What price reputation conclusions

An investigation into corporate reputation management in the FTSE250

The health of the FTSE250 is often viewed as a weathervane for the UK’s economy. More companies are in the earlier stages of their lives, with more growth potential. They are generally more UK focused and so more exposed to domestic risk factors. Those risks have been amplified in the uncertainty unleashed by COVID-19; business reputations are being won and lost as companies respond.

Do FTSE250 leaders understand the value of corporate reputation or are they still missing a trick when it comes to managing this asset?

What Price Reputation Report Conclusions Cayhill Parnters
Our research suggests they are. Too many appear to be overlooking the wider benefits of actively managing a core part of their market value, and not understanding the importance – and fragility – of their reputational whole.

Why is this important now? At the time of publishing this research, the only certainty of COVID-19 is continued and unprecedented uncertainty. Business leadership and corporate behaviour are in the spotlight as never before and the composition of the FTSE250 will undoubtedly look very different in six to 12 months’ time. As our interviewees explained, it can take a crisis to awaken CEOs to the fundamental importance of corporate communications. And with no ‘new normal’ on the horizon, controlling what is controllable has additional significance.

Many FTSE250 companies are focusing their communication resource on investor relations or financial PR. The explanation may be evolution, in that it’s the ‘must have’ when listing and so has the CEOs’ attention from the start. Thereafter, the absence of robust, or respected, measures for broader aspects of reputation mean that ‘investor sentiment’ may be allowed to prevail as a proxy for ‘reputation’. Is this important? Oiling the hinge that squeaks loudest risks overlooking the constituent parts of corporate reputation that ultimately impact value. Our research uncovered a wide range of perceived reputational risks, but unless there is a voice at the top table, or a NED on the board with the expertise to champion and challenge the role of communications, reputational management may take a back seat until a risk materialises as a crisis.

COVID-19 may be the necessary wake-up call. It would beggar belief to report that three quarters of CFOs, or HRs, thought that their CEO didn’t understand the value of their function. Yet 73% of the corporate communication leaders we interviewed said just that. If companies are to come out of the COVID-19 crisis stronger, our research suggests it is time for them to actively manage their corporate reputation alongside the tangible assets on the balance sheet. The consequences of inadequate controls have severe ramifications for investors, employees, customers and wider public opinion.

For chairs and their boards, this means embedding top down buy-in to the notion of reputation as a competitive asset. This has probably never mattered more. As the UK – government and citizens alike – grapples with new notions of collective and personal responsibility, corporate responsibility is firmly in the frame. It can take just one misstep in communication for immediate and ruthless comparison to be made between the corporate ‘demon’ and ‘angel’ of the day. The chair’s personal reputation is inter-twined with the company: public expectation of both is ‘do good’ and ‘do well’.

Cayhill Partners What Price Reputation Report, Conclusions
For CEOs, the unsurprising finding from our research is that their role is pivotal. Hiring in and managing sufficient resource for corporate reputation management is crucial, as is ensuring there is a clear understanding of what it can and can’t deliver.

For communications leaders, a key finding from our research is that roles within FTSE250 organisations are no longer a stepping-stone to a FTSE100 position but a career aspiration in themselves. They typically enjoy more responsibility, wider briefs and more involvement in the running of the business and can be a true powerhouse in an organisation.

FTSE250 leaders may have little time to consider such issues while dealing with the day-to-day firefight of the COVID-19 crisis, perhaps battling for survival, but there has probably never been a more important moment for the C-suite to reflect on who and what is now driving their corporate reputation and how they can take control.

“Do CEOs think the market is reflecting the true value of their company in the short, medium and long term? Do they think there are any risks to the way the market perceives the organisation? If not, they have got some serious work to do in telling the company story better, and to tell that story needs professionals. You want to inspire people to trust your company and invest in it”.
FTSE250 Chairman