Ethics of Reputation Management

Ethics is entwined with reputation management in two ways. First, organizational rhetors attempt to legitimize an organization’s image by linking its actions, policies, and procedures to the dominant moral expectations and ethical systems of the societies in which they operate. The resulting organizational images and identities in turn create guidelines and constraints that validate some actions and preclude others, and make some rhetorical strategies credible and others implausible. Consequently, there is a responsibility and weight that accompany these strategic moves. Organizational rhetoric creates expectations regarding organizational policies, performance, and actions, and a company’s reputation depends in part on how well it lives up to those expectations, which ironically is an ethical issue in and of itself.

Conversely, organizational rhetors attempt to mold societal values and value hierarchies. This is easiest to see in the case of nonprofit advocacy organizations, such as the Heritage Foundation in the United States and Fraser Institute in Canada. But it also is true of profit-oriented firms. For example, after the U.S. government enacted enhanced regulations and increased taxes for the oil industry at the end of the 1970s, firms responded with extended rhetorical campaigns designed to persuade citizens that these actions constituted excessive interference in the free market by inept administrators who threatened jobs and the economic and military security of America. Values of economic freedom and choice were articulated and placed higher in the dominant value hierarchy than values of environmental sustainability or income redistribution. The new values then became the basis for reputation management during the neoliberal era of the 1980s and beyond.

After the fall of the Berlin Wall, a new wave of globalization increased the power of multinational corporations in relationship to governments in both the developing and the developed worlds. States shifted from regulating organizations and limiting their power, both in general and vis-à-vis other institutions (e.g., labor unions), to facilitating organizational growth. Even in the relatively rare cases in which governments demand that “corporate persons” fulfill the social responsibilities that accompany their legal rights, these pressures often are countered by organizational demands for increased rights as compensation. Thus, new structures and power relationships, supported by an increasingly influential neoliberal ideology, created a much more complex context for considering the relationship between ethics and organizational actions.

This entry examines these interrelationships between image, identity, and reputation and their connections to ethics. Each component guides and constrains the others—as a company’s spokespersons strategically articulate its image, stakeholders will evaluate those claims in terms of their congruence with the organization’s identity and their perceptions of its reputation, in terms of both the content of the messages and the firm’s history of truthfulness, ethicality, and so on. Image-managing communication that is congruent with identity and reputation will solidify both; incongruent communication will destabilize or transform identity and reputation, creating new guidelines and constraints for future image management. Audiences also project the interplay between image and identity into the past, thereby shaping, reproducing, or transforming a company’s reputation. The entry examines the ways in which the dominant ethical systems of a society guide and constrain reputation management, and are in turn shaped by organizational rhetoric. The entry then analyzes the interrelationship between ethics and strategic communication, focusing on strategic choice making. It concludes with an analysis of the ethics and tactics employed during reputational crises.

Image, Identity, and Reputation

Stakeholder perceptions of an organization constantly are under review and are constantly emerging and changing. While some organizations are able to manage the resulting pressures in a way that sustains a relatively stable impression, others are less successful and their images fluctuate. Thus, an organization’s image is a momentary snapshot that is influenced by the organization’s actions as well as how its spokespersons handle the different rhetorical situations the organization finds itself in. An organization can forge ties with consumers, communities, and other stakeholders to strengthen a desired composite image, and its rhetors can develop targeted messages that address different stakeholder groups and that vary across time and changing rhetorical situations. Because members of a particular target audience often consume rhetoric designed for a different target audience, multiple images (or at least multiple components of a composite image) may emerge. Organizational rhetors must find ways to deal with these complexities lest their organizations be perceived as duplicitous.

Organizations also have identities that can be strategically built and refined, or undermined and distorted. While image is a temporary state embedded in transient space/time configurations, identity is relatively more stable and enduring. Organizational rhetors strive to construct a favorable identity to attract or placate key stakeholders; invite, preempt, or deflect potential criticisms; and/or appeal to potential consumers. Through processes of socialization and internalization, these corporate identities, in whole or in part, can become a part of stakeholders’ personal identities. Organizational identities also may be multifaceted and replete with tensions and contradictions. Consequently, audience members can reject or accept an organizational identity in toto, but they also have the ability to parse out their approval—condoning or celebrating certain aspects of an identity while ignoring or disapproving of others. Ironically, a highly coherent identity may limit stakeholders’ ability to grant partial approval, thereby robbing the organization of potential allies.

