FIRING THE CHIEF EXECUTIVE AND OTHER STEPS TO SAFEGUARDING CORPORATE REPUTATION
In the 21st century, where word travels instantaneously around the globe, reputation matters more than ever. Since the 1980s, corporate scandals, including the collapse of Barings Bank, Enron, DeLorean Motor Company and Lehman Brothers, to name a few – allied with the growing prominence and very public scrutiny brought by digital and social media – means that boards have to take organisational perception seriously.
Positive corporate reputation, in effect the enterprise’s ability to deliver valued results to its stakeholders, is crucial. However, the successful delivery of these outcomes critically depends on stakeholder opinions, experience and assessment of the firm’s performance against varying social expectations.
In an information-rich economy where 70 to 80 percent of market value comes from hard-to-assess intangible assets, such as brand, social responsibility, thriving through intellectual capital and demonstrations of goodwill, organisations are especially vulnerable to reputational damage.
Our ongoing research into and observations of high-performing boards highlights the following four key aspects to ensuring reputation not only remains intact, but also enhances the long-term sustainability of the organisation.
Legitimacy through mission
An organisation’s brand demonstrates how the management of its product or services portfolio is positioned in order to attract the greatest attention through sales. By contrast, reputation is a board issue, dependent on the degree of legitimacy that can be attributed to the firm, and how much respect is generated from a wide range of stakeholders. In other words, legitimacy is achieved by how others collectively choose to perceive the entity.
Oct-Dec 2021 Issue
Henley Business School