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by GK Strategy 20th April, 2016
3 min read

Reputation’s the word on ‘The Agenda’

Tom Bradbury’s ‘The Agenda’ has had some interesting guests of late – Boris Johnson and Ed Miliband to name but a few. With the EU referendum campaign in full swing, political programmes will be filled with those from either side of the debate getting their word in. Monday’s programme saw George Osborne take the stage along with consumer hero Martin Lewis, journalist and broadcaster Grace Dent, and Telegraph Brexiteer talisman Allison Pearson.

An issue that caught my eye during the programme was a question posed to the panel on the Conservative Government’s National Living Wage. First up, George Osborne was asked to respond to reports emerging in recent days of businesses across the country, such as Waitrose, looking to offset the cost of the National Living Wage by reducing employee perks. Osborne’s response was simple: it makes him angry and that “companies should be much more careful about their reputation and much more aware of their social responsibility to their workforce as well as their community.”

This struck a chord as it is often a poorly made case that managing reputation effectively will have a positive impact on ‘the bottom line’. This is often reflected by communications people and spinners scrambling to make amends when an organisation or business is in the midst of a scandal or reputational issue. What’s more, most of the time it is managing business issues, rather than aesthetics, that have a positive impact on reputation, and in turn, presentational efforts are usually only effective when they are grounded in reality.

Ipsos Mori uses five metrics to measure reputation: awareness, familiarity, favourability, trust and advocacy. Without awareness reputation cannot be built; without familiarity reputation cannot be sustained; without familiarity, favourability will suffer, and trust will break down if promises are not met. Having advocates will help bind the first four so that reputation is built and goodwill is stored for the benefit of future crises that occur.

The Chancellor’s point rings true of recent corporate scandals. If we track back to before the Panama Papers and look at the corporate ‘tax dodging’ scandal in the UK, companies such as Starbucks, Amazon and Facebook received a prolonged thumping in the press for their part. In 2012, YouGov’s BrandIndex reported that Starbucks’ reputation score dipped from +4.6 to -3.9 following the tax revelations and in 2014, Starbucks announced a 3.4% dip in UK sales.

Many will be surprised to hear of Waitrose’s management of the National Living Wage as their brand strength is built around being ‘a successful business powered by its people and its principles’. There is a key difference that will define the impact of this issue; for every dozen headlines written about tax manipulation by Starbucks, Amazon and Facebook, far fewer will be written about Waitrose, a company that has invested in being known for the fair treatment of their employees. Ultimately, their store of goodwill will help to deflect the repercussions of their National Living Wage ordeal.

George Osborne is right about this; businesses do need to take seriously their reputation, invest in it, and to think of it as an asset – those that do will stand a much better chance of weathering storms in the future.

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