Is perception reputation reality?

Among post-modernists, PR people and business academics there have been some decades of reputation debate about whether perception is reality or not.

An amusing example of how it can be, even if only briefly, occurred recently when the Cameron Government put a tax on sugar. UK share market traders immediately pushed the price of Tate and Lyell shares down. Yet Tate and Lyell had sold its sugar business in 2010 and was no longer one of the world’s major sugar operations. Now share market traders are probably not much of an example – we know that irrationality is an important characteristic of many markets – but briefly until a few people realised what was real and what was perceived we did see a clear case of perception (however ignorant) shaping reality.

The blog, with a colleague, also presented a paper at a Reputation Institute conference challenging the validity of reputation index methodologies – including that of one of the key conference organisers. We weren’t invited back. And as the blog has mentioned before it once wrote a tongue in cheek article about PR, post-modernism, Umberto Eco, perception and reality. It was printed in a PR association’s journal and then re-printed elsewhere apparently with the irony being missed by nearly everyone.

As a teenager the blog was also a bit struck by the Bishop Berkeley arguments about everything in the universe being merely ideal. No doubt this was driven by teenage angst augmented by too much sci-fi reading. The Berkeley-induced illusion was dissipated when a friend pointed the blog to the famous passage in Boswell’s Life: “After we came out of the church, we stood talking for some time together of Bishop Berkeley’s ingenious sophistry to prove the nonexistence of matter, and that everything in the universe is merely ideal. I observed, that though we are satisfied his doctrine is not true, it is impossible to refute it. I never shall forget the alacrity with which Johnson answered, striking his foot with mighty force against a large stone, till he rebounded from it – ‘I refute it thus’.”

Now a well-respected PR consultancy, Senate SHJ, has produced a report (one of a series produced since 2006) about Trans-Tasman perspectives on reputation and risk. The sample size may appear to be a bit small – 150 business and public sector leaders – but given that it is a survey of leaders it can be regarded as robust just as Brian Donovan’s ongoing surveys ( )of leaders’ perceptions of challenges in IT and technology fields are.

The Senate SHJ survey found that 96% of respondents believed that corporate reputation was one of their organisation’s primary assets compared with only half of the 2006 respondents. 60% said they had seen an increase in risks affecting reputation over the past three years. 90% of respondents said their organisation was proactive in protecting its reputation but, as is often the way with that awful word, the reality was a bit different with little activity in areas such as technology, new processes, governance and crisis simulation. The blog doesn’t know how many Australian banks and their wealth planning and insurance arms were included in the sample, but in their cases proactivity is arguably massive donations to the Liberal Party rather than preventative measures to protect customers from their staff and cultures; or, working out ways to delay reimbursing their victims after their suffering becomes public. Indeed, Senate SHJ’s citing of Commonwealth Bank as a reputation management exemplar is probably the only weak point in the report.

When asked about risks customer satisfaction was a key area but there were a few differences between Australian and New Zealand respondents in risk focus. In Australia 40% said they expected to focus their risk management on regulatory changes in the next two to five years. Only just over a third of the sample nominated ethics, social and governance risks as an area of future risk management – perhaps indicating a degree of complacency or denial consistent with that demonstrated by Commonwealth Bank over recent years. In NZ the emphasis (60%) was on safety with 42% nominating data, privacy and cyber issues as focus areas.

As far as corporate reputation management tools are concerned customer satisfaction surveys are important; the vast majority of respondents had crisis management plans in place but only half undertook crisis simulations; and traditional and social media monitoring was also ranked highly. Of course, part of the art of issues management is to make sure issues don’t get into media – traditional or social – and to recognise that issues often don’t surface in media until they are well-entrenched in the community. But to be fair the implication from the survey seems to be that media monitoring is regarded as a useful form of issues scanning even though other techniques are needed to get around the problem that issues featured in the media are frequently not those which companies should be worried about.

Most significantly about 60% of respondents nominated the CEO as responsible for corporate reputation; more than half the corporate affairs head; and only a quarter said the board had some responsibility. And, you might well say, what do those directors do for their very generous remuneration if they don’t have some responsibility for reputation? However, respondents could pick more than one role in the question about who has reputation responsibility and there was clear belief that it often rests with more than one role in a business.

The report includes some common sense, but often neglected, advice on what reputation management should involve: investing in reputation and robust risk mitigation at times of low threat; establishing senior responsibility for reputation; mapping and listening to stakeholders; and, building relationships before a crisis occurs.

In terms of further information and mapping, it would be interesting to see some tables charting responses to questions (if they are comparable) over the decade the survey has been undertaken. Perhaps we’ll see that in the next report.