PR Ethics & Reputation
Presented by:
John Dalton
Director of LSPR Worldwide
Dalal Nageh
Course Director
PR Ethics & Reputation
1. PR and its practice cannot be divorced from
business ethics
2. Since the collapse of ENRON & WorldCom
– PR and applied ethics has become as
focus for western companies
3. Evidence shows that compliance and an
ethical approval helps sustain long term growth.
Background
 Corporate Governance (CG)
 Socially Responsible Investment (SRI):
Ethical Investment
 Corporate Social Responsibility (CSR)
 CSR and Reputation Management
 How to manage Reputation
 Stakeholder theory & reputation
management
Introduction
Corporate Governance & Business Ethics
Standard and Poor’s defines corporate
governance as:
“ Corporate governance refers to the rules and
incentives by which shareholders control and
influence a company’s management so as to
maximise profits and the value of the
corporation”.
What issues does CG deal with?
 Compliance with laws and regulations
 Accuracy of corporate financial reporting –
providing accurate corporate data
 Transparency – allowing shareholders and
others access to information: the question of
disclosure.
 Accountability – who are the directors
responsible to?
What issues does CG deal with?
 General standards and principles
 Developing accounting standards – ensuring
auditor independence
 Monitoring and measuring the performance
outcomes of CSR initiatives: the impact of
corporate citizenship
 Role & responsibility during merges and
acquisitions - problems of hostile take overs
What issues does CG deal with?
 At the centre of CG is the recognition of the
need to separate ownership from
management control, thereby preventing
conflict of interests
 Conflicts of interest will inevitably occur – e.g.
what influence should institutional investors
(pension funds & insurance) have on
individual corporations
What issues does CG deal with?
 In the UK, pension funds represent 1/3 of the
total market capitalization of the London
Stock Market.
 Following the meltdown of ENRON and
corporate scandals surrounding TYCO &
WorldCom in the US, the SEC introduced a
host of new governance measures backed by
George W. Bush.
What issues does CG deal with?
 In the UK, in January 2003, the Higgs’ report
tackled the problems associated with non –
executive directors
Why has Corporate Governance
become so important?
 Historical – the term was hardly seen a decade ago,
but following high profile scandals such as BCCI,
Barings, Robert Maxwell & Enron, the media and
public have rightly became highly suspicious of
corporations.
 CEO & Board Behaviour
 Failure of corporate reporting systems
 Attitude of MNEs to human rights, pay and conditions
Why has Corporate Governance
become so important?
 The influence of institutional investors and the
issue of proxy votes made by mutual funds
not being disclosed
 Rise and power of NGOs and campaigning
organisations
 Rise of shareholder activism and ethical
investing
Socially Responsible Investment
(SRI): Ethical Investment
 Screening
 Shareholder activism
 Cause – based
investment –
community investment
Corporate Social Responsibility
(CSR): licence to operate
 The European Commission defines CSR as follows:
“essentially a concept whereby companies decide
voluntarily to contribute to better society and a
cleaner environment”
 The concept of the triple bottom line
- economic
- social
- environmental
Benefits of CSR
 Reduces exposure to risk and accusations of
irresponsible behaviour
- helps cushion & vaccinate during time of crisis.
 Enhances employee recruitment
 Improves stakeholder communications
 Reduces risk exposure, improves investor confidence
and the ability to raise capital
Benefits of CSR
 Encourages innovation
 Encourages a more inclusive corporation
CSR, Reputation & Financial
Performance
 Does CSR Pay?
 What issues does CSR address?











Pollution of the environment
Supply – chain management
Human rights
Ethical investment
Good governance
Political & social
Employee rights
Training
Stakeholder engagement and dialogue
Clean technology
Overall reputation
CSR Initiatives
 The Global Reporting Initiative (GRI)
 OECD Guideline for Multinational Enterprises
 ISO Standards
 SA 8000
 UN Global Compact
 Ethical Trading Initiative (ETI)
The Concept of Sustainability
 The Dow Jones Sustainability Index
 The FTSE4Good Index
Risk
 Uncertainty of outcomes, based on
probabilities
 Risk = uncertainty (or probability) x impact
 Pre entry risk
 Ongoing risk – issue management
Risk
 Categories of risk











Operational
Strategic
Marketing
Brand reputation
Financial
Intellectual Property
Technology and e – business
Human or personal
Price or market
Merges and acquisitions
Event – based: political, terrorism, weather
Good PR and reputation acts like a
vaccine
 Brands, especially corporate brands, are the
best psychological vehicles for delivering
meaning and value
 This raises the question of the role of PR,
brand and relationship management within
corporations
 Does PR now equal reputation management?
If the answer is yes, what are we doing about
it?
What is Corporate Reputation?
 The interplay of identity and Image
 A single precise definition does not exist
 Whatever definition is agreed upon,
reputation must be considered in its historical
context i.e. the track record of a company.
 Whereas corporate image refers to the “latest
beliefs” someone holds about a company,
corporate reputation represents the long-term
collective assessment of a corporation’s
integrity.
Factors that build Corporate
Reputation













