Human Resource Development

Reputation is fast becoming one of the most important risks to manage. Build quantifiable arguments to get boards on board.

Corporate reputation, the close cousin of a firm’s brand, is one of the most intangible assets a company has. If a brand is the inside-out perception of a firm, reputation is the outside-in perception. Therefore, risks to a reputation can come from anywhere. It is difficult for boards to control and the financial impact of a damaged reputation is deemed to be higher than climate change or a cyber-attack, according to the Asia Risk Report by StrategicRISK.

A damaged reputation can be exacerbated by its interconnectedness with other risks. In the same report, survey respondents ranked “damage to company reputation/brand” as the risk most connected to environmental risks, social unrest and regulation among others.

What’s more, companies are increasingly valued on intangibles. Mitigating risks to reputation was at the center of a recent panel discussion as part of INSEAD’s Risk Breakfast Series, which brought together academics and experts in the field to share views on how to protect firms against reputation damage.

Reputation equity

The first barrier companies face in building protections against reputation damage is in quantifying it. Reputation, like brand, is qualitative. But like brand equity, it is essential to building trust. Standard & Poor’s has added reputation risk to its enterprise risk management assessment of companies.

As Leesa Soulodre, managing partner at RL Expert Group said, reputation risk management is about both a company’s legal and regulatory license to operate (the risks) and its social license to grow and innovate (opportunity). The ability of a firm to recover trust after a reputation incident has been significantly affected by the global financial crisis and reputation risks are increasingly emerging from what others say about the firm.

This means boards need to start building their reputation risk frameworks to protect it. The trouble is, boards also prefer to look at their organisations in quantitative terms.

Priorities

To overcome this, Soulodre shared her experience working with a global financial institution to get the board on board. It had 130 pages of risks it wanted to evade, but she and her team worked to whittle it down to 30 top risks that could lose the company its legal and regulatory license to operate. To more dynamically adapt risk appetite and tolerance to the company’s risk register, an Upstream Risk team, composed of multidisciplinary functional and board leadership, was recruited to proactively look at emerging risks. This ensured a lifecycle risk management approach. The Risk Forum could examine all the company’s license to operate risks on a monthly basis and dynamically allocate resources to the priority risks.

She added that it was also essential to make sure the organization had a single position on each of the top 30 risks to ensure appropriate engagement with key stakeholders.

With the risk landscape changing so quickly, she made sure the client was updated by smartphone so that each issue could be brought up and put into the right context at any time. A single company position was articulated, the background context of the issue explained and the company’s three key messages on its position in relation to the risk were made clear. The company leader engaging with stakeholders could then report back via their smart phone the level of advocacy that the stakeholder was offering the organization, which helped its allocation of resources on key reputation risk topics.

As the Asia Licensee of the Reputation Institute, Soulodre shared the framework for defining and managing reputation risks developed with AIRMIC.

Measuring the risk

Sara Gori, head of reputation risk at AXA, noted that AXA treats reputation just like any other risk such as credit, liquidity, market or regulatory risk. Similar to Soulodre’s approach, the company starts by identifying, then assessing and prioritizing the potential reputational risks. The organization should ask, “which risks have the potential to negatively impact the company’s reputation? What is our risk tolerance?” For example, if a customer or the general public airs an opinion of the organization, saying ”I like or hate X company”, the risk to reputation will be taken into account but can be deemed tolerable whereas risk due to internal fraud would not be tolerated.

AXA quantifies each risk with a traffic light system of red, amber and green, which correspond to severe, moderate and minor, respectively. This then gives the firm visibility over what the potential reputation risks are. For instance, it could be how many agents or employees leave the firm on an annual basis, which could become a reputation issue. They then move to prevention to tackle the root problem.

To ensure the whole company sings the same tune, AXA also has a firm escalation policy from local markets to HQ. “Even if we’re going to say ‘no comment’ we need to know what is going on,” she said. This is handled by one dedicated in-country representative who gathers all the local facts of an issue and bundles it up to HQ.

Gori advises that reputation issues be prioritized based on their ability to cause the firm to lose its license to operate, lead to increased regulatory scrutiny or closer scrutiny from media and other stakeholders, which has the ability to perpetuate a reputation issue.

