A flight attendant who had spent over 10 years with an employer posted controversially about a public figure on his personal Facebook page. Within two weeks, the organisation dissociated itself from the employee’s actions and he was fired by his employers. A CEO of another media organisation made controversial social media posts about different people. His speech was categorised under free speech with no disciplinary actions reported. Two events, two different outcomes. Neither outcome was random. Rather, they both reflect something the organisation may have decided (knowingly or unknowingly) before the events ever happened.
When an individual joins an organisation either as an employee or a member of their Board, they inherit more than a role description. Depending on the capacity in which they join, they also receive things like employment checks (which includes identity checks, credit checks and sanction checks), terms of employment/service and importantly, a code of conduct policy. These documents whether contained in the organisation’s handbook or issued separately, exist to guide the individual on how to conduct themselves and what standards they are expected to uphold. Importantly, they also indirectly help the organisation to manage its reputational risk from potential loss events such as hiring a person who is not credible or an individual’s poor conduct within and outside of the organisation.
However, there is something else that runs alongside these documents. This is an unwritten expectation, a sense of how the organisation will show up for the individual, protect them and stand behind them. It is unwritten because much of it is derived from the individual’s perception of how the organisation treats its people, and because nothing in the documents or policies mentioned usually specifies what happens to the individual should they come under public scrutiny, or how the organisation may choose to respond. This gap, between perception and reality, is the focus of this piece: to examine who gets protected and who does not in the way organisations manage their reputational risk. Before going further, it is worth defining reputational risk itself and explaining why managing it matters.
What is reputational risk and why does its management matter?
There are several definitions of reputational risk, but there is some consensus that it is the risk that events either within or outside the organisation’s control, will negatively affect how the organisation is perceived and experienced, both by its stakeholders and the wider public. This negative perception and experiences can then adversely impact the organisation’s operations, recruitment opportunities, investor confidence, cost of capital and ultimately its survival. While one can argue broadly that perception does not accurately reflect reality, unfortunately, it carries a similar weight as reality because it is tied to what the beholder believes to be true/truth. It is also not determined by one event or a single occurrence. In fact, as Jenny Reyner puts it, “Perceptions are built over time and every contact, rumour, media mention, leak, piece of gossip will play its part in constituting an overall impression of an organisation’s standing.”
Given what it is and the impact it can have, assessing and managing reputational risk matters for every organisation, though more so for some than others. For instance, it is a regulatory requirement for organisations in the financial services industry to not only assess and manage their reputational risks but to also disclose same in their financial reports. However, while an organisation can actively take steps to manage its reputational risks, there is a specific, tricky-to-manage overlap that it also has to contend with. This is the overlap that exists between the organisation’s identity and the identity of the individuals that represent it. That overlap has direct implications for how the organisation responds to any future reputational loss events arising from any such individuals and needs to be properly thought through by all parties.
The overlap in individual and organisational identities
By virtue of the contractual relationship, every organisation representative carries some of the organisation’s identity and the organisation also carries some of the representatives’. The size and nature of that overlap, though, varies and is dynamic. The two categories below are worth distinguishing.
- Incidental overlap: This is usually the default position where an individual simply works with an organisation and adopts the identity of the role they fulfil e.g. employee, contractor, board member. Neither the individual nor the organisation takes an active role in defining itself or allowing itself to be defined by the identity of the other.
- Conferred overlap: Here, the organisation takes an active role in defining itself or allowing itself to be defined by the identity of an individual (representative) and the latter allows it. Usually, the organisation folds part of its own public story into a person, features them in its marketing and press releases, and cites them as proof of value it wants to be known for. Where the individual allows this, there is also some benefit that they would expect to derive from the organisation’s action(s) such as an elevated public or social reputation. Conferred overlap can often be seen in senior leadership or symbolically significant positions such as the Chief Executive Officer, Chief Financial Officer and Board Chair. Importantly, a conferred overlap does not necessarily have to be in writing for it to happen.
Neither of these overlaps is inherently bad. However, the real implication surfaces only when there is a potential reputational loss event for the organisation and would reveal who gets protected and who does not.
When things turn, who gets protected and who does not?
There is no fixed rule that stipulates how an organisation should respond to potential reputational loss arising from an individual it is associated with. Usually, depending on the identity overlap, organisations tend to act as bystanders or take the organisation-first approach, attempting to minimise the resulting loss or damage.
Where the identity overlap is an incidental overlap, organisations can get away with using this approach, placing the priorities of its key stakeholders above that of the individual. This would often leave the individual unprotected except where their action falls within existing legal protections such as statutory protection for lawful off duty conduct. The flight attendant case provided at the beginning of this piece exemplifies this. The airline’s connection to the employee was incidental and when a reputational loss event arose, it acted swiftly with the organisation’s exposure prioritised over the employee’s long years of service.
