Seat at the Table

Ah yes.  The age old desire of seeing big stock returns based on running an admired business.  As a University of Michigan study shows, Fortune’s most admired list seems to splash a little cold water on this as the data shows a bit of inconsistency.  To the surprise of the masses (but not the cynics), you don’t have to do good to do well. 

Admiration is not the cause of a strong bottom line but the result of communicating the business successes behind a strong bottom line, not a driver of it.   And there are many different types of admiration:

-  Philip Morris/Altria can be admired for running a great company, even though it makes money off tobacco.

- Microsoft can be admired for a strong brand, if many people hate its  software.

- Malden Mills can  be admired for continuing to pay employees after its big mill burned down.  Even if it did go bankrupt a few years later after running out of money. 

- JetBlue can be admired for selling  cheap tickets.  Even if that means they are short staffed when a big storm hits.

Reputation researchers like Leslie Gaines-Ross seem to imply that focusing on being admired by doing good (CSR etc) will result in business success.  Wrong.  

Make no mistake, basic social values (don’t lie, cheat, harm etc) should always come before profit.  However, business decisions based on doing good do not necessarily mean the biggest profit or valuation.  It depends on the business.  Cigarettes kill people and their makers have high profits.  Malden Mills paid people when the Mill burned down.  other That was a great move for Corporate Social Responsibility and they were highly admired for it until they went out of business a few years later due to high costs and no cash.    On the other hand, Starbuck’s has done well making doing good) a core part of their marketing strategy.  That works for them.  It may not work for others.

One of the problems and opportunities for communications professionals lies in this difference.  It simply depends gaining a strong reputation sound smart saying there are clear advantages to being admired but don’t focus enough on the cause-effect.  Too often, they push programs like CSR programs that show how admiration for the company will go up but ignoring the important bottom line return.  As BP found out, CSR means little if it’s not in the DNA of the companies actual operation. 

Communication professionals like to say there is a cost to a poor reputation.  Of course there is.  But a poor reputation that costs a company business is often the result not of lousy communication but of poor business moves such as Jetblue making bad decisions in bad weather.  Likewise, smart business decisions, like Jetblue’s quickly making business commitments to customers, can secure both the reputation and the business. 

The job of the communicator is not to save the day with a quick, PR reputation fix.  The job of a communicator is to counsel as to what business moves will address the poor reputation, and then to properly communicate those moves. 

So let us stop trying to make a false business argument and focus on what matters - business have the reputations they deserve business of business decisions.  Have a reputation problem?  Look at your business first, fix it, then communicate it.