Why brands’ reputations are dependent on transparent leadership

Leadership is described as the ability to drive and inspire a group of people or an organisation. And in a world fuelled by persistent social media and online news commentary, the ability to lead an organisation successfully is under constant public scrutiny.

CEOs and senior directors of organisations are expected to act in a way that reflects a business’s core values, and to steer clear of crises; however, recent events that have engulfed the likes of Bell Pottinger, BHS, Sports Direct and Barclays have ignited concerns over the intentions of these leaders, and therefore damaged the reputations of the brands they represent.

Transparency
In today’s open media landscape, stakeholders are increasingly demanding of leaders – authenticity and transparency is valued above all else and is what people are growing to expect from companies. In fact, research from Reputation Institute has shown that consumers are now placing more importance than ever on responsible business behaviour; this has been reflected by the emphasis of the government and media on standards in corporate governance.

Executive pay
A clamp down on poor corporate governance is something Theresa May seems to be set to make an element of her legacy, and while we are very pleased the issue is being given the attention it deserves, we will wait and see if widescale change can be enacted from the top down. The government recently announced  a set of new reforms – due to be implemented by June 2018 – which will compel around 900 publicly listed companies to publish the pay ratio between their chief executives and average employees, with the aim of creating accountability and increasing transparency among FTSE 100 companies. In addition, organisations with over 20% shareholder opposition to executive pay deals will be named on an Investment Association register.

For corporate communicators, tackling executive pay is nothing new; however, recent pressure has created a whole new reputation management challenge in demonstrating transparency authentically. Successfully tackling this challenge will be absolutely crucial in allowing an organisation to fully function in a world where good corporate governance is valued as highly as the products and services a business offers.

Leadership and reputation
The reputation of an organisation’s leader is crucial to developing positive perceptions of a company overall. Leadership is one of the key reputational drivers for companies in the UK, accounting for 12.3% of overall corporate reputation.

However, we have seen that perceptions of UK plc continue to lag behind those of international companies, particularly with regards the reputations of our business leaders. Our 2017 RepTrak data reveals the collective reputations of UK plc stands at an ‘average’ 68 out of 100, while international companies have a combined reputation of a ‘strong’ 72. The perception of UK business leaders also sits at an average 68, while international leaders sit at 73 points. One explanation for this is that UK consumers struggle to have an emotional and rational connection to business leaders of UK companies.

The ‘leadership’ dimension of reputation should be regarded as the ‘driver of drivers,’ because an organisation’s leader represents the values of an organisation and has the ultimate platform to communicate the company’s values and achievements. Being under the spotlight is inescapable for leaders of large companies and judgements made about the whole company can be formed from his or her characteristics. It is important for corporate communicators to understand this and play to their leaders’ strengths to ensure communication is authentic and accessible.

Article written by James Bickford, managing director of Reputation Institute