Reputational Risks Rise; Organisations Fail to Manage

MEDIA RELEASE

TUESDAY, APRIL 9, 2019

Reputational Risks Rise But Organisations Are Failing to Protect Themselves

Just two fifths of executives give their organisation top marks for proactively managing their reputation and the proportion has dropped in the last year, research from SenateSHJ has revealed.

More than nine out of 10 business leaders believe corporate reputation is a primary asset with 67% of leaders in New Zealand saying it was harder to manage than other forms of risk (up 12% from the last survey), and 63% of leaders in Australia saying the same (an increase of 9%).

These findings are part of the 2019 Reputation Reality research conducted by trans-Tasman communication consultancy SenateSHJ to understand the challenges faced by organisations and brands in protecting corporate reputation. It also pinpoints emerging trends and shifts in attitudes around reputational risk.

The latest research found there has been a 13% drop in New Zealand leaders who believed it was now more important to manage reputation – from 72% last year to 59%. While our Australian counterparts believe it’s now more important to manage reputation – 72% versus 60% previously.

Despite reputation being regarded as a lynchpin of an organisation’s success, only four in 10 survey participants ‘strongly agree’ that their organisation proactively protects reputation.

Confidence in managing a crisis is low with one in three New Zealand leaders (38%) ‘very confident’ in executing a crisis plan.

The research also identified ‘integrity’ and ‘quality of products and services’ as leading the list of the drivers of reputation. ‘Competence’ and ‘authenticity’ have become less important factors in reputation.

New Zealand leaders placed greater emphasis on transparency (35%) and relationships (32%) than Australian leaders (21%) and (28%).

‘Customer dissatisfaction’ is seen as the most significant potential trigger of a crisis in reputation – rising to first place. This belief was shared by New Zealand and Australian leaders. Other triggers remain unchanged – ‘data/privacy/cyber issues’, and ‘ethics/social/governance and regulatory changes’.

“There is also a clear focus on leadership and the vital role effective leadership plays in building corporate reputation and in the management of significant issues or crises,” says Neil Green, CEO of SenateSHJ.

When a crisis hits, the majority of respondents (68% NZ and 57% Aus) believe a Chief Executive needs to step up as the trusted face and voice of the organisation. Regulatory bodies and the media are also trusted information sources. External experts or analysts are also valued as a trustworthy source but fell from second position to fourth.

Communication (85% NZ/83% Aus), staying calm (64%/71%) and being decisive (53%/59%) are key attributes for a leader during a crisis.

Said Mr Green: “Recognition of the value of corporate reputation is prompting organisations to invest in reputation management in a variety of ways.”

In New Zealand, there are four main areas of planned investment: government relations, governance, crisis/simulation training and processes and systems. Government relations is a high priority in New Zealand (51%), followed by governance (49%), crisis simulation/training (48%) and new processes and systems (44%).

And what were the key reputational crises of 2018 as voted by participants in the survey?

Respondents unanimously nominated:

• Fletcher Building’s financial struggles

• Russell McVeagh and the inquiry into sexual misconduct allegations at the law firm

• The New Zealand National Party expulsion of former whip, Jami-Lee Ross, and the allegations of leaking of the party Leader’s travel expenses

ENDS

A note to the editor:

• Online interviews were completed by 254 participants:

• 103 in New Zealand and 151 in Australia

• Participants included CEOs, senior executives, board members, managing directors, public and corporate affairs managers and marketing and communications managers.

• This is the sixth annual survey, with an increased sample size of 104 additional respondents.

• Government, Healthcare/Pharmaceutical, Banking/Financial/Insurance Services, Professional Services, Not-for-profit, IT/Technology/Communications, Education and Training, Utilities, Retail/Wholesale and other sectors were represented in the survey.

• Business sizes ranged from 0-20 employees to 3,000+ employees.

About SenateSHJ
There has never been a harder time to communicate consistently, clearly and convincingly. SenateSHJ exists to help our clients respond to this challenge and protect and enhance their reputations. SenateSHJ specialises in reputation and change. We have offices across Australia and New Zealand, along with an in-house content marketing, video production and social media agency.

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