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Home > Business Strategy Best Practice > Reputation and Strategic Issue Management

Business Strategy Best Practice

Reputation and Strategic Issue Management

by John Dalton

This Chapter Covers

  • An overview of the relationship between reputation and issue management.

  • The importance and context of issue management as a tool of reputation management and strategic business planning.

  • The impact of social media in managing issues.

  • The value of issue analysis to decision making and business insights.

  • The structure and process of issue management.

  • The interconnection between issue management, risk, and crisis management.

Introduction

What is the purpose of a business? According to Peter Drucker, “the purpose of a business is to create a customer.” Such a statement makes good sense, as without customers there can be no functional business. Essentially, if the purpose of any business is to fulfill some human need within society, then that business, whatever its nature, should take an active interest in its own reputation as a way of securing its future prospects. Central to building and defending a sound organizational reputation is the capability to be proactive and to recognize and evaluate potential and ongoing risks (issues). Legitimacy and transparency are at the heart of issue management, and whether the messages developed and delivered through corporate communications are credible to stakeholders. If reputation can be viewed as a form of assessment of a corporation’s behavior and performance, then understanding and identifying risks and issues—that may at a later stage damage this valuable asset—must be an active part of any reputation management structure and process.

Most organizations recognize the importance of reputation to their organizations, yet few have dedicated structures and people in place to oversee the critical function. In the author’s opinion, we are witnessing the era of a reputation economy, whereby economic sustainability is based less on what you claim (typically through a mixture of mass media and social media) and more on what you actually do, i.e. your accountability and consistent delivery of brand values. Concurrent with this is a shift in values and public attitudes towards corporations and an increasing ethical overlap between business and personal morality.

Consumers now expect organizations to act in a fair and reasonable manner, and not only to make a brand/organizational promise, but to deliver it. Faced with increasing market volatility and complexity, corporations are realizing the need to have structures and processes in place to ensure that risk issues do not evolve into nasty reputational surprises, damaging brand equity, which can quickly result in loss of shareholder confidence and, in the long term, profitability. The hasty demise in July 2011 of the British newspaper, the News of the World, is a good example of an issue that rapidly became a crisis, with devastating consequences.

Risk and issue management are by their nature proactive so, in order to build, defend, and maintain a good reputation, corporations need a series of key interdependent competencies to manage reputation risks:

  • Strategic risk and issue management.

  • Effective brand/marketing communications and message development.

  • Corporate identity and image development.

  • Crisis management planning.

  • Innovation and communication of change.

  • Sustainability and corporate social responsibility.

  • Ethics and regulatory/compliance.

Is the Management of Issues Important?

Issues and their management are similar to the way in which we perceive our health. Most of us care about our health and fear long-term diseases such as cancer, yet many of us indulge in lifestyles that can increase the risk of exposure to serious illness. Interestingly, a simple search on the internet quickly reveals the importance of crisis management in the business lexicon. Type in “issue analysis” or “issue management” and there is significantly little presence on the web. Why? Because most people in business habitually use the terms “issue” and “issue management,” yet there is poor understanding of how issues can be properly managed.

Conversely, the term “crisis” is more popular in terms of awareness, training, and consequences. A crisis evokes fear and potentially threatens the very existence of a business. The simple explanation is that issues, like threats from illness, do not command our immediate attention. Our minds have not evolved for such long-term planning, as we tend to look for short-term reward and security. In essence, executives understand the importance of risks and issues but seem to have a cognitive bias against them, primed as we are for “fight or flight,” the classic crisis scenario. Even when risks and their management are advanced, such as enterprise risk management (ERM) systems within the financial sector, elements such as reputational risk are not adequately dealt with.

In his book, Managing, Mintzberg pointed out that businesses are often over-led and under-managed. Organizations place too much emphasis on preparing and training for crisis response, and far too little on establishing formal structures and training for complex issues and their management. Yet this seems somewhat strange given the rise of social networks and relational media, which have leveled the playing field, with bloggers and activists having the same access to the network as corporate giants. In the post-industrial world, dominance is being replaced by influence, central to which is an appreciation of what makes reputation.

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Further reading

Books:

  • Carroll, Archie B., and Ann K. Buchholtz. Business and Society: Ethics, Sustainability, and Stakeholder Management. 8th ed. Mason, OH: South-Western Cengage Learning, 2011.
  • Chase, W. Howard. Issue Management: Origins of the Future. Stamford, CT: Issue Action Publications, 1984.
  • Cornelissen, Joep. Corporate Communications: A Guide to Theory and Practice. 3rd ed. London: Sage, 2011.
  • Friedman, Andrew L., and Samantha Miles. Stakeholders: Theory and Practice. Oxford: Oxford University Press, 2006.
  • Heath, Robert L., and Michael J. Palenchar. Strategic Issues Management: Organizations and Public Policy Challenges. 2nd ed. Thousand Oaks, CA: Sage, 2009.
  • Rayner, Jenny. Managing Reputational Risk. Chichester, UK: Wiley, 2003.
  • Ringland. Gill. Scenario Planning. 2nd ed. Chichester, UK: Wiley, 2006.
  • van Riel, Cees B. M., and Charles J. Fombrun. Essential of Corporate Communication. Abingdon, UK: Routledge, 2007.

Articles:

  • Business Action to Stop Counterfeiting and Piracy. Submission to the UK Department of Health consultation on the future of tobacco control. September 8, 2008: Online at: tinyurl.com/44umasl [PDF].
  • Jones, Barrie L., and W. Howard Chase. “Managing public policy issues.” Public Relations Review 5:2 (Summer 1979): 3–23. Online at: dx.doi.org/10.1016/S0363-8111(80)80020-8
  • Reber, Bryan H., and Jun Kyo Kim. “How activist groups use websites in media relations: Evaluating online press rooms.” Journal of Public Relations Research 18:4 (2006): 313–333. Online at: dx.doi.org/10.1207/s1532754xjprr1804_2

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