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The Persistent Problem of Corporate Australia’s Poor Image

AUTHOR: Professor Grahame Dowling    DATE: 13.04.06   ISSUE 1, 2006

If we needed any further confirmation it came recently with the publication of a survey by Roy Morgan Research about the public’s perceptions of Australian occupations. The ratings on ethics and honesty for our business people were not inspiring:

· Accountants = 50%
· Bank managers = 35%
· Lawyers = 32%
· Union leaders 19%
· Public company directors = 18%
· Business executives = 15%
· Stockbrokers = 14%
· Insurance brokers = 13%
· Advertising people = 10%
· Car salesmen = 3%.

In recent years, various industry groups have tackled the problem of a poor image with varying degrees of success.

Illustration: Gregory Baldwin

Now a poor image has a number of negative consequences. There is the personal stigma of association. It makes it harder to recruit into the profession. It makes it more difficult for the profession to get its message across to regulators and the general public. It often makes the group the butt of jokes. And it really annoys the people involved.

In recent years, various industry groups have tackled the problem of a poor image with varying degrees of success. For example, the two major accounting bodies have run advertising campaigns extolling the virtues of being an accountant. (In the last decade their survey rating has risen by 5%.) A code of Banking Practice that proclaims the industry’s commitment and obligations to customers has been introduced and amended twice. (The rating of bank managers has fallen 4% in 10 years.) The legal profession holds its annual Law Week promotion. (Their rating has remained constant.) The latest initiative has come from the advertising industry. The Advertising Federation of Australia is to offer an accreditation scheme to its members. It is interesting to pause and think about why a profession or an occupational group gets a poor image in the first place. Common sense, often confirmed by research, suggests the following:

· The activities of the group don’t fulfill an obvious need for most people.
· When work is carried out, it often doesn’t meet the client’s or society’s expectations.
· Promises are often not understood or kept.
· The behaviour of some members is periodically brought into question by the media.

"When a business occupation can show people how they are better off after a visit, then most of their image problems will disappear."

Photo: Professor Grahame Dowling

When it is hard to judge the worth of an occupation and you don’t know much about its inputs (such as people, training and skills), process (work performed and risks) or outputs (achievements), it is easy to rely on what others say about it. And, more often than not this is negative or sensational.

Business is getting better with stakeholder engagement, as opposed to stakeholder communication.

So what can be done to change this state of affairs? Well one thing not to do is to get an industry body to directly counter-argue with people’s beliefs, especially when these beliefs have been given government support. Consider the case of company directors. As people are losing confidence in this group, they are arguing that the push for more regulation and personal accountability is misguided. This type of blunt counter-opinion just signals entrenched self-interest to many people. A more subtle approach is needed in the court of public opinion.

Now subtlety is not the hallmark of two other current strategies being used. One is advertising, and the other self-regulation. Advertising is only partly effective because it suffers form a lack of source credibility. By its nature is blatant self-advocacy. Self-regulation proposes authority but often looses public credibility because many schemes lack real sanctions for non-compliance. (It is difficult for them to revoke a member’s ability to operate.)

If the above initiatives are of limited help, then what can be done. Here are four suggestions:

1. Engage with key stakeholder groups – first, employees and customers, and later the communities from whom you need their confidence, trust and support. Seek information about their needs, expectations, and perceptions.

2. Manage the expectations of stakeholders by making it clear what will and what won’t be offered by all the parties involved.

3. Reform business practices and signal that these will be delivered to the standards expected – or else.

4. Work out how to demonstrate the real (economic, social and psychological) value provided to stakeholders.

Business practice reform is the hardest thing to achieve –
    but by far the most important.

Business is getting better with stakeholder engagement, as opposed to stakeholder communication. But in many cases it is still struggling to manage the expectations of stakeholders. For example, in the eyes of small investors, are auditors process inspectors, quality assurance providers, or watchdogs? And if they don’t fulfill all three roles, who does?

Business practice reform is the hardest thing to achieve – but by far the most important. For example, clients want their advertising agencies to produce more cost effective communication. Consumers and social critics would also appreciate better advertising. But many ad agencies and media planners don’t tie enough of their remuneration to this outcome, and thus the economic incentives of the agency are poorly aligned with the needs of their clients and the community. Improvements here would automatically result in a better image for the industry.

It is easy to take for granted that other people know the worth of some activity. But too often they don’t. Hence, the task for business is to continually demonstrate its value added. That is why nurses, pharmacists, doctors and school teachers were the top rating occupations in the Roy Morgan survey. When a business occupation can show people how they are better off after a visit, then most of their image problems will disappear.

Grahame Dowling is a Professor in the Australian Graduate School of Management and the Australian representative of the US and European based Reputation Institute.