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“Spain Leads in the Management, Measurement and Know-How of Reputation”

Currently reputation and trust are the most valuable assets for businesses. Intangibles already account for more than 85% of the value of companies in the S&P 500. Regarding the value of reputation and purpose for companies, we spoke with Ángel Alloza, CEO of Corporate Excellence.

Additionally, he also explains the main conclusions of the Report ‘Approaching the Future: Trends in Reputation and Management of Intangibles 2019‘, prepared by Corporate Excellence – Center for Reputation Leadership together with Canvas Estrategias Sostenibles. It also reflects on how the reputational asset has improved in Spain and how the voice of the CEO should be given more value within an organization.

The fourth edition of this report has had the collaboration of Dircom for the dissemination of field work and the Chair of Metrics and Management of Intangibles for the analysis of results. The report includes the present and future of intangible management, especially the emerging trends in reputation, sustainability, ethics and transparency.

Reputation is Built From Within

We have heard over and over again that the best protection against a PR crisis is to have a great reputation and a tightly knit network of support. Those of us who dedicate ourselves to the wonderful world of corporate communication know that getting those two things right requires plenty of time and effort on one hand and robust strategy and planning on the other.

It is, therefore, a long-term task that also requires daily actions. In order to reap the rewards of a solid reputation, it is essential to act in an irreproachable manner with each of the stakeholders, starting with our own employees. To paraphrase the great master of internal communication, Pablo Gonzalo, it is useless to say over and over again that our professionals are the raison d’être of our brand if we do not demonstrate it every day or if we don’t set out to help them become real prescribers to the same vision.

I firmly believe that it is impossible to have a good reputation without employees committed and aligned with the corporate purpose. But this doesn’t always depend their will or interest. In fact, it almost never depends on that. It is a responsibility that corresponds unequivocally to the leadership team of the company or institution. Thus, this challenge should be permanently on top of the top executive’s desk, as well being firmly prioritized by the members of the Board of Directors. For this it is necessary to provide management indicators (the famous KPIs). Therefore, let’s start to measure as soon as possible not only the level of employee engagement through the work climate surveys, but also their level of recommendation (NPS) and their contribution to reputation indicators. Fortunately, there are several proven methodologies which can provide specific diagnostics and strategies for continuous improvement.

These indicators can be grouped and integrated in a scorecard that serves as a roadmap in the decision making process and in the corresponding action plans. In some cases, these plans will require budgeting that should be proportional to the size of the challenge. It will be at that point where we can check on whether there is real commitment to employee satisfaction and the consequent improvement of the brand’s reputation.


 

 José María Palomares
Director of Communication and Institutional Relations at the European University of Madrid and President                         of Multinacionales por Marca España

How to Manage a Sponsorship to Enhance Reputation

The Boeing 737 Crisis and Our Future

We must rejoice in the rapid and coordinated response of the EU to the Boeing 737 Max 8 accident in Ethiopia, prohibiting that model from flying into, within or from Europe. The safety of the people always comes first. One would be forgiven for thinking that the measure was facilitated by an alignment with European interests in support of Airbus, Boeing’s main competitor, but the decision was the right one nevertheless.  That the USA has followed the same path and have grounded all aircraft of that model, too, is likewise the correct decision as much as it hurts a strategic sector such as aviation.

We ought to congratulate ourselves because the official organizations and regulators that watch over our security have acted swiftly and decisively, without being held back by economic interests. That’s not always the case, so today they deserve our applause so that this example can set a precedent.

The same cannot be said about Boeing. All of its stakeholders (airlines, shareholders, regulators, public authorities and the rest of the industry) would have preferred a more diligent attitude. Air travel is an activity highly sensitive to social perceptions of safety and security. We would all have welcomed an immediate response that didn’t seek to protect their own interests, but rather to defend the greater public interest. It is not the most frequent attitude in a discovery of a potentially defective product, but it is the only way to weather such a crisis comparably well.

