Shouldn't we aim to be leaders?
As Chair of the Global Alliance for Public Relations and Communication Management, I represent corporate communicators in countries all over the world. And as CEO of Argyle Communications, I represent many large Canadian and global businesses. Looking at Integrated Reporting through the lens of corporate reputation, I want to highlight two big trends.
The first is about the way communication is changing our world. Even as economic power has become more concentrated in corporations, communication power has become more diffuse. There’s been a massive shift in power from organisations to their publics – as each of us walks around with global publishing power in his or her pocket. As consumers, citizens, shareholders or stakeholders, we can make or break corporate reputations. This power has transformed our expectations of corporations, and therefore requires them to engage us in different ways. And because the balance of power has changed between organisations and their audiences — the organisations we represent need a new kind of legitimacy – one that’s earned through communication.
The second big trend is that the components of market value have changed, and the majority of a typical company’s value now rests in intangibles — such as reputation. To understand the dynamics, one need look no further than recent headlines. The Royal Bank of Canada managed a difficult issue last week. I want to salute one thing that its CEO said in his open letter to Canadians:
While we are compliant with the regulations, the debate has been about something else. The question for many people is not about doing only what the rules require – it’s about doing what employees, clients, shareholders and Canadians expect of RBC. And that’s something we take very much to heart.
If you think about it, that’s a very powerful statement. It goes to the heart of why Integrated Reporting is so important. In managing reputation today, compliance is not a ceiling; it’s a floor. Strong reputations start above that floor.
A good reputation starts with a good story: a story about how a company combines capital to create value. Businesses tell stories of value every day, and these stories influence decisions by shareholders and stakeholders.
Integrated Reporting can change the way we tell those stories — for the better.
The goal: to give shareholders and stakeholders alike a truer picture of how the organisation creates value over time.
There will no doubt be many suggestions for improvement. I am, however, convinced that most will see Integrated Reporting as an idea whose time has come. Here’s why:
First, investors want better information, particularly in uncertain times. The financial and ethical crises of the last decade have changed corporate governance, and affected many reporting streams – producing a myriad of financial, environmental, health and safety and sustainability reports. Yet for the investor, these reporting streams are not integrated; and they look backwards rather than forwards. With a sharper picture of both risk and opportunity, investors are more likely to provide capital with confidence.
Second, few businesses have silent stakeholders. Strategic CEOs know that with their operations being more transparent and scrutinised than ever before, they must acknowledge both problems and solutions within a clear context. Integrated reporting makes that possible – and powerful in mitigating risk.
Third, the brand used to represent the company; but now the company represents the brand. There’s a growing desire for authentic consumption – in which consumers buy products that reflect their values. Corporate reputations influence our decisions to buy, to try, to invest, or to believe.
Fourth, Integrated Reporting leads to integrated thinking. It fights ‘silo thinking’ by encouraging executives and employees to consider their connectivity to business strategy, and the interdependence of departments and divisions. The way manager’s report often shapes the way managers think.
Fifth and finally, Integrated Reporting requires integrated communication. For CEOs, few risks are greater than losing touch with their customers and stakeholders; that’s when even a successful business finds itself vulnerable to disruptive innovation, reputational damage and lost value.
The very nature of an integrated report – which requires a company to consider how it uses all types of capital – requires robust, ongoing dialogue both inside and outside the organisation.
As this movement gains momentum, CEOs and boards must decide whether to lead or to lag. Given the link between Integrated Reporting and more resilient business, there’s a simple question every company should ask: shouldn’t we aim to be leaders?
I believe we should. I believe we will.
The Global Alliance for PR and Communication Management is the confederation of the world’s major PR and communication management associations and institutions, representing 160,000 practitioners and academics around the world. The Global Alliance’s mission is to unify the public relations profession, raise professional standards all over the world, share knowledge for the benefit of its members and be the global voice for public relations in the public interest. The Global Alliance works on the cooperative efforts of communication professionals to tackle common problems with a global perspective. By partnering with regional, national and international bodies to increase professionalism in Public Relations and Communication Management, this Alliance works to enhance the influence of the industry among its constituents around the world.