The Oxford Dictionary defines reputation as ‘what is generally said or believed about a person’s or thing’s character or standing’, ‘the state of being well thought of; distinction; and respectability. Certainly, the good qualities – or values – executives mention to me as evidence of their company’s good reputation can play an important role in the way a company is perceived. But reputation is also an emotional connection that people have with companies. This ‘feeling’ people have about a company can’t be reduced to just one or even several things. In truth, reputation is earned – for better or worse – based upon the company’s conduct in all the areas that matter to its stakeholder groups.

Executives can’t really know what their corporate reputation is unless they ask. They must engage in systematic and regular two-way communication with their investors, customers, employees, community leaders, the media, regulators, and others who collectively represent the diverse range of interests and opinions about their company. They must also monitor social media and pay close attention to how they are perceived by those who express their opinions on the Internet.

Then using that feedback as a bellwether – or smoke detector of sorts – executives must continually reevaluate their organizations to determine where improvements are needed, ensure that the line of communication with stakeholders is always open, be certain that reputational risks are identified and addressed as early as possible, and track their reputational equity over time.

With as much as 63% of a company’s market value tied to its reputation, the failure of C-suite executives to make corporate reputation one of their most important priorities puts their company and those who depend on it in jeopardy. On almost any day of the week, a quick look at the headlines offers ample reminders of what can happen to companies that don’t.

The easiest explanation for this is that people who are intimately familiar with a company and its solutions forget that not everyone understands the issues or challenges their company helps to solve, or the significance of their solutions in the context of competitive offerings. This is particularly true for journalists, investors, regulators, community leaders and other stakeholders who are familiar with the industry a company works in, but are not actual participants in that industry. It may seem like a small distinction, but it is one that makes a tremendous difference in how well corporate communications resonate with these important audiences.

This also happens within companies as executives in leadership positions communicate to employees as a group, and as if they all understand the company and its solutions at the same level. Perhaps they do in smaller firms, but the larger the company, the more likely it is that employees will have varying levels of understanding about their company’s business environment, challenges and opportunities.

Of course, the first step in moving from complexity to coherence in corporate communications is recognizing the differences in the way messages are received and interpreted by each audience. Each stakeholder group must be considered and evaluated not only for the level of understanding members of the group are likely to have around a topic, but also for the type of information that actually matters to them. To the extent that companies work to customize their messages to the audiences they hope to reach – and stop assuming that all message recipients are on the same page – it will help them move from complexity to coherence and to deliver messages that result in real understanding.

I am certainly an optimist myself – but my optimism has been tempered by working for clients that suddenly found themselves in a whirlwind of controversy with a serious impact to both their reputation and market value. And like many other companies in this position, I’ve seen them communicate less instead of more, argue internally about what to do or not do, and on those occasions when they could all agree on a communication about the issue, it was either vague or defensive.

When you read about companies like BP, Netflix, Bank of America, Toyota and many others that have had big PR problems in recent years, we all have a tendency to roll our eyes at the stupid things companies sometimes do and say. But when you see a crisis unfold up close – when you know the company and the people involved – you can see how communications during a crisis becomes driven by emotions like fear and anger rather than by strategy. Without a strong crisis communication plan in place, even a group of very smart, experienced, and articulate senior executives are at such a disadvantage that they cannot effectively communicate when the crisis comes.

This is how Susan put it to me the other night: “A crisis communications plan is not just the fancy frosting on a cake! It helps address the very real vulnerabilities that companies have in today’s world of 24/7 media and allows them to effectively communicate with stakeholders that demand accountability.”

I laughed at her “fancy frosting” analogy and agreed. Every company needs a strong, well thought out and agreed to crisis communications plan. It’s the best hope for effective communications during a PR crisis and often the only way to preserve corporate reputation.

For example, companies often look at their various audiences as belonging to stakeholder groups – employees, investors, customers, government officials, the media, etc. But when companies focus their public relations efforts on communicating with a category – they often miss the fact that it is really about the quality and nature of their relationships with individuals in that category that ultimately impacts their ability to effectively communicate.

