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In this extract from their co-authored chapter in the latest edition of the STEP Handbook for Advisers, 'Business Families, Family Businesses', Partners Lily Kennett and Victoria O'Byrne' explore why reputation should be invested in proactively.
Time to rethink reputation management
When we consider the reputation of an individual, a brand or an organisation we are fundamentally making a series of complex value judgements. Reputation is often defined as a measure of trust, based on opinions as much as actions. Your reputation, whether positive or negative, determines how you are viewed by others, how you will be treated, and if you will be listened to. In short, a strong reputation is something you earn over time, as a result of keeping the promises you make.
‘Reputation management’ is too often used as a euphemism for crisis management or spin. The reality is quite different. Reputation management is the act of proactively shaping your narrative, engaging with key stakeholders to explain who you are, what you value and what you do. Managing your reputation is not just something you should consider after a damaging event or when under attack; it is strategically positioning yourself and your business to harness opportunity.
Put simply, it is a form of investment. However, it differs from many investments as reputation is an intangible asset that yields tangible results.
When reputation is well maintained and invested in over time, you build resilience – or capital in the bank – which you can ‘spend’ to leverage key opportunities or manage critical moments. Organisations with good reputations can attract better people and business partners with whom to build more profitable, long-term relationships. They succeed at selling themselves and their businesses as ‘premium’ services and have more loyal customers. They have greater influence with their key stakeholders, such as regulators and policymakers, and are more likely to be given the benefit of the doubt by the media and others scrutinising their investments and activities.
Investing in reputation therefore not only enhances your ability to create value and exploit opportunity, but also means that if your reputation is challenged by factors out of your control, you are better able to withstand them and come back stronger.
Investing in reputation allows you to reach new audiences, gain new supporters, foster trust, and build resilience. Proactive reputation management will ultimately set you apart from others, protecting your licence to operate and enabling business objectives to be pursued with less friction and distraction.
When reputation is at risk
There are any number of reasons why your reputation may be at risk, some predictable, others less so. A situation that is known which develops in an unexpected way, or a sudden unexpected event outside of your control can both have the potential to threaten your reputation. However, there are some fairly consistent triggers: a perception of weak leadership, a lack of transparency, accountability or action, poor stakeholder relationships leading to failures in understanding, an unwillingness to speak or explain, a high-profile issue affecting an entire industry. These are all situations which invariably attract the attention of the media and social activists, and when your reputation bank is low on credit it can be an uphill battle to be heard and understood.
Why invest in reputation now?
Building a strong reputation takes time and once lost, often cannot be regained. The best time to invest in your reputation is yesterday. Getting on the front foot and building a resilient reputation cannot begin too early. Our information climate is fast-paced, voracious, and increasingly prone to disinformation. Only a solid reputational foundation and a capacity for organisational resilience can help to protect from shocks.
Transparency, for both businesses and individuals, is now an expectation in many parts of the world. Demand for transparency continues to grow year on year, with a range of sophisticated investigative tools available to the media, non-governmental organisations and regulators. ‘Big data’ journalism is on the rise and disclosure requests, such as Freedom of Information requests, are common and well-used by the media, investigators and private citizens to query the contacts, investments and actions of the wealthy and the powerful.
This trend towards transparency, fact-finding and analysis, when combined with our fast-paced digital information landscape, can at times lead to a rush to judge in the ‘court of public opinion.’ Add to this the potential for misinformation (simply wrong), disinformation (deliberately placed inaccuracies intended to do harm) and distortions caused by generative AI, the potential for reputational impact becomes hard to ignore. With these forces facing family offices as much as any other organisation, it’s more important than ever to prioritise your reputation and tell your own story to your priority audiences before someone else does it for you.
But there is another reason too. When something goes wrong, your ability to recover your reputation and rebuild trust will depend on behaviour; investors and stakeholders will use the situation as a chance to re-rate your ability to deal with the unexpected. What makes the difference? Strong leadership, quick decision making and clear, proactive and consistent communications. Get it right and you won’t just recover, you’ll have an opportunity to enhance your reputation.
Read the full chapter in Business Families and Family Businesses, The STEP Handbook for Advisers, Third Edition.