Boeing is in a crisis because its relationships with those very stakeholders are seriously threatened. Who else will be left to think if they can’t find better alternatives. The only way to protect and even strengthen these relationships is to forget about the income statement. You have to spend what you have to spend to fix the problem, that is, to protect those relationships. You can survive a crisis with debts, even huge ones. But not without clients, without shareholders, without banks that would lend to you and without official permits to operate in the first place.

Sometimes we misinterpret reputation as if it were a value independent of our actions. We conceive it as if it were the consequence of some complex communication engineering or – even worse – marketing, which is suspended in the air without support. One then falls into the tempting trap of avoiding anything that has a negative impact on that corporate image. As if clearly recognizing a problem, assuming one’s own responsibilities and stopping the machines is like throwing stones against the roof itself. It’s the other way around!

On the contrary, you lose credibility, and down the road recovering it is very difficult. It would have been very different if the entire initiative to stop those planes had come from Boeing itself.  A hard landing no doubt, but one that keeps its fuselage of credibility intact in the eyes of its priority audiences.  Later, they could have said: “Fortunately, it was a false alarm: everything is fine,” or even, “we have discovered the problem, and we will repair it before there are any more accidents.”

This episode also shows that problems bring forward signs of life. The accident of another airplane of the exact same model a few months ago wasn’t taken as seriously as it should have been. No one really asked, “what if what happened with that plane is a structural defect?” Ultimately the direst, last consequences were reached. These days we read comments from pilots who experienced the same problems, complaints about a lack of more intense training processes and clearer, more detailed training materials … Today nothing internal stays in the dark: absolutely everything will be known, not through the mouths of official spokespersons either. The truth finds holes to come to light.

Now, what to do? Quite plainly, learn. It isn’t the first crisis of the aviation industry nor will it be the last. We need strong companies, capable of responding quickly in defense of the greater public interest. The best scenario for everyone would be that Boeing recovers and sews the tear in its relations with its priority audiences. They will achieve it, if its actions restore lost credibility. I am inclined to think that they even hope for recovery if they themselves reveal that there were internal failures. But if these failures are discovered by others, they can consider themselves finished.

In short: aircraft manufacturers have to disappear once more. It would be a disaster that now instead of choosing which airline to fly, we would start to see if we would (or not) to fly on a specific model.

Not only do the other aircraft manufacturers have to study this case. There are lessons to spare for all industries working towards greater control of activities by artificial intelligence which have a direct impact on people, such as cars and transport in general. It isn’t enough to say that the number of victims “while the machines learn” will be small, and smaller than what human errors currently cause. If they want to prevent a reaction from being motivated solely by strong emotions (and by anti-system ideologies) and hindering progress, they need to devote much time and energy to communication processes, with human supervisors and with public opinion in general. It isn’t the company that decides what is an acceptable risk, but rather the people.



Yago de la Cierva
Director of Crisis Communication at Proa Comunicación

A Checkmate to King Steven Spielberg

Just a week ago, we were thinking of writing a piece about the controversy that arose between Steven Spielberg and Netflix following the alleged statements of the director’s confidant. According to Indiewire, a spokesman for his field said: “Steven has a very strong opinion on the differences between cinema and streaming. He would like others to join his campaign when it arises. We’ll see what happens.” The ‘campaign’ to which he referred to proposed the possibility that films produced by Netflix would not be represented at the Oscars. Automatically, the news was published in countless national and international media. Each and every one of them alluded to the words of the director’s close source to justify headlines like: “Steven Spielberg charges Netflix and reopens the debate about streaming”, “Spielberg’s attack on Netflix movies”, or even “Steven Spielberg is working to make movies like ‘Rome’ never reach the Oscars in the future.”