Sure, I understand that it makes sense to understand the general similarities between individuals in a specific category, and to try to develop public relations initiatives that will resonate with the largest audience. Employees generally care about employment stability and financial security. Investors generally care about a company’s leadership and upside potential. Customers generally care about price, product performance, and customer service. But especially in the B2B world, that’s not exactly rocket science – right?

What’s invaluable to companies is better understanding what makes stakeholders within a category different, rather than what makes them similar. Deepening this understanding can happen through focus groups and surveys. Even better, what if the CEO made a point of calling one person from a stakeholder group each day strictly for the purpose of trying to understand what makes that individual unique? And what if every manager in the company did the same thing and the information was shared across the organization?

This kind of knowledge is what allows companies to communicate in ways that build ‘public relationships’. Relationships that reduce employee turnover; increase customer loyalty; attract new investors; win community acceptance. Ultimately, relationships that form the foundation for a good corporate reputation and a successful business.

Like many start-ups, we spent our early years accepting just about any work that came our way if we had the skills and talent to deliver on the needs of the client. But we have learned some important lessons along the way that have made our client selection process much more effective today:

• Select companies with accessible, involved C-suite executives. We can only perform at our best when we are working with a company at the strategic level, and are considered a strategic partner.

• Select companies that are willing to align their budgets with their expectations. We can certainly help companies outperform their budgetary constraints through smart strategy. But we cannot take a start-up budget and produce Fortune 500 results.

• Select companies with a high level of integrity. Are the company’s actions aligned with how they represent themselves? What is the evidence of that integrity?

• Select companies with a true passion for taking their company to the next level. We are most energized by clients that challenge themselves – and us – to achieve great things.

• Select companies that respect and trust our expertise. We can’t perform our best work in an environment where our recommendations are disregarded.

Ultimately, our selection of a client is even more important than a prospective client’s selection of our firm as their agency. We know our people and the value we can bring to a client, but the client can only know those things over time, once our partnership is established. It is our responsibility – and a measure of our integrity – that we are up front with prospective clients regarding our selection criteria. It is also vital to the interests of both parties that we say “no” to new client relationships when that criterion just can’t be met .

In the realm of corporate reputation management, it is of crucial importance to plan for the “worst case scenario” well in advance of its occurrence. In some cases, reputations are at stake – in others, lives may be at stake. Not only does a company need to determine what the worst case scenarios are – it needs to professionally craft the messaging pertinent to each scenario and then outline a strategy for the communication channels it will use to distribute these messages.

On September 11, 2001, I was working in the Renaissance Center in downtown Detroit, which is a group of seven interconnected skyscrapers and the tallest structure in Michigan. When word started to break about the terrorist attacks, approximately 7,000 people were working in the Renaissance Center and it was considered a possible target. As a result, the building was evacuated. Fortunately, the building’s management company had previously given all employees a manual that outlined exactly what to do if the building needed to be evacuated, providing clear steps to follow and emergency numbers. As a matter of routine, the building management firm conducted simulated fire drills every three months that included an evacuation via the emergency staircases. As a result of this preparation, the building was safely and quickly evacuated.

So while it may be impossible to prevent the unexpected, it is vitally important to conduct scenario planning, whether it be for natural and manmade disasters, or for some misstep by your company that results in negative consequences – intended or not. As most companies are well aware, the resulting fall-out can include misinformation that spreads across the Internet and news media like a wildfire. It can be extremely difficult to contain if a plan is not ready to go.

As public relations professionals, our job is to help our clients expect the unexpected, develop the readiness ‘tool kit’ they need to handle unexpected issues or events expediently and professionally, and to provide the support and expertise they need to implement those strategies efficiently. Corporate reputation is a fragile thing, and it is vital to handle it with great care and intentional, comprehensive planning for the unexpected. In other circumstances, lives may depend on this pre-planning and a no-fail communications strategy is imperative. Either way, “Expected The Unexpected” is a mantra we would all do well to think of as we begin each new day.

