Governance Watch - Issue 16

by Dina Medland in London

Reputation, Reputation, Reputation

What a nasty shock for the UK’s publicly listed companies. Those they entrust to help tell (and sell) their stories to the world don’t all operate with the same moral compass, it seems. Anyone who thought it was like casually looking into a mirror and then being reflected on with added glory will be reconsidering. No, it’s potentially downright dangerous, this vast corporate expenditure on public relations, or #PR.

It certainly seems that way when the spin goes wrong – as the headlines have demonstrated on the story about Bell Pottinger, the “leading integrated, international reputation management agency.” Lobbying is only called lobbying when it achieves its aims, and anyway, the term has a tendency to take on a morally neutral hue in corporate dictionaries.

Ah, the ‘management’ of ‘reputation.’ Would that companies spent as much time and money figuring out the ‘management’ of strategic direction, and leave the rest to play out accordingly.

There is corporate action and there is corporate advertising and there is corporate self-promotion, and when you get help with the last one it is called #PR. From a mixture of all of the above, and far more besides, we conjure up ‘reputation’. But ‘reputation management’? Undoubtedly handy in a corporate crisis, if well done. But surely of questionable use if those hiring the PR firm are unclear on the fundamental ethical basis of their declared or undeclared strategic direction.

Global media headlines on the Bell Pottinger scandal have been around a dramatic fall from grace. But let’s go back to 2012 and the Press Complaints Commission on how it hated the scrutiny. Here’s the ‘deal that undid Bell Pottinger’ with tales of ‘fees of £100,000 a month’ enough for many ordinary folk to ‘sell their grandmothers’ in popular parlance. As long as nobody saw them do it, of course.

A few days ago, when Bell Pottinger was expelled from its trade body and public judgment and a sense of righteous moral indignation was in the air, everything changed. Because actually, listed businesses are pretty savvy about reputation almost a decade after the financial crisis – they know it matters, they sweat its translation into numbers.

So the exodus began on who would actually want to have anything to do with firm. The Times ran with ‘Bell Pottinger faces collapse as investors rush for exit.’‘Bell Pottinger has toxified political debate in South Africa’ read The Guardian’s Comment Is Free opinion slot. ‘Bell Pottinger hires BDO to look at options as clients and staff abandon crisis-hit agency’ said PR Week.

And quite swiftly… ‘Bell Pottinger could close by the end of the year without fresh finance.’ At time of writing, the 47 UK listed companies that were represented by Bell Pottinger, and the ones that have dumped it as a PR firm,  courtesy City AM. Latest in the Financial Times: ‘New blow for Bell Pottinger as chief of financial arm quits.’

Companies, investors and the media appear to unite as they rail against the PR firm and also attempt to create distance, as rapidly as possible.

But, I wonder: does UK plc take the rap too, for hiring those who spin its activities at great expense without being too awkward with their questions, or their views?

This Bell Pottinger saga tells us quite a lot about the state of UK corporate governance, much under review. So, let us not get too distracted by a bunch of hapless PRs and spare a thought for those more junior employees caught up yet again in the net of corporate culture, sometimes toxic and always with final responsibility in the boardroom.

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