Org culture poses increasing risk to reputation

By Jerome Doraisamy|24 March 2020
Melbourne CBD

A new survey of senior leaders has found that the culture of an organisation has become more and more “critical” to its reputation.

The 2020 Reputation Reality Report – compiled by SenateSHJ and Governance Institute of Australia – surveyed 278 senior executives across Australia and New Zealand. It found that integrity, relationships and quality of products and services are the three most important drivers of reputation.

Culture came in fourth, but – the authors noted – impacts all three of the most important drivers.

Reputation is more important to manage than it was three years ago, two-thirds of senior executives said in the survey, but added that it is much harder to manage than other types of risk.

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According to SenateSHJ managing partner Darren Behar, many senior execs now recognise the extent to which “culture underpins reputation”.

“The biggest reputational crisis of 2019 [was] all in some way the result of culture,” he said.

“It is a surprise that culture ranks only fourth in the list of drivers of reputation given the growing awareness of its importance and the high-profile discussion about culture within regulators, industry bodies, government and boardrooms across the country. We would expect it to continue to rise in importance.”

Governance Institute CEO Megan Motto added that it is up to an organisation’s senior management team to ensure they are setting the benchmark for culture and ethical practices.

“The CEO and senior management of an organisation have the most influence on the culture and overall ethical practices of the business,” she said.

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“Good culture is critical for long-term value for shareholders and stakeholders, and to attract and retain the talent to be innovative.”

Elsewhere in the report were findings that almost 80 per cent of respondents say that risks affecting their organisations have increased in recent years, CEOs are seen as the most trusted source of information in a crisis, nearly three-quarters see stakeholder engagement as a crucial investment, less than one-third of organisations test their crisis communication plans annually, and less than one-quarter of organisations are “very confident” in managing digital and social media channels during a crisis.

Org culture poses increasing risk to reputation
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