A strong identity can be both a blessing and a curse. It creates a framework through which a company can make and justify strategic decisions moving forward, streamlining a sometimes unpredictable process, but it also can delay or constrain needed change. At the start of the new millennium, Starbucks faced a difficult strategic decision as its customer base was expanding to encompass coffee drinkers who were not part of the cadre of connoisseurs that had formed the company’s core market. These new consumers wanted faster, cheaper coffee, and appealing to them promised access to a very large mainstream market. The identity that Starbucks had formed over time, however, was one of quality over price and experience over efficiency, so changing marketing strategies was difficult. Motivated by its new priorities, Starbucks eventually decided to close a number of its locations in favor of a more inclusive approach and to add staff to better serve its original core customers. Its identity served to direct its actions and was subsequently strengthened overall.

The complex relationship between organizational images and identities is also illustrated by professional sports franchises. Not only are their images multidimensional and internally incongruent, but they are also defined in comparison with the identities of their competitors. Some very wealthy clubs, for example, the New York Yankees baseball team or Manchester United Football Club, have developed competitive strategies and policies that involve spending millions to recruit established players instead of developing “home-grown” talent. This approach results in their having exorbitant payrolls that are incongruent with their efforts to seem committed to local communities and local player development. In contrast, many of their competitors have emphasized modest salaries and ticket costs, strong community ties, extensive player development, national loyalty, and ethnic diversity (e.g., the Kansas City Royals baseball club, the Green Bay Packers football team, and the Guadalajara Chivas soccer team).

As a result, these organizations can develop identities that incorporate perceptions of moral superiority and, in turn, produce rhetoric that focuses attention on tensions within the identities of the wealthy organizations. Conversely, even prosocial actions and rhetoric by the wealthy clubs are likely to be dismissed as manipulative and “mere rhetoric.” Of course, identities also constrain organizational strategies and create image problems if violated. For example, when Barcelona Football Club, which long has depicted itself as totally committed to the development of young players, broke from its tradition and spent millions to import established star Neymar da Silva Santos Júnior, captain of the Brazilian national team, local supporters felt betrayed.

Finally, stakeholder interpretations of a company’s actions over time create an organizational reputation, a perceived historical accounting of its strategic decisions regarding image and identity. A community’s shared construction of an organization’s past actions and rhetoric is stored in the public’s memory and is both shaped by organizational identities and used to validate them. Individuals’ memories of an organization also reflect their personal experiences—both direct and symbolic—with the organization and others like it. Conversely, these reconstructed events form a backdrop through which stakeholders construct and evaluate organizational images and identities. This explains why companies try very hard to suppress or redefine the mistakes of the past and present while simultaneously emphasizing both current and historical triumphs.

Of course, some organizations are much more adept at managing their reputations than others. For example, during the late 1990s, Apple was on the verge of bankruptcy, largely because of a poor reputation for innovation and a lack of products that functioned well with the mainstream software that was being produced. Today, Apple is one of the most profitable companies in the world, known for its innovation both in products and in marketing, and largely drives the software development process that once threatened it. The strength of its reputation over the long term will depend on how well Apple stays true to its current identity, as well as the extent to which the images it creates continue to coincide with these values.

The Apple example also illustrates that while organizational identity, image, and reputation are important, their interrelationships are also important. An organization’s identity influences its reputation. Memories do not make sense by themselves. They are connected and given meaning when audiences interpret them in terms of the organization’s identity. If an organization has a positive identity, which is solidly based on many supporting memories, it is easier for organizational rhetors to persuade stakeholders to overlook or forgive a negative event. Rhetors can claim that the event is an aberration, an exception to the organization’s normal way of doing things, and has no larger significance. Similarly, if the organization’s identity is negative because it is based on a series of unfortunate events, if it is unstable because stakeholders can recall few relevant memories, or if it is untrustworthy because they hold a number of inconsistent or confusing memories, creating a positive image during a reputational crisis will be very difficult. It is the combination of identity, image, and reputation, and their interrelationships, that is crucial.

Ethics and Strategic Communication

An organization’s perceived ethicality plays a large role in its identity, image, and reputation. A company that is seen as reflecting the core values of its stakeholders can create a more coherent identity, which will allow it to cope more effectively with reputational threats. Ethical codes and systems consist of core values, hierarchies among the values, and rules for applying these values to concrete situations. They are both culture and subculture specific and evolving, which makes them context (time and space) bound. Even in relatively homogeneous societies, ethical codes are inherently polysemous and contentious, in spite of the efforts of so-called ideological state apparatuses to inculcate a dominant value set in all members.

