7 minute read 16 May 2018

Three bad attitudes damaging your reputation — and how to fix them

By

EY Global

Multidisciplinary professional services organization

7 minute read 16 May 2018
Related topics Trust Workforce Customer

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In a connected world, reputation is all important. Organizations can’t afford to damage theirs through poor stakeholder relationships.

An organization may lose the respect of its stakeholders for a range of reasons. It may have too little time for them, place too little value on their perspectives or have too little interest in their well-being.

A growing number of organizations are using primary market research to find out how they are perceived by their stakeholders – essentially anyone who has dealings with or who is impacted by the actions of an organization. Stakeholders in this context include customers, employees, investors, the community, suppliers, regulators and the media, among others. This research helps them to identify opportunities to work more closely with these stakeholders and to make informed decisions that help build trust and a better reputation.

Of course, every organization has its own unique reputational issues. But dozens of major reputational research studies, drawing on the perspectives of hundreds of strategically minded stakeholders, have revealed some common themes and pinpointed some important lessons on the defining traits of organizations with strong stakeholder relationships and the weaknesses of those that fall short.

If your organization isn’t solving problems through collaboration with key stakeholders, it could be time to ask yourself why. Are you too busy, too bossy or too self-interested?

How poor reputations develop

Organizations with poorer reputations generally exhibit at least one of three common characteristics: they’re too busy, too bossy or too self-interested.

1. Too busy

These organizations don’t seem to have time for all that stakeholder stuff. They operate in a dynamic sector, face many competing demands and find themselves too busy to engage with stakeholders.

They display a strong preference for doing things their way, even in areas that require collaboration to make sure a solution meets the needs of all. When they are dealing with stakeholders, it is usually after an “event” that includes patching up differences with a hurt party, often not for the first time.

Their stakeholder relationships are punctuated with damaging events, disappointments and an ongoing loss of trust.

These organizations tend to be lacking in talented leaders and are generally less strategic in their leadership style. And they tend to spend a lot of time fighting fires.

Stakeholders are likely to be viewed as another problem, rather than as a source of problem solving.

One company that found out the hard way about the risks of being too busy for stakeholders was a paper manufacturer. It found itself besieged by a number of pressing issues: digital disruption, the need for capital investment to remain cost competitive, and growing demands from customers for products with stronger environmental credentials.

With the company focused on these urgent concerns, its conversations with forest environmental groups suffered. This led to a string of unresolved issues, including a loss of trust in the communities from which it sourced its raw materials. This ultimately resulted in reduced access to the forests themselves.

2. Too bossy

These organizations are often large and powerful and are absorbed in their own power, knowledge and goals.

They tend to offer only token engagement with stakeholders and allow little time for listening. Their communications with stakeholders are largely one-way and predetermined.

Internally, they consider themselves to be professional, hardworking experts. But, externally, they are seen as disconnected, narrow-minded and lacking in humility, because they fail to tap into the capabilities of their stakeholders.

Organizations that are defensive, and that avoid stakeholders, usually underestimate the productive role stakeholders can play. Their stakeholders would tell them that true leaders take advice: they never have the full story.

These organizations may well be considered a force in their sector, but they are usually disconnected from that sector. This lack of respect is not lost on their stakeholders, who often prefer sector leaders to recognize that they are in a privileged position and lead the pack as responsible and formidable members of the community.

One organization that fell into this trap was a public health body whose sense of its own importance grew after a decade of success. Its earliest campaign had won the agency worldwide recognition for its impact and change of behavior.

But when the agency broadened the range of health issues it addressed, it collided with other incumbent health bodies and would only collaborate on its own terms. This eventually undermined its own credibility and negatively impacted the stakeholder support it received.

Male receptionist on the phone ignoring woman at the desk

3. Too self-interested

These organizations often make choices that demonstrate that they place their own self-interest ahead of community best interest.

The products and services they develop are often designed to meet their own needs more than those of their clients.

