James Boyd-Wallis, account director at Legal Futures Associate Byfield Consultancy outlines recent guidance from the Chartered Institute of Public Relations
Neville Bain, chairman of the Institute of Directors, said in the recently issued Chartered Institute of Public Relations (CIPR) guidance on reputation and the board that ‘organisations – and particularly boards of directors – need to apply more attention to managing reputation’.
With 24-hour news, an increasingly regulated business environment, and the evolving spectre of social media, good and proactive communications has become more important. As legal business becomes more corporate in its structures and the prospect of non-lawyer owners becomes a reality under the Legal Services Act, the legal profession should take note of this latest guidance.
The CIPR states: ‘While everyone in a organisation plays a part in a firm’s reputation, it is the senior management team that must lead with support from those with appropriate operational experience. This is particularly true of reputational risk especially given the board’s task to manage risk.’
The report also noted that Ernst & Young, in its Business Risk Report, identified reputation as a top-10 business risk. Given this, boardroom communications must become a priority for all firms. Strong communication ensures that firms can capitalise on reputations, mitigate potential threats and helps business strategies to be communicated to internal and external audiences in a clear and coherent manner.
But how should this be done? Firstly, and most importantly, the guidance notes that the management team needs to determine the impact of a strategic decision on reputation each and every time such a decision is made. This means communications professionals should take an active part in strategic planning so that reputational opportunities and risks can inform decision making.
This is different to the current approach of expecting PR professionals to manage the impact of a decision after it has been made.
The CIPR guidance is also clear to point out that directors have a legal obligation to consider reputational factors under the Companies Act 2006. This Act sets out requirements for directors to consider the desirability of maintaining a reputation for high standards of business conduct when making corporate decisions. Failure to consider the reputational impact of actions could constitute a breach of duties.
The same principles should also apply to partners in law firms and alternative business structures.
So what steps can managing partners take to ensure management communications becomes the foundation for good reputation management?
The following are some of the steps which the CIPR advises all organisations to consider:
Management teams should develop and regularly review a reputation policy that is cross-functional and reflects different geographies and stakeholders;
The management team should ensure an integrated approach to reputation and risk assessment;
Reputation should form part of every organisation’s risk register so that reputational risk is identified, evaluated and planned for;
Any discussions regarding organisation governance and sensitive issues such as executive pay should include reputational impact;
Reputation monitoring should form part of business performance management approaches;
Reputation should be a filter when reviewing or evaluating threats and opportunities;
Any significant organisational decisions and the development of new strategies should be considered within a reputational context as well as other contexts, such as financial or operational;
Any management team audit should include an audit of reputation management skills and experience;
There should be a clear process for identifying, training and guiding spokespeople, particularly those responsible for responding to issues;
All the businesses stakeholders must be considered by the board and not just the shareholders or equity owners;
All factors that impact reputation should be measured; and
Managing boards should support investment in research and analysis to ensure that their decision making process is supported, perceptions are understood and impact can be measured.
Increasing competition in the legal sector and new entrants to the market means that the value of a good reputation will become ever more important. By taking the steps outlined in the CIPR guidance, as Neville Bain advises, legal businesses will surely benefit as a result.