In addition, the widespread notion that ethical organizational behavior can be taught and organizational scandals and malfeasance result from individuals acting on their own flies in the face of the realities of organizational power and politics. However, like all cultural myths, the assumption that ethics is located in individuals, who should be individually held responsible for their choices and actions, serves a number of functions for power holders in societies and their organizations. Most important, it allows organizational rhetors to scapegoat individual “bad apples” when unethical behavior becomes public. This strategy blunts the pressure to make substantive or structural changes, thereby perpetuating the structures and processes that gave rise to the ethically troubling behaviors. Moreover, it allows corporate persons to remain out of the reach of disciplinary structures and practices, particularly in cultures that are highly individualistic.

Choosing Reputation Management Strategies

Strategic communication activities in general and organizational reputation management rhetoric in particular are intertwined with ethics at two levels: (1) managerial decision making and (2) stakeholder support and pressure. In this sense, ethics is not something that is “added on” to managerial actions; it is intrinsically tied to them. Managers face a plethora of often contradictory pressures from stakeholders, many of which are driven by narrow ideologies and sectional interests but are justified in terms of their purported congruence with a vaguely defined and volatile “public” opinion. The most important of these is simple—in the vast majority of cases, being “ethical” entails financial costs, at least in the short term but also often in the long term, costs that usually are not offset by increased goodwill or enhanced organizational reputation. Managers can manage these tensions in many ways, from attempting to apply the broader set of values that are implicit in their organization’s identity to retreating into the bureaucratic impulse to transform moral issues into practical concerns such as efficiency or short-term profit maximization.

Fortunately, managers can scan their own reconstructed histories and their perceptions of their organization’s reputation for precedents and guidance in navigating these pressures. Both individual and organizational histories were constructed through communication, but they have been reified and thus seem to provide factual information on which future decisions can be based and legitimized. While basing strategic decisions on these constructs can lead managers to become trapped in their own (and their organizations’) rhetoric, relying on them allows managers to propagate self- and organizational images that solidify their power, both within the organization and with significant external stakeholders. In the process, they solidify the cultural assumptions implicit in the concept of managerialism. Strategic communication professionals assist in these processes by helping managers create, believe in, and apply a practical ethical system, one that, in the best of cases, reduces the ethical gaps and tensions between bureaucratic amorality and personal and cultural values.

Through these processes, ethics is subordinated to the demand to sustain managerial and organizational reputations and to sustain management’s power and freedom to act. In the process, the Enlightenment values of transparency, truth, and fairness are transformed from ends into means. Even lying (more politely called “disinformation”) or the creation of front groups that engage in various “dirty tricks,” including the creation of false and misleading “data,” can be justified in terms of competitive realities or neutralizing opposition. Diversionary tactics, for example, “prosocial” actions such as “greenwashing” (positioning cost-saving measures as environmental choices or exaggerating the environmental benefits of an action) and “pinkwashing” (funding or visibly becoming involved in cancer-fighting activities while producing and distributing products that are known carcinogens) are even easier to justify because they do some good. The resulting positive reputations can reduce stakeholder pressure and provide managers with “evidence” of the ethicality of their actions, policies, and procedures.

Communicative Tactics, Ethics, and Reputational Crises

Reputation management is a constant process that is interconnected with an organization’s image and identity. However, sudden events may demand extraordinary efforts to help managers and stakeholders make sense out of new situations, to maintain a positive organizational image in the short term, and to ensure that a reputational crisis does not undermine the organization’s identity. The meaning of an event itself is ambiguous; its significance, the actors responsible for it, and what should be done in response to it are all contested concepts. Some events become reputational crises; some do not. If the event involves actions taken by individuals within the organization, for example, sexual abuse of children by leaders of the organization, public knowledge of the event is immediately transformed into a reputational crisis. The only remaining ambiguities are who or what is to blame and what should be done to realign the organization’s image and its core social values.

If the event happens outside the organization, its rhetors have more room to maneuver, and its impact on the organization’s identity will depend on how it manages the event itself and/or on how it manages its rhetoric during the event and its aftermath. In some cases, potential crises may even allow organizations and their rhetors to enhance their standing in the eyes of key stakeholders. For example, the responses to Hurricane Katrina by the American Red Cross and the Federal Emergency Management Agency severely damaged their reputations, but the responses of the Salvation Army and the much-maligned Walmart Corporation to the same event enhanced theirs. The difference resulted from both the level of competence demonstrated by their responses to the event and the credibility of their spokespersons’ rhetoric. For the first two organizations, the event became a crisis; for the second two, it did not.