Corporate Advertising
Quality of products and services
Brand value
Innovation and creativity
Customer satisfaction
Corporate citizenship
Financial performance
Organisational structure and culture
Vision and leadership
CEO performance and reputation
Internal communications/employee satisfaction
Core competencies
Collaborative networks
Corporate Identity: self-presentation
 This has traditionally referred to the physical ways a









corporations defines itself i.e., the identity mix:
e.g
Logo and trademark
Products and packaging
Colours
Annual reports
Web design
Staff communications
Uniforms, signage and livery
Advertising
Building design
Corporate Identity: self-presentation
 However, identity is more than just the visual
elements of a corporation and how these
differentiate one company from another.
 It must also take into account the day-to-day
operational reality, which employees,
suppliers and other key stakeholders
(including consumers) experience.
 In this regard, identity and image overlap.
Corporate Image: perception is all
 Corporate image reflects the set of beliefs or
attributes that people ascribe to a corporation. It
is in part identity, but is evaluated on what
consumers “perceive” at specific points in time.
 Image is a construct of cognitive and emotional
(psychological) attributes that are holistically
evaluated by consumers. It is affected by identity,
positioning and how the company behaves i.e.
peoples’ experience of the product/service.
Corporate Image
 Once corporate identity and image are established (over time), a
corporate reputation emerges, either positive or negative
 If an individual’s own values accord and fit with the company’s
image, then that individual will probably be of the opinion that
the company has a good reputation
 Therefore, corporate reputation is the sum of all the values that
stakeholders attribute to a company based on their perception
and the interpretation of the image that it communicates and its
behaviour over time
 Reputation represents the long-term and collective assessment
of a corporation’s integrity
Stakeholder Conflict
 No one corporate image exists
 Every one has their own image, hence the
problem posed by stakeholder conflict
 One of the key challenges that exist for PR
practitioners is to manage this conflict
Benefits of Good Reputation













Attracting new business partners
Securing investment
Cash flow and profits
Attracting new customers
Entering new markets
Influencing legal and political affairs
Human capital: attracting good employees
Better M & A
Better relationships with NGOs
Issue and risk management
More effective brand extensions
Sustainability in the market
Better relationships with suppliers and distributors
The Growth of Reputation Capital
 Globalization and the rise of MNEs
 Recent scandal: poor corporate reporting
 Investigative journalism: pluralism
 The demand for company metrics: extension of TQM
and BPR
 The rise of knowledge management: The Balanced
Score Card
The Growth of Reputation Capital
 NGO activity
 The ascendancy of corporate citizenship
 Technology
 The emergence of non-financial performance
indicators
How to Create Image from Identity
 The Experience of Products and Services
 Behaviour and Attitude of Employees and
CEOs
 Corporate Social Responsibility
 Organisational structure and Culture
 Corporate Communications
 Physical Environment
 Innovation and Creativity
 Managing Shareholder Value
The Role of Branding and PR in
Reputation Management
 Brands: the smart delivery systems
 Intangibles:
1. Brands
2. R&D
3. Intellectual Property (IP)
4. Infrastructure assets
5. People – employees
6. Customers
7. Reputation
The Impact of Relationship Marketing
Stakeholders:
 Context: why is stakeholder theory important?
What is the link with reputation management?
 The emergence of stakeholders: a licence to
operate?
 Who is a stakeholder?
 Multiple Stakeholders: a relationship model
Stakeholder Audience Typology
Influence
Recruitment
Shareholders
Organisation
Employees
Suppliers
Customers
Partners
The Six Market Domain Model:
1.
Customers
2.
Internal markets
3.
Recruitment markets
4.
Suppliers and alliance markets
5.
Influence markets
6.
Referral markets
Modelling the communications mix, Stakeholder typology
and communications interface concepts.
customers
suppliers
Marketing
Communication
partners
recruitment
Organisation
Communications
Management
Communications
influence
Organisation
shareholders
employees
Audiences
Main Communication
interfaces
Supplier and Alliance market
 Managing the supply chain and understanding the
origins of products and services is now a complex
process in certain industries. Yet it these very
industries and markets that are most at risk from
reputation damage by investigation from NGOs and
journalists.
Examples:
 Nike
 Cadbury Schweppes UK
Supplier and Alliance market
 Alliances and new technology
 Influence markets
 Referral markets
Measuring Stakeholders’ Views
 Image surveys
 Attitude Surveys
 Perceptual mapping
 Customer satisfaction surveys
 Awareness surveys
 Retail audits
 Consumer reports
 Postal surveys
 Competitor intelligence
 Online research and focus groups
 Marketing method research
Conclusion
 Risk cannot be managed through insurance
 Risk and reputation are linked
 Corporate governance & CSR initiatives
reduce risk
 Corporations need to became more inclusive
 Brands need to become citizen brands
 Reputation management does pay