Reputation Risk on the Increase: National Survey

FOR IMMEDIATE RELEASE
4 May 2007

Reputation Risk on the Increase: National Survey

New Zealand organisations are lagging behind their international counterparts in recognising the importance of reputation management, according to a new national survey of directors and top executives.

The inaugural national survey into reputational risk carried out among more than 50 organisations by Senate Communication Counsel and TNS Global, found only half of senior managers see corporate reputation as one of their primary assets – compared with 90% globally.

Six out of 10 chief executives surveyed thought reputational risk management was not understood well enough in the country’s board rooms while four out of five senior managers thought directors should do more to understand the management of reputation.

”Reputation management is an internationally recognised discipline but this is the first time anyone has publicly explored how organisations think about and deal with their reputation in New Zealand,” says Neil Green, Managing Partner at Senate Communications.

“A global research project carried out by the Economist Intelligence Unit two years ago found that worldwide companies were struggling to quantify risk to reputation and finding it hard to know who should be responsible for owning the issue. But reputation risk management is now considered a top priority for global leaders.

“We found management in New Zealand has been slower than their international counterparts to understand the significance of reputation, the sort of reputation risks they run and how to manage those risks. But it is heartening to know that they strongly agree more should be done to ensure directors understand how reputation can be formally managed.”

The New Zealand research was carried out at the end of last year and captures the views of mainly CEOs and communications directors about reputation management in more than 50 organisations including top listed companies and major public sector organisations.

More than 40% of respondents said they had faced what they regarded as a crisis in the past year. Many organisations had operational plans or crisis plans in place but 40% admitted they didn’t have plans in place to deal with communication in a crisis. Few organisations had recognised the effect of the crises on their reputations or integrated their existing plans into an overall reputation management process.

“In order to be fully prepared to handle any sort of crisis and manage corporate reputation, organisations need to have conducted research, such as into stakeholder perceptions and established a clear contingency plan for each potential crisis. We found many organisations did no formal research among some of their stakeholder groups,” says Mr Green.

Eight out of 10 organisations said they had never monitored the perceptions of political activists and pressure groups; two thirds of organisations admitted to never researching the perceptions of the general public towards their organisation; while a quarter said they had never monitored media perceptions.

“We were very surprised at the glaring disparity between organisations’ apparent concern for reputation risk and their apparent unwillingness to frequently check what some of their important stakeholders were thinking,” says Gary Lembit, Managing Director of TNS Global.

“Only 20% of respondents continuously monitored their customers’ perceptions – half as many as in the rest of the world. This suggests New Zealand organisations might be complacent compared with their overseas counterparts.

“It is clear from the survey that nowhere near enough discussion is taking place among New Zealand organisations about the management of corporate reputation. Given that these organisations have shared concern about the increase of risks to their reputation and the potential damage, it is alarming that they continue to sit back and trust to luck.”

The full report Managing Reputation in New Zealand is available online at www.senatecommunications.co.nz.

ENDS

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