It would be easy to say that these companies get caught off guard because they are not ‘listening’ for mentions of their company in the blogosphere, or they are not evaluating how unfolding industry issues could impact them, or they have underestimated the impact of some skeleton in their closet. But I find that the problem is even more fundamental:

Lack of Education About What Might be a Threat to Corporate Reputation

What exactly is a threat to corporate reputation? How do you know? What should you be looking for? One of the first things companies must do is educate themselves and their employees and colleagues about the types of things that could become a reputational threat to their company.  Of course, it’s easy to identify issues when they show up on the evening news, but what about the issues that are not fully developed?  How do you help people think about those issues in new ways? And if threats to corporate reputation are the gaps between what a company does and what stakeholders expect, which internal issues or operating hiccups represent a potential reputational threat?

The lack of clear guidance for employees and colleagues makes it very unlikely that a developing reputational threat will be identified as such before it becomes a much bigger issue. It is important to help those who are willing to alert the company to reputation concerns by providing them with common definitions and guidelines.

Lack of Central Point of Contact for Information

Information is generated from many different directions and carried along through many different channels. Potential threats to corporate reputation may begin as a small story in a local newspaper about an industry issue; information picked up from a conversation at a trade show; comments written by a blogger no one has ever heard of; or an internal audit report that indicates a product or solution isn’t performing. Other information sources like the media, grassroots organizations, and other stakeholders like customers and investors are also part of the information network.  So how does information from these diverse sources get communicated to the company in order to be evaluated?  If someone inside or outside the company thinks something might be a reputational threat, how do they let you know?

Organizations need a clearly designated central point of contact for information to flow to – regardless of where it comes from. Employees and colleagues should be aware of who to communicate with if they think something might represent a potential reputational threat.

Corporate reputation is a valuable asset, and knowledge is the power that can help companies protect it, if they can get it.  To access that knowledge as early as possible, firms must ask for the help of employees and colleagues and help them understand what a potential threat looks like. Then they must make it easy for them to communicate that information to a central point of contact.

Only if a company becomes aware of a potential threat can it evaluate the issue and determine next steps.  The earlier this happens, the easier it is to protect and defend a company’s reputation.

Of course, the PR field itself has evolved in dramatic ways over the years. A decade ago, it was much easier to identify those who stood in opposition to a company’s products, services or practices and to understand the grounds for that opposition. Unfavorable stories were more easily averted or contained, even for companies with a national footprint. The influence of NGOs was not as widespread as it is today, and working with stakeholders to find common ground was not as often complicated by the influence of third party adversaries.

PR practitioners also had the luxurious benefit of time. Except for high-profile disasters, such as an explosion at an assembly plant, the amount of time between initial issue identification and its potential impact on public perception took much longer before the proliferation of new media technologies and social platforms began to explode earlier this decade. Now, we have all seen that tremendous damage can be done to a company’s reputation with breathtaking speed.

The threats to corporate reputation have dramatically increased both in terms of frequency and the cost incurred to address those threats. Today, some companies face reputational assaults almost daily as the media, regulators, NGOs and others pummel them with damaging accusations and innuendo — whether rightly or wrongly. Other firms may fail to recognize these threats or underestimate their ability to cause harm – until the day some information about an old skeleton in the closet pops up in a blog and catches the attention of the national media.

Certainly, more organizations now recognize that their reputation is a valuable asset worth monitoring, strengthening and protecting. Sure, traditional PR is a part of that strategy, but more importantly, public relations practitioners must expand their thinking and increase their value by providing a framework organizations can use to proactively identify and analyze areas of reputational risk. They must understand what drives stakeholder trust in the organizations they serve, and what could diminish that trust. They must also become strong advocates for the transparency, resources and investment that are required to effectively manage and protect the corporate reputation asset.

In today’s public relations environment, success is best achieved by those who can develop and execute high performance reputation management strategies in a highly fluid communications environment. In meeting these requirements, PR professionals will be much better positioned to navigate the public relations challenges ahead, recognize new opportunities as they unfold, and to serve their organizations and stakeholders with strategic distinction.

Very exciting night tonight – so much going on. Tomorrow morning we leave for HIMSS with so many meetings on deck, so many media appointments for clients and so many logistical challenges around our Social Media Hunt (which, by the way, will be both fun and, for one lucky Hunter, rewarding).

We’ll be blogging from HIMSS, and in the days and weeks ahead, watch this space for commentary on all things PR. The level of expert knowledge we have at MPRG is pretty phenomenal (if we do say so ourselves), and we’re looking forward to sharing.