In general, organization rhetors should respond to potential crisis events (a) quickly and clearly, so that the organization defines the event in its preferred terms instead of allowing other parties (the media or critics) to frame it for stakeholders; (b) consistently, in terms of both the claims that are made and the rhetorical strategies that are used, to maintain the organization’s credibility; and (c) in an open and honest way. The organization’s overall response and the specific tactics its rhetors employ inevitably raise ethical issues, both in terms of their congruence with the specific values held by individual stakeholder groups and in terms of the overall tension between Enlightenment values and considerations of competition and profitability.

The simplest crisis management strategy is denial—asserting that a potentially troubling event did not happen, was insignificant, or is not out of the ordinary given current industry standards. However, denial only works if the rhetor responds clearly and immediately; the rhetor can produce overwhelming, credible evidence to support claims of innocence; the organization has developed an identity as a trustworthy, truthful source; and the audience for the message shares its implied values. Of course, denial is easier to implement if the organization actually is innocent or the event actually is trivial. Knowingly issuing false denials almost always transforms events into ethical and reputational crises. However, in some cases, organizational rhetors simply do not know the “facts of the case,” which was powerfully illustrated by Commonwealth Edison’s problematic rhetoric during the Three Mile Island crisis. Consequently, the need to respond quickly, which is exacerbated by today’s 24/7 media coverage, can make it difficult to be open, honest, and accurate.

If the corporation actually is guilty of wrongdoing or denial is otherwise not a viable strategy, it may choose to apologize for its actions. The key characteristics of full apologies are simple—they begin with a heartfelt expression of regret for the organization’s transgressions, followed by an admission that the confessant knew that the actions were wrong, a repudiation of the actions and the “person” who committed them, a promise to behave properly in the future, and the payment or promise of some form of atonement or compensation. Organizations rarely issue full apologies. Doing so would require upper management to admit to some form of failure, which threatens their egos; full apologies may also open the organization up to litigation, especially if the organization actually is guilty of illegal or unethical behavior.

In most cases, partial apologies are combined with efforts to shift the blame to other parties. The simplest form of shifting blame is to assert that an external event was an “act of God,” the hand of fate, a genetic imperative (“Boys will be boys”), or some other impersonal force. Rhetors sometimes attempt to blame an organization’s lower-level employees or contractors, a tactic that usually fails because most audiences assume that a corporation and its upper management are responsible for the activities of their employees. Blame shifting requires the identification of a credible external scapegoat, one that is sufficiently powerful to feasibly be held responsible for the questionable event and is suspect in terms of some legitimized cultural values.

There are many strategies available to limit the costs of litigation—arranging out-of-court settlements that include “gag orders” to keep identity-threatening facts secret; ensuring that lawsuits are filed in states that have passed tort reforms that limit corporate liability, in courts whose judges have demonstrated procorporate orientations, or in districts that have a history of having plaintiff awards reversed or reduced on appeal; or delaying legal proceedings until the plaintiff dies. But each of these strategies undermines the organization’s reputation, at least until stakeholders shift their attention elsewhere. Consequently, it is more likely that organizations whose management chooses to apologize will offer partial apologies, a kind of “nuanced regret,” in which the organization expresses its willingness to take steps to ensure that similar events do not happen in the future. They may admit that the event took place and was significant, but they will assert that it was completely unintentional or accidental, or could not possibly have been anticipated given the information available at the time (a strategy generally labeled “defeasibility”). But they will decidedly not confess or even use the term apologize, since it implies an acceptance of blame.

In contemporary organizational discourse, the most common scapegoats are the mass media and government, especially regulatory agencies. There are two risks involved in blaming the government. The first is that some audiences may realize that organizations exercise substantial influence over government regulations and regulatory agencies. Trying to shift blame to the government can remind audiences of this cozy relationship, and in some cases, it may force the regulators to attack the company’s credibility in order to protect their legitimacy. The second risk is that attacking regulators may inadvertently encourage policymakers to increase regulation of an industry.

A third simple strategy is bolstering an organization’s identity by producing an extensive amount of rhetoric that congratulates the organization for its other activities and/or shifts attention away from the potential crisis event to its prosocial activities or contribution to the economy.