However, where the overlap has been conferred, the calculation changes. The organisation alone controls how much of its identity gets fused into the individual’s and how to unwind that fusion when things turn. Therefore, when the individual becomes part of a public controversy, the organisation is watching its own reputation come under fire because it chose to attach its narrative to the individual in the first case. In this case, using a strict organisation-first approach creates a humanity vacuum of what the organisation owes and should be willing to change. An organisation that has benefitted from an individual’s story and identity when it was an asset, has a moral duty to show up for the individual when controversy arises. Though as we will see later, that duty has limits but within those limits, failing to show up would constitute an ethical lapse and a reputational risk. It would signal to every other person with conferred identity overlap in the organisation as well as the wider public how conditional the overlap is.
Unfortunately, this is a choice only the organisation can exercise, and it produces a specific kind of unfairness that neither individuals nor organisations tend to discuss until the situation actually arises. An individual that has allowed an organisation to benefit from their identity and who may or may not have also benefitted from that arrangement would expect the organisation to show up for them when crises hits. If, however, the organisation chooses not to do this, the individual is left exposed, unprotected and understandably feeling exploited. This thus raises the real question underneath all of these: Why might an organisation be unwilling to spend its reputational capital to douse an individual’s crises?
Organisation’s willingness to spend their reputational capital
Over time, an organisation that meets and surpasses the expectations of its stakeholders and the wider public builds reputational capital which can be available for it to redeem when reputational crises happen. To understand why an organisation may or may not be willing to spend its reputational capital on an individual’s controversy, therefore, one must first consider the source of the scrutiny or controversy.
When scrutiny arises from substantiated misconduct such as sexual harassment, standing behind the individual would instinctively be a wrong move and a waste of reputational capital, regardless of how much the organisation may have previously benefitted from the individual’s identity. Moreover, doing this would not only fail the people harmed but also fail the organisation’s stated values in the most visible way possible thereby resulting in further reputational loss. However, where scrutiny or controversy is created by political or other pressure rather than what an individual did, and an organisation still chooses not to spend its reputational capital on the individual’s behalf, we must consider something else: How the organisation has amassed its reputational capital in the first place.
An organisation builds its reputational capital on meeting or surpassing expectations tied to certain values, beliefs, ideologies and pedigrees. When an individual’s controversy emanates from beliefs and values contrary to the ones on which its reputational capital was built, the organisation would likely struggle to spend the same capital defending them. This holds regardless of the posture the organisation adopts publicly because privately, it will always be mindful of protecting the key sources of its reputational capital.
These two considerations may be relevant individually or intersect to result in a third consideration – an organisation willing to spend some of its reputational capital towards the individual’s controversy but not enough to calm the controversy. In this case, the organisation may be seen as “showing up” for the individual by issuing press releases and public statements. However, what requires close attention is not the number of public statements being issued but what is not being said in those statements as it can be the difference between an individual being truly supported and being left to carry the weight of public speculation alone. That is a real exposure that individuals with conferred identity overlap should be concerned about, not because they intend to conduct themselves inappropriately but because they need to understand the true risk that they could also be facing in that arrangement.
Where this leaves leadership
How an organisation shows up for an individual who represents it when public scrutiny or controversy arises will never have a single unanimous response. However, as a leader, a good starting point to ensuring that humanity is integrated into your reputational risk management response is to understand what incidental and conferred identity overlap looks like in your organisation and who has which. Beyond this, if your organisation consistently defaults to the neutral bystander, pure investigator or the strict organisation-first response in the face of crises, it is worth asking yourself the following questions:
- Why is this the default position of the organisation and what values truly underlie this position?
- How would your organisation’s response change if there was a documented framework that clearly identifies these identity overlaps and provides some guidance on how they should be navigated in the face of reputational crises?
The organisations that get things right are not the ones that never face scrutiny. They are the ones that are not afraid to demonstrate integrity and adopt a human-centred approach in their responses.
About the Author Dr Basirat Razaq-Shuaib is an executive advisor to leaders and organisations on embedding courageous, inclusive and values-driven practices into strategy, policy, and operations within African leadership, education, and business contexts. She is the founder of The Winford Centre for Children and Women and The Blooming Mum, and an external expert to the African Union’s Committee of Experts on the Rights and Welfare of the Child (ACERWC), working with its Working Group on Children with Disabilities. She holds a Cambridge PhD and has recognised expertise in strategic leadership, stakeholder management, policy analysis, gender equality and social inclusion advocacy, financial reporting and risk management. She also serves on the boards of change-making social impact organisations.