Measuring the extent of reputation damage

Attempting to make qualitative risks quantifiable is the central challenge. A reputation issue could be caused by an operational disaster that drags the firm’s reputation down for months or even years. It’s not impossible to clean up a reputation problem. INSEAD Professor of Accounting and Control, Gilles Hilary, outlined the steps taken by the International Olympic Committee in the wake of a bribery scandal as effective for countering reputation damage: apologize immediately, investigate and punish and then reform.

But prevention is better than cure. Ultimately, the source of any reputation damage is a culture that allowed an incident to occur. Gori recommends building risk intelligence and compliance into company culture to ensure that the frameworks to facilitate whistle blowing and reporting are there as well as the willingness to use them. This, she says, must come from the top.

By:Gilles Hilary
Source: http://www.thejakartapost.com/news/2016/01/25/getting-boards-reputation-risk-management.html

What makes a good leader is the use of effective management skills such as spending 50 percent or more of their time listening carefully.

Great leaders understand that some of the best leadership qualities entail listening to others with undivided attention.

When was the last time you actually listened single-mindedly to one of your staff members?

Can you remember when you last listened to someone without interruptions or distractions from either telephone calls or drop-in visitors, when you just focused intently on the person speaking with you, ignoring all else? When CEO Alan Mulally arrived at Ford, he used a technique he had refined at Boeing. He found a way to instantly shift the senior executives on his team from talkers to listeners by changing the way he evaluated his team’s performance.

“It always comes down to incentives. What’s the incentive for someone to behave differently? Is it recognition, time, or more money? No. It’s usually visibility,” he said. “When you give a speech, you’ll be scored by the audience.”
So those executives who were smart enough to leave lots of time for Q & A got better grades than those who lectured. And those managers who encouraged a dialogue with the team came out on top.

Great leaders with excellent management skills encourage input and change, and the best way to measure them is based on feedback they get from their best people. People usually give the best scores to leaders you trust and to leaders who listen.

The Most Essential Leadership Qualities

Integrity is perhaps the most valued and respected quality of leadership and one of the most important management skills you need to attain. By saying what you’ll do and then doing what you say, you will build trust around your team.

Do you stand up and speak out for what you believe?

Do you demonstrate the courage to stay the course when the going gets tough and the outcome looks uncertain?

What makes a good leader is the ability to stay calm and in control, especially when everyone around them is wondering whether it’s the right decision or if it was a mistake to commit to a particular course of action.

When you exude confidence in yourself, in the decision, and in the people around you, you instill the same feelings and attitudes in others.

Leaders have what is called “courageous patience.” Between the decision and the result, there is always a period of uncertainty when no one knows if the effort is going to be successful.

To be a successful leader, you must strive to have these essential leadership qualities. If you have lived with this feeling many times in your career, you’re in good company.

What Makes A Good Leader?

To be successful as a leader, you need a combination of two ingredients: character and competence. You need to be a person of integrity. Someone people trust and are willing to follow.

To be trusted in business, you must be trustworthy. You must believe in yourself, your company, the essential goodness of your products and services, and in your people.

You need to believe that you are offering an excellent product or service in every way, one that makes a difference in the lives of your customers.

You must lead by example and obtain management skills that inspire others to join you in the exciting project of building a great company. At the same time, you must become excellent at the key capabilities and functions of leadership and set yourself on a course of continuous improvement throughout your career.

“You need the humility to remind yourself that you’ve got to get better at everything you do,” insisted Amazon founder, Jeff Bezos. “I don’t know about you, but I’m never done growing my company or myself.”

Believe In Yourself

Management guru Jim Collins uses the phrase “Level 5 Leadership” to describe the characteristic of the best leaders, those who build great companies.

Out of all the existing leadership qualities, the most fascinating and distinguishing characteristic of level 5 is an often misunderstood trait: humility.

As it happens, humility doesn’t actually mean being humble . . .

People who are crazy enough to launch businesses as the economy is falling apart and then fight Goliath-size adversaries, are not exactly humble.

“Humility simply means you have a burning, driving, relentless ambition to serve and to win,” Collins told me, “Without the arrogance to delude yourself into believing that you are all knowing or always right.”
As a Level 5 Leader, you don’t believe you are perfect. You must, however, believe in yourself, and be convinced that you have what it takes to succeed and that you can get better. You are always looking for new ways to develop your leadership qualities and take your game to the next level.

If you enjoyed this article on how to improve your management skills and develop your leadership qualities, please share it with others right now!

By: Brian Tracy
Source: http://www.briantracy.com/blog/business-success/management-skills-what-makes-a-good-leader/