Magazine article Marketing

On One's Best Behavior

Magazine article Marketing

On One's Best Behavior

Article excerpt

As Shell and Camelot have found out, customers and shareholders are becoming less tolerant of ethical writes Andy Fry

The way we respond to corporate behaviour has become an important consideration in the boardroom, even earning itself the fancy title of 'reputation management'.

The recent furore surrounding bonuses for Camelot's top executives demonstrates the significance and complexity of reputation. Above all, the story shows that just because you are the most efficient company of your kind in the world, you are not excused from paying attention to opinion.

Camelot's dramatic failure in reputation management was that it did not make the connection between the bonuses and a drop in donations for good causes. Add to that the election of a Labour government which, in opposition, had expressed distaste for Camelot's profit margins, and a PR disaster became inevitable.

Camelot is not the first to misjudge the damage that a hostile media can inflict. Last year, the water and gas industries vied with each other to prove the most inept communicators. Perhaps the most alarming lack of sensitivity was exhibited by British Gas chief executive Cedric Brown, who accepted a massive pay increase just as his company was axing jobs.

Listening to regulators and consumers is only part of the reputation management job. Oil giant Shell, for example, has recently been on the receiving end of criticism from some of its own shareholders. A rebel group at its annual general meeting tried to force it to commit to more stringent environmental and ethical procedures but was out-voted.

In many cases of shareholder activism, the real impetus comes from the lobby groups that stand behind the shareholders. For example, the shareholder opposition to Shell is backed by Amnesty International. and the World Wide Fund for Nature both of which are well placed to publicise the dispute.

Previously, Shell was publicly embarrassed by Greenpeace over the disposal of the Brent Spa oil platform. "Shell listened to the wrong people," says Countrywide Porter Novelli's David Lake. "It got government permission but it did not recognise that consent is a wider concept, until the public started boycotting its forecourts."

Do the right thing

The fact that the scientific case was unproven in the Brent Spa affair was irrelevant - Shell's failure was that it was not seen to be doing the right thing. The fact that it has an ethical record that is no worse than many other multinationals is also beside the point. The company's resistance to change was interpreted with suspicion - and this has to be viewed as a communications breakdown.

High-profile cases like Camelot and Shell have prompted observers to hold up reputation management as the new watchwords for the good corporate citizen. But isn't reputation management just good PR?

This wordplay does smack a little of flummery. "If you want to put it bluntly, reputation management is a new way of describing proper public relations," says Brook Wilkinson director Rosemary Brook. "A sceptic might argue that the term PR was in such disrepute that we needed to invent a new phrase."

Brook acknowledges, however, that important shifts in the relationship between business and society are pushing PR to the centre of the communications discipline. "Companies are recognising that the ability to raise capital, get customers to buy your product or attract high-flying employees is influenced by your reputation."

The speed of modern media and its appetite for business stories has been a major factor in pushing reputation up the corporate agenda. Fat-cat salaries, City cock-ups, complicity in human rights abuses and companies that send bill reminders to dead customers make colourful copy. And the media can always rely on someone with an axe to grind to tip them off.

Lake says: "Traditionally, a manufacturer might have concentrated on its relationship with a retailer. …

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