Corporate Reputation and Corporate Governance

Friends on Linkedin reminded me that I have completed 13 years with Prana PR. Thank you, all. It has been a long time, indeed. Much has changed in the world. Much has changed in the craft that I practice. Much has changed in the way a corporate responds to a particular stimulus. The scams, the sub-prime crisis that downed many who were once considered to be too big to fail, the economic downturn, the emergence of technology as the biggest disruptor, etc. happened in this period. Truly, the world has changed.

What has not changed is the importance of trust in any business. Any brand with a trust deficit, even for a shorter period, finds it hard to retain its glory of the past. This is true for all, be it a small FMCG brand or the monolith corporate like brand Tata. The stakeholder, once belied, is a very unforgiving being. She shifts to an alternative that promises to live up to the trust imposed by her.

As I write this, Mr. Cyrus Mistry has announced his resignation from the boards of all Tata companies. His fiery statement while announcing the resignation is all over the Internet and business television channels. Good news ultimately reaches each stakeholder, but bad news travels faster. Also, bad news has an additional spice called sensationalism. While the jury is still out on which of the two warring factions is with the stakeholders, it will surely cause a bit of a dent in the reputation of brand Tata.

If this latest Mistry bomb explodes on the stock markets tomorrow morning and cause valuations to erode, the stakeholder most affected will be the small shareholder. And this shareholder is going to blame brand Tata for the loss. For her, it does not matter who actually caused it. If it can happen to brand Tata, then every brand is as vulnerable. It is all about good corporate governance and how impactful is your message delivery while reaching your audience. Tata is among the most trusted brands on stock markets.

Though it is easier said than done, good corporate governance is a simplest way to a great corporate reputation. All that the entrepreneur needs to do is to govern the business well and resist short-term temptations. Your consumers, shareholders, employees, vendors, regulators, etc. need you to fulfill the promise that you have made to them before the transaction. No one minds you making a profit. It is your right. It is also your corresponding responsibility to ensure that trust results into their profitability and satisfaction. A long-term corporate vision that is based on creating value for each stakeholder would help. Responsible businesses are obsessively conscious about this. It is also a fact that threats on your corporate reputation will come irrespective of your size, stature or the best practices. But if welfare of your stakeholder is at the core of your value system, then the threats can be overcome easily. It is about doing the thing right accross the entire spectrum of stakeholder relations. Trust pays.

As a first exercise to find out if you are doing good corporate governance, just close your eyes and name five ‘great’ companies. If your own company is not among those names, then corporate governance may be an issue that you should be focusing upon. As for corporate reputation, it is the cart whose one horse is corporate governance.