Their performance reporting is often more self-serving than informative, and their dealings with stakeholders are sometimes opportunistic.

In extreme cases, they may break laws. But, more often, they communicate secretly or keep a low profile, securing their gain out of public view, leaving others worse off.

The behavior of leaders of these organizations is followed by their peers and subordinates, all driven to meet their KPIs in order to secure rewards. But when these behaviors finally come to light, the community loses trust in the organization, and the organization’s social license to operate is often withdrawn.

For example, one government enterprise was highly trusted until it was forced to reveal its high executive pay levels, boosted by significant incentives for meeting KPIs. Leaks from the organization then revealed that, in order to optimize their performance against KPIs, executives had understated key employee work safety statistics.

The executives had gained at the expense of the public purse and, potentially, employee safety. The trust placed in the enterprise was significantly diluted.

How better reputations are built

Just as reputation-poor organizations share traits, so do those that have built strong reputations. They tend to be well-connected, highly collaborative and focused on the best interest of their stakeholders.

1. Connected

Organizations with healthy reputations tend to be well-connected to their stakeholders. They spend time getting to know stakeholder organizations, what they do and what their priorities are, meaning they understand the stakeholder’s perspective.

They have designated leaders to act as key points of contact with key stakeholders. And these leaders proactively communicate and maintain a dialogue. Their conversations are not always positive, but they are constructive, respectful and ongoing.

Organizations with healthy reputations spend time getting to know stakeholder organizations. They understand the stakeholder’s perspective.

One organization that turned its reputation around through better connections was a large investment fund that had previously been viewed as detached and as “too big to listen” to the local investment community.

The fund embarked on a transformational program to reconnect with the investment community and to contribute as a thought leader on topics of significance for all members. The next year, the fund’s leaders outlined its investment approach and thinking to a wide range of influential industry forums. Stakeholders of the fund valued both the conversations and the connection. It was a significant turnaround.

2. Collaborative

Organizations face many challenges with the potential to impact stakeholders. However, collaborative organizations don’t wrestle with these challenges on their own. They use regular, constructive conversations to collaborate with stakeholders and believe in the capacity of partnerships to solve problems.

One organization that took a collaborative approach to turn around its fortunes was an industry-innovation body with over 100 members. For many years, it had been a battleground between large members and the rest over the direction of R&D funds, with little innovation actually delivered.

In an effort to listen and learn from its members, it launched a comprehensive program of in-depth interviews. These gave all members a voice and clearly identified their innovation appetite, capital and ambitions.

3. Best interest over self-interest

Organizations with effective key stakeholder relationships tend to place the best interest of the sector ahead of self-interest. These organizations recognize that their clients and stakeholders should represent valued partners over the long term.

Their clients and stakeholders may describe their relationship with the organization as like being “joined at the hip,” because the organization is proactively engaged and makes time to understand their business drivers, strategic goals and plans.

There will be occasions when these relationships require give and take on both sides. But these occasions can serve to reinforce the respect each party has for the other. Together, they endeavor to generate solutions that serve the shared best interest rather than one party’s self-interest.

One organization that refocused itself on its clients to transform its reputation was a treasury agency responsible for lending and asset management with government agencies. It had been perceived to be too focused on its own interests ahead of those of its mandated clients.

In response, the agency is focusing on being a sustainable and aligned organization that delivers holistic solutions for their clients, through their people’s capabilities and behavior.

Imperative to act now

If your organization isn’t solving problems through collaboration with key stakeholders, it could be time to ask yourself why. Are you too busy, too bossy or too self-interested?

Your key stakeholders are an informed, interested and strategic-thinking source of possible solutions to challenging problems. Fail to listen and you may end up wrestling with those problems alone.

Summary

To build strong reputations with stakeholders, organizations need to be well-connected, highly collaborative and focused on their stakeholders’ interests.

About this article

By

EY Global

Multidisciplinary professional services organization

Related topics Trust Workforce Customer