249: Reputation and political engagement: the fundamental link

Organisations with poor reputations are damaging their political engagement. Unless efforts are made to build, maintain and protect reputations then you are also risking political intervention.

Politicians do not want to suffer from guilt by association. What makes political stakeholders different from any other stakeholder is their need to stand for election and win. So their key stakeholder is the electorate. What votes are available to them for standing beside any organisation or individual with a poor reputation?

There is also political capital to be made from politicians being seen to deal strongly and effectively with those who have a poor reputation. That can apply to individuals, companies, charities – everyone is liable to such direct intervention. Strong politicians, taking action wins votes!

The forms of intervention can vary from direct attacks in the media, through to regulatory measures sometimes even named after the ‘wrong-doer’ (GAFA tax anyone? – Google, Apple, Facebook, Amazon), and Committee hearings and inquiries.

Mark Zuckerberg recently gave testimony to the House of Representatives’ Committee on Financial Services primarily focused on Facebook’s plans for a Libra, its own cryptocurrency. Of course such sessions range widely and politicians will use them as an opportunity to ask about what they want regardless of the topic primarily at stake.

What was most interesting in the session was Zuckerberg’s comment that:

‘I understand we’re not the ideal messenger right now. We’ve faced a lot of issues over the past few years, and I’m sure people wish it was anyone but Facebook putting this idea forward.’

This is a pretty explicit recognition of the relationship between the political environment and reputation. In this case, Zuckerberg has realised that Facebook’s engagement with government has been tainted by its reputation.

In their case, once was what a stellar reputation has been dented by a series of scandals but also complaints that they have not done enough, or taken action quickly enough, to deal with the problems faced. This has given the politicians ‘permission’ to start taking action. As a result, Facebook are not being listened to and it could do them real damage, both in terms of political intervention (taxes, regulation etc) but also by not being allowed to progress new ideas or concepts that require some political or regulatory agreement. Their example acts as a stark warning to others.

Expectations of reputation change and develop over time. As new issues and challenges come to light then these need to be factored into reputations as well. Those who choose to stand against such changes are risking their reputations, unless they know that the stakeholders that really matter to them are of the same position. In those circumstances, what may look like an outlier position can be, in fact, perfectly sensible based on the organisation’s knowledge and understanding of their stakeholders.

This will not, however, stop potential attacks from outside groups, the media or politicians. It just means that that organisation needs to stand up and defend that position. You could draw some loose comparisons with the Donald Trump approach here.

So there is a direct link between reputation and the approach that political audiences will adopt. Whilst much of the emphasis of reputation management focuses on the impact on sales, employee morale or share prices, I believe that the really important relationship is with the political audience.

Unless you consider your reputation form a political perspective then you are failing to manage your risks effectively.