The incident would have elevated the text that would’ve published in Proa Comunicación towards the debate between the cinema and streaming platforms, fully reaching the plane of a cinematographic praxis that is redefining itself. The article would have reflected different currents of opinion that would have served to provide arguments to those who have yet to form a clear opinion about the issue, but it would’ve done nothing more than stoke some doubts that are nonetheless healthy to formulate. However, we don’t consider it imperative or crucial because of the scarce connection it would have with the field of communication, being a mere article oriented on audiovisual consumption trends.

Apart from a series of timid responses from second and third tier actors (see Charlie Hunnam), Alfonso Cuarón, winner of the Oscar for Best Director for ‘Roma’, published a reflection on distribution models, supposedly in response to Spielberg. The main conclusion was: “We need more diversity in the way we release our films,” a correct and elegant answer. Netflix, on the other hand, replied to Spielberg through Twitter:

Netflix as a standard of freedom, universality and artistic awareness. How ironic.

But then just a week later, The Hollywood Reporter publishes nuances and completely changes the version of Spielberg through another spokesman. A ‘rectification’ that, on the other hand, has not had the same impact – at least in the national press – as the alleged proposition. This detail now already makes it a direct attack on the reputation of the director, and that’s why it attracted our attention.

Producer Jeffrey Katzenberg, who co-founded DreamWorks with Spielberg and David Geffen, told the media: “I talked to Steven about this yesterday, I asked him and he said, ‘I did not say that at all.’ He didn’t really say anything. What happened was that a journalist was looking for something to spread and heard a rumor about Steven.  They called a spokesperson to draw out a comment and honestly they twisted it around. One, Steven did not say that, and two, he will not go to the Academy in April with some type of hidden agenda.  Rather, he hasn’t weighed in at all, nor has he aligned himself with any specific position.”  What does this change? Everything.  But the damage is already done.

Judging from the data from Google Trends over the last three months which measure the influence and interest over time in terms of search figures, the audience peak generated by Spielberg as a result of this news is indisputable. On March 4, the day of the outbreak, interest increased markedly. Another date, the director’s birthday (December 18), is approaching.

It’s undeniable that Spielberg himself has contributed to his own reputational damage by breaking two golden rules of the management of any crisis: time and exposure. Leaving a week in any crisis is irresponsible. Positions must be defined beforehand and time is key. Therefore, a week of feeding all kinds of criticism and debate has played against him. On the other hand, if you do not correct the falsehood, you cannot pretend to completely reverse it through a third spokesperson. That Jeffrey Katzenberg had to ‘show his face’ for Spielberg denotes a certain weakness and even reinforces the belief that it still isn’t Steven’s genuine opinion that we’re being told.

But what if that campaign mentioned by the anonymous source was in fact true, and that organized impact has simply caused the director to stand back? Apart from personal considerations about his filmography, about his person or about his work, it is undeniable that Spielberg is a film deity. Demonizing his character for questioning Netflix is just more evidence of the tyranny of the audience.

In one way or another, whether due to defamation or an incorrect clarification or correction, the reputational damage to Steven Spielberg has already been done, and it cannot be solved unless he himself puts an end to it. In conclusion, it is necessary to point out that it is somewhat ironic to accuse the director of denying Netflix and bring forth propositions to an Academy that has so often denied him recognition and, according to many rumors, never forgave him for eclipsing the most avant-garde cinema of the 70s, supporting in its place a series of more conventional characteristics that, on the other hand, were those that impelled the golden age of the 50. But this is already another story …

To conclude, it should be noted that on occasion, Carlos Boyero is right: “Steven Spielberg is the king, a king with sense, a total and complete man of cinema. I hope that the power will be brought about by people with the talent of Spielberg.”

Álvaro Ramos Izquierdo
Senior Communications Consultant, aficionado of the eminently artistic essence of film and, nonetheless, a mythomaniac of the Oscars.

The Importance of a Bank’s Reputation

Joaquín Maudos, Professor at the University of Valencia and Deputy Director at the Valencian Institute of Economic Research (IVIE), examines the relationship between the bank and the consumer, in an article published by the national economic newspaper EXPANSIÓN.  He reveals the worrying fact that no bank sits among the 50 companies in Spain with the best reputation. “The bank in general is already demonized, which makes it an easy target to exploit for electoral purposes,” he continues.

