaviour fares better in the long term. 

In some parts, we were already on this road to purpose but the pandemic has more sharply focused our attention on the welfare of employees, community spirit and inclusion, climate change and the effects of globalisation. 

I’ve outlined three key areas where there is a risk to reputation; in each challenge, there is an opportunity to reframe and reset our relationship with and view of business.

Employees

There’s been a new starring role for employees since the start of the pandemic. We see staff on our TV screens, on billboards and in person being real ambassadors of their brand. 

At the frontline, it’s not enough for the C-Suite to see workers as those people who do what they are told in exchange for a wage. This contractual arrangement is now much more open to scrutiny as we see with whistleblowers, legal challenges to NDAs and tribunals. As job security and working conditions reach a critical level, bosses need to understand that pride and integrity are just as important as a salary for many employees. 

Look at what happened at Google in 2018 when 20,000 workers took part in a worldwide walkout to protest at the way in which the company handled cases of sexual harassment. This has since given rise to a new strain of worker activism in many industries which has challenged both working conditions and the social impact of employers. And it’s not just group action that impacts on reputation – shoppers at Asda threatened to boycott the retailer after a baker claimed on Twitter that he lost his job after refusing to sign a new contract. 

If ever incentive was needed for improved engagement, HR policies and open dialogue between employer and employee, it’s estimated that workforce activism could cost organisations up to 25% of global revenue each year (Herbert Smith Freehills, 2019). 

Diversity and inclusion

Diversity and inclusion (D&I) have been on the agenda for many years. Their public profile ebbs and flows depending on the news agenda. 

Obviously, it is currently of high prominence because of the killing of George Floyd and the ensuing global protests. Even though the focus here was very much on ethnic diversity, it’s fair to say that no organisation is immune from questions on how it represents, reflects and supports the full spectrum of its workforce, customers and society ranging from gender and disabilities to socioeconomic background and sexual orientation. 

The evidence of a diverse and inclusive business can be seen, quite frankly, in black and white with data on the make-up of the workforce at all levels. But this should not just be a numbers game. Diversity can be measured but inclusion runs deeper; it’s more about intangibles and how people treat one another. 

Successful organisations recognise that a lack of diversity and inclusion can put revenue at risk, increase employee turnover, stifle innovation and reduce customer loyalty. Companies that are leaders in diversity and inclusion outperform “laggards” by 36% (McKinsey, 2020). Certainly no business wants to be accused of racism – just ask Adidas how that feels; its HR executive recently resigned in a high-profile race row. 

As Kasper Rorsted, Adidas CEO has admitted, D&I needs to be a strategic priority: “While we have talked about the importance of inclusion, we must do more to create an environment in which all of our employees feel safe, heard and have equal opportunity.”

ESG

The recent case of Boohoo is a prime example of what can happen when a business prioritises short-term gains over purpose. With allegations of unlawful and unsafe working conditions in its supply chain, the fast fashion company saw around £1.3bn of its market value wiped off - one of its largest shareholders sold almost all its stock because of Boohoo’s “inadequate” response. 

Research has found that nine out of ten investors would prioritise a company’s economic recovery over its ethical principles (Boston Consulting Group, 2020). This may not seem entirely unsurprising at a time when it’s estimated that the UK economy could take until 2024 to return to the size it was before the lockdown and that unemployment could rise to 9%.

Survival in the short-term may seem to be the critical goal at the moment but the commitment to environmental, social and governance objectives - that holy trinity of ESG – must take precedence, many argue. 

The damage wrought by the pandemic has underlined the detrimental impact of globalisation upon people and planet. 

Now, more than ever, the public has a very loud voice in what is deemed ‘the right thing to do’. And it’s not even a case of voting with their feet - or rather, voting with a click of the Buy button. 

Even those who are not customers must be heard – spurred by activist organisations, social media opinion is binary; you’re either wrong or right. There is little room or appetite for nuance which makes the need for a proactive coherent stance on purpose all the more important. And purpose pays. BlackRock calculates that 88% of “a globally-representative selection” of sustainable indices outperformed their non-sustainable peers over the same period. 

ESG is not for the faint-hearted – it requires technical expertise, changes to operations, transparency and credible communication but given that the pandemic has given us all a foretaste of what could happen in the future, a controlled rather than forced move may be prudent. Ultimately, a strong purpose is in everyone’s interest. 


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Zaiba Malik is a highly experienced communications consultant who specialises in reputation, issues and crisis management and media coaching at national and global levels. She is a former award-winning news and current affairs journalist. 

She is the founder and director of Coppergate Communications which provides business and communications advice. 

LinkedIn: linkedin.com/in/zaibamalik
Web: coppergatecommunications.com