Friday, November 18, 2005

Reputation Galore

Reputation is increasingly becoming research-worthy. Just this week I encountered two interesting surveys -- one on reputation risk ("Risk of Risks") and another on board reputation management.

The first survey provides excellent information from the Economist Intelligence Unit (
http://eiu.com) although I cannnot seem to find a link to the report on their web site. The survey was sponsored by ACE, Cisco, Deutsche Bank, IBM and KPMG.

The other is from Financial Dynamics and Directorship and appears in the November issue of their newsletter (
www.directorship.com/newsletter/index.html). As a reputation expert, here are some of the findings that captured my attention:
  • 59 percent of senior risk managers say that reputation is becoming a key source of competitive advantage.
  • CEOs are primarily responsible for managing reputational risk, followed by the board of directors (media agencies rank lowest but I tend to think that risk managers rarely talk to agencies unless they are in trouble).
  • Companies do not gather external perceptions often enough. The most often surveyed segment are customers, the least surveyed are pressure groups, NGOs. Of course, the latter groups can be the most noisy.
  • Board members say that the CEO is the source they rely on most to stay informed about the company (92 percent choose the CEO). Sounds abit risky to me.

The findings are of particular interest because the CEO continues to be the principal reputation guardian despite all the regulations, board involvement, financial liability, lead directors, non-executive chairman, and other restrictions we have placed on them. In fact, it appears that although CEOs are reported to be losing authority, they are gaining accountability when things go wrong.

Management guru Peter Drucker was quoted in the Wall Street Journal on November 14th (http://www.wsj.com) as saying: "In every single business failure of a large company in the last few decades, the board was the last to realize that things were going wrong."

Reputation should be everyone's responsibility. Leaving it to the top dogs can be risky.

lgr

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