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Bring in the “Qualts”… The “Quants” Need Some Help

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In study after study, reputation risk remains a top concern of board members. With that in mind, and in light of the Harris Interactive RQ study that ranks companies with the worst and best reputations, AIG has some “… splainin’ to do” while Amazon lives large. The RQ study ranks companies’ reputation based on:

  • Social responsibility
  • Emotional appeal
  • Products and services
  • Vision and leadership
  • Financial performance
  • Workplace environment

Mirroring Edelman’s annual Global Trust Barometer, the top 10 best companies on the Harris ranking were led by technology and food companies and the worst 10 were primarily banks and financial services companies.

Nearly all of the reputationally remarkable companies boasted strong numbers in vision and leadership, employee satisfaction, social responsibility and customer service. This, too, emboldens Edelman’s Trust Barometer drivers of trust-building. On the flip side, those on the bottom rung had poor numbers for customer service, leadership and social responsibility.

Clearly, reputational risk intertwines with all corporate risks. Until business fully embraces and operationalizes social utility into its business models, stock price, a record-breaking DJIA and the illusion of economic recovery will do little to nothing to manage reputational risk. Most crisis-recovery examples represent a tectonic pivot to a fully integrated risk-management platform that infuses reputational considerations into the full “supply chain” of risk-based decision making. While reputational risk-taking must include some degree of negotiability, companies must possess a materiality index that guides reputational risk-taking as well as clear reputational standards that remain inviolate.

At their core, the RQ findings, as well as additional analytics by 24/7 Wall St., illuminate once again that we live in a global business environment challenged by a perplexing paradox, particularly for boards of directors:

Business continues to be managed by quantitative metrics but, increasingly, is measured by values.

Many elements follow as a consequence. But a crisis in leadership, certainly, occupies center ring. Nonetheless, the top 10 list provides a proof point that opportunity abounds for strong, values-based leadership.

Harlan Loeb is the global chair of the Crisis & Risk practice at Edelman.

Image by Richter Frank-Jurgen.
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