The author calls for a joint effort by firms, supervisors, the media and the education system to improve the image the bank in the public eye.

Key Steps for the Banking Sector to Improve its Reputation

The latest scandals involving large banks picked up by the press – the illegal eavesdropping ordered by the previous BBVA chairman, the unsuccessful appointment of the Santander´s incoming CEO and the lawsuits filed by investors who have lost their money in Banco Popular shares or mandatory convertible bonds – portray how Spanish banks continue to be affected by serious reputational problems.

 

This is despite the fact that the three largest operators, Santander, BBVA and La Caixa, are among the top 10 ranked in best corporate reputation according to Merco, based on 38,000 interviews with the general population and stakeholders. Or maybe it´s simply that bank customers in Spain are much more loyal to their banks than customers in other countries, something exemplified by the fact that 86% of the distribution volume of investment funds originates from bank branches, according to Inverco.

 

This situation is worrisome, however, because banking is the mainstay of the economy, being the financier of consumption, real estate investments and general business activity both public and private. In Spain´s case, the largest banking operators have expanded widely to other regions such as Latin America, so that the effects of their reputational crises at home are transferred abroad.

 

Change the Business Model

After the financial crisis in 2008 there was a severe economic recession in Spain which lasted until 2013. In the wake of the crisis, the cycle transformed towards a growth phase in which we remain today. The banking system´s role in this improvement was fundamental, as the low interest rates, the abundant liquidity and the household saving rate due to deleveraging in the private sector boosted credit activity and with it the consumption.

 

The crisis had another consequence, namely a profound transformation of the banking business model. Banks had to adapt their revenue generation model to anticipate lower margins because of higher regulatory costs, greater amount required in technology investments and the emergence of competitors with much more efficient cost structures.

 

A report by the Boston Consulting Group noted that between 2009 and 2017, the global banking sector had to pay fines to regulators amounting to 320 billion dollars as a result of bad marketing practices. On the other hand, McKinsey estimated ​​the impact of Fintech competition on conventional banking to be in between 29% and 35% of revenues, due to both the loss of customers and the reduction of margins.

 

Transform Digitally

These factors explain the banking sector´s strong commitment towards digitalization. Such is a key tool with which they can improve customer experience, challenge competition from Fintech and raise the quality of service towards customers while reducing costs.

 

The digital transformation that the banking sector undertakes is also causing other changes to the financial ecosystem, as the importance of front-office processes in customer service models is progressively reduced due to commercial pressure and the high costs they reflect on the income statement.

 

Logically, this lower front-office effort means greater attention to the middle-office and back-office processes, which are the ones that need higher levels of automation and control in aspects such as risk management and cost reduction.

 

Communicate Novelties

The future of the sector is therefore to implement solutions that provide greater agility, flexibility and orientation towards customer satisfaction to create greater value. Accenture translates it as banking´s evolution towards the “commoditization” of some services, the aggregation of data and new models of transaction processing, based on distributed ledgers (blockchain) and databases.

 

In the case of Spanish banks, they have been pioneers and enthusiasts when it comes to implementing new transformative trends in business models. Therefore, banks need to communicate effectively their beneficial role as the engine of the economy and the impact of the major changes they´re implementing to adapt to the new age of digitalization, regulatory changes and increased competition.

 

Banks also needs to effectively communicate the cost-cutting procedures and customer experience enhancements they are carrying out, so that these efforts are positively received by the customer and thus by society as a whole.

 

Only in this way will it be possible to change the negative perception of banks across social groups and classes. Such is the perception that prevails whenever incidents occur related to banking malpractice, solvency problems or deficiencies in the commercialization of products, all of which affect banking recurrently.

 


Javier Ferrer
Proa Comunicación Consultant specializing in the investment realm