Echo’s client Advisory Board members weigh in on the major trends for sound reputation management in 2023 – preparation is all

At the turn of the year, we asked members of our client Advisory Board for their opinion on what will be the principal reputational drivers in 2023. We had a strong and insightful response which we summarise below. This 19-strong group have set out some important markers for the year ahead.

Overall, all agree that from a greater focus on expectation management and risk assessment, to the need for speed, acting according to established values will help build resiliency in the face of challenges ahead.

Against a backdrop of a struggling world economy, the continuing fallout from the pandemic and the conflict in Ukraine, sound reputation management - to those organizations that consciously focus on it - will depend on attention to performance and careful explanation of reasons why performance may fall short of commitments and expectations. 

How organizations treat their customers, as well other stakeholders such as staff and suppliers, in the context of the cost-of-living crisis will also have a significant reputational impact. The active support we saw for those facing the greatest difficulties in the pandemic has to a degree set a behavioural expectation against that benchmark will be a driver of reputation. 

 The biggest reputational risk for many businesses will be how to balance investor expectations against the increasing expectations of the ESG agenda. At a Board level, we have to ask ourselves, can we issue dividends or senior exec pay increases if our least well paid staff, our customers or other stakeholders are struggling to make ends meet?

Beyond managing reputation around their own direct business engagements, CEOs and their senior teams will be increasingly called on by employees and external stakeholders to engage on significant social matters. It will be critical for senior leaders to have principles and a process for determining when and with what matters to engage, and to consider how the enterprise's words will be supported by tangible and measurable actions.

Organizations need to know themselves and the values that make up their distinct character and culture. With a clear understanding of who they actually are, their actions consistently need to line up directly to that character and culture and in all that they do - in service to customers and all stakeholders, and of course in talent recruitment and retention. As always, good, principled leadership sets the tone for managing any organization's reputation. 

Reputations will continue to be intrinsically linked to the most pressing challenges that businesses face and especially the ones that put them under increased scrutiny from their key stakeholders. 

Questions to consider:

• are we future proof? Do we have a comprehensive framework for resilience - not just operationally but in terms of the resilience of our people and organisation? 
• what tangible steps are we taking to embed sustainability into our business and how do we ensure that our communications are truthful and evidence-based? 
• how are we approaching the future of work and the new generation of talent coming into the workplace - what place does reputation play in attracting and retaining them? 
• does our leadership have the skills and capacities needed to be agile, demonstrate courage and lead responsibly amidst unrelenting pressure and change? 
• how are we engaging with our stakeholders to understand their perspectives on these and other topics? 

We see a continuing trend:

• with an expectation that brands will demonstrate their values and be authentic in what they do and say. In consumer brands this includes support at a time of hardship,
• toward an increasing involvement in activism where there is a legitimacy to do so
• around employee welfare – the role of the employer is changing in this respect (it includes but goes way beyond WFH)
• that internally, increasing demand for evidence of how reputation impacts top and bottom line, i.e. using business metrics rather than traditional corporate affairs metrics
• for challenging ESG as a short term priority.

Expect:

• a change of government and direction in many countries
• the visibility and viability of economic footprints – exposed by the Ukraine war – (intertwined value chains etc into newly-ostracised geographies) creates an uncertainty for business strategy and a continuing reputation dilemma for organisations
• the cost of living crisis and general increase in people’s sensitivities (or their rush to be deeply offended) to impact companies who are seen to be tone deaf – think executive pay rises in the energy / utility sector through to mass firings at tech companies
• fast and radical disruption with technology, such as AI’s impact on accountants and lawyers
• increased scrutiny on environmental commitments; e.g. carbon credits were already looking wobbly and risk falling into further disrepute. Therefore, it’s a good year to set credible and deliverable goals, not a good year dial up greenwashing 
• social and environmental partners becoming increasingly choosy about who they take money from/associate with.  The fear that a social partner is being used as ‘deal candy’ to win e.g. a big government contract because they demand levels of social impact, is now a thing
• that paid and earned worlds become increasingly indivisible as media seeks to monetize its access to valuable customers/stakeholders
• and culture clash of legacy teams vs the new world order. Risk is both ways – discarding institutional knowledge and networks for ‘the new way’– and the ‘old guard’ defending the status quo.

Specifically on Environment, Social and Governance (ESG):

• the ESG agenda will become ever more complex and nuanced. This, combined with the macro-economic situation, will increase the demands for transparency and reduce tolerance for greenwashing (in all of its guises). Organizations that evidence their commitments and ‘show their working’ will see their reputations improve
• we are entering the 4th successive year of instability for the economy, the environment and people (socially, health and so on). Organisations that understand the context in which they operate (and the materiality of the issues they face) will be able to ground their ESG strategies in the supply/value chain and benefit reputationally as a result
• we are going to be in a year of complex trade-offs, and the way in which leaders/organizations navigate their various environmental and social obligation will become increasingly challenging. Driving hard at carbon targets when employees are using food banks (for instance) may become a genuine fracture point.

Overall, the fast-changing political, economic and social environment world-wide will continue to pose some serious challenges for reputation management. First, the rapid changes in the expectations and priorities of stakeholders requires detailed monitoring and a process to continuously re-balance responses to these changing and often conflicting demands. Secondly, third-party risk and the link to reputation is increasing, with supply chain players being subject to new pressures relating to ESG factors, new laws, sanctions, political changes, etc. all over the world.

Finally, the principles of sound reputation management remain valid, but the context is evolving - and quickly. Organizations in 2023 are surrounded by (and may contain) a society of increasing conflict, geographical and generational fragmentation, disputes, shortages of resource, frequent emergencies and rising anger. Moreover, many audiences or stakeholders are faster to reach their judgements and the time offered for delivery is shortening. Organizations that understand - and feel - this context will do better.

The last few years have just emphasised the need for deeper thinking and advanced preparation for the challenges you can identify and prepare for, so you have the time and space to also respond to what you couldn’t predict but comes to pass. Leaders need to give more time and resource for this, even though they are fully occupied with the current crises marathon.

In sum, as we look into this year, the need for professional and sound guidance across these many conflicting dimensions is greater than ever before. 

To help navigate the issues and opportunities ahead, do contact us at Echo. Preparedness is all.