Reputation Trends 2021: Unforgettable

[I posted this on LinkedIn yesterday where I have posted all my reputation forecasts for years. I am reposting below in case you don’t visit LinkedIn.]

A pandemic ravaging the planet, households going hungry, racial injustice searing our souls and a nation deeply divided—such is what 2020 has brought us. Thankfully, this year of infamy is coming at long last to a close. 

What is there to say about this year of unprecedented, unforgettable, largely negative events? Its impact is immense and needs to be addressed when predicting trends in 2021.

With that in mind, here are my thoughts on the here and now of reputation for the upcoming year:

1. The Accountable Corporation.

The coronavirus outbreak and BLM movement, among other gut-wrenching events of 2020, have compelled hundreds of companies to go on the record in support of employees, customers, HBCUs, the homeless and the vulnerable. Stakeholders felt deeply about the events of 2020 and sought out some kind of long-lasting reputational reckoning. They demanded no less from their institutions and brands. Indeed, nearly 4 in 10 Americans report boycotting at least one company whose actions didn’t align with their political ideology or values and more than half of them avoided more than one company.

Consequently, a groundswell of lists has risen designed to keep corporate America accountable. Starting last spring with didtheyhelp.com, the number of accountability lists grew exponentially and include ones such as JUST Capital, Forbes Corporate Responders, Harris Poll’s Essential 100, Barron’s top 25 CEOs with leadership preparedness, Fortune’s Change the World, and PEOPLE’s 50 Companies that Care. More recent record-keepers include Instagramers’ Silent Brands, Vocal Brands and @pullupforchange. All of these have proliferated as consumers acknowledge the moral authority that companies have wielded and seek a permanent record-keeping of who and how that authority has been employed.

Companies should be prepared for a new age of corporate accountability and reputation registers, especially if they want to be on the record for concerned customers and/or wish to attract new socially-conscious talent. As discussed in the next trend, this is not an easy task and may present companies with a NoWin choice, leaving at least some stakeholders unhappy. Be that as it may, corporate responsibility now transcends mere business metrics. For better or worse, more than the bottom line matters. There is a new reputational world order out there seeking corporate accountability and many will be evaluating how companies acted in moments of societal ground zero.

2. The Politicized Employee. 

While the corporation has had to become more accountable to its stakeholders, it has also had to focus more deliberately on its employees who have also become politicized and seek to hold their employer accountable along the political spectrum. Employees have become increasingly aware of the contradictions that surfaced everywhere this past year, especially when corporate actions did not align with a company's publicly stated positions.

Employees can easily find articles on Popular Information, a daily newsletter, with titles such as “Six corporations that talk green and spend dirty,” or peruse Open Secrets’ discussion of the disconnect between corporate spending and corporate public policy and lobbying efforts. President Bruce Freed of the Center for Political Accountability, a corporate political contributions tracker, told The New York Times that some of the biggest companies are sadly unaware that their donations have funded “severe restrictions on or prohibitions of abortions, the rolling back of L.G.B.T.Q. rights, the filing of lawsuits challenging federal climate change initiatives, and gerrymandering, some of it racially motivated.”

Employees are now increasingly willing to call out and dig deep into their employer’s history over political funding and leanings such as we saw this past summer involving New Relic, a family owned software company. Among other things, employees complained about CEO Lew Cirne’s personal charity donation to a private Christian school that excludes gay students, a position that runs directly contrary to the company's publicly professed support for a broad diversity program. Contributions by Cirne’s wife to President Trump’s reelection campaign raised employee ire too. Employees’ instantaneous feedback over a CEO’s actions and stated corporate values is now filtered through an intense political lens, another layer of radical scrutiny to watch out for.

When it comes to employee activism, of course, the pendulum swings both ways. For every proponent of one cause, there is undoubtedly a proponent of a countervailing cause. Because our nation is divided on so many issues, those divisions are now reflected in the workforce. So it is not easy for a corporation to take a stand without offending someone somewhere. 

In recognition of this quandary, some corporations have attempted to hoe a middle line and set aside “safe places” for employees to discuss hard and divisive topics. Some other CEOs, however, are throwing up their hands saying enough is enough. CEO Brian Armstrong of Coinbase, a digital currency exchange, made headline news when he declared in a blog post that employee activism and political discussions are no longer encouraged: “We don’t engage here when [broad social] issues are unrelated to our core mission, because we believe impact only comes with focus.” He added: “While I think these efforts are well-intentioned, they have the potential to destroy a lot of value at most companies, both by being a distraction, and by creating internal division.” He even offered employees a generous severance package to those uncomfortable with Coinbase’s position of not taking politically sensitive stances. While only five percent of Coinbase took Armstrong up on his severance offer, the mere fact that a CEO thought it necessary to make such an offer is reflective of the difficulties that arise when corporations involve themselves in highly politicized issues.

With many CEOs facing similar NoWin situations, we can expect increasing “enough is enough” reactions to the involvement of business with politics and social issues. Whether this means an inevitable retreat from corporate activism is hard to tell, but whatever its future, it will be a continuous and perplexing problem which corporations will have to confront in the coming year.

3. The Remote CEO. 

This year there was no time to hide behind the trappings of executive leadership whether it be meetings in the corner office or formal addresses to the workforce from behind a podium. Social distancing, restrictions on group gatherings, business closures and other pandemic-related rules just wouldn't allow it.

CEOs have instead been communicating in large part remotely, beaming themselves out to the world just like many of their zooming colleagues. They appear in less than business casual, in unadorned family basements, behind office doors with barking pets and with less than perfect haircuts. Remote communicating and other COVID-imposed restrictions have had a leveling effect, making CEOs appear more like the rest of us. They are seen live and less rehearsed while still having to face the same difficult tasks of explaining layoffs, furloughs and culpability over social and racial inequities, all in real time.

CEOs have not been able to secrete themselves and their messages behind emails, memos or pre-taped videos. The old hands-off way of communicating no longer cuts it if you want to build a productive and engaged workforce during a pandemic. Zoom, WebEx, Skype, Microsoft Teams, BlueJeans and other conferencing software have reshaped how we see CEOs and allow them to be more human, empathetic and accessible. As the Chief Strategy Officer at Salesforce, Alexandre Dayon, said: “All the social codes of leadership have kind of all disappeared. We are all little pictures on Zoom.”

Some CEOs may have trouble adapting and have undoubtedly been humbled by meeting virtually with employees, customers and partners who are juggling young children at home, working on couches, beds and kitchen tables, and showing visible signs of lockdown loneliness and stress. But for those who are able to rise to the occasion, this past year has been an opportunity to grow a deeper sense of community in the workforce and materially reduce the gap between CEO and employee. 

There is no reason to believe that remote communicating will totally disappear when COVID-19 becomes manageable and in-person business relationships return. The benefits, not just the drawbacks, of such communicating will remain with us for years to come.

4. The Enduring and Everlasting Effect of Corporate Failure. 

As Berkshire Hathaway CEO Warren Buffett said: “Trust is like the air we breathe—when it's present, nobody really notices; when it's absent, everybody notices.” The same goes for reputation.

Years ago, when a company lived up to its promises, its reputation stayed intact among stakeholders despite rough waters. Consumers, employees, influencers and others did not think twice about whether to buy from them, work for them or to invest in them. A good reputation created considerable good will that generally stood the test of time. A company might stumble here and there but most often, the company would be given a second chance. It might be given a slap on the wrist perhaps, but its stock price would not budge and sales would not dip beyond a few days or weeks.

Nowadays, however, when a company errs, reputation is less resilient. When a company crosses the line, when it is no longer true to its values and does wrong, even a long-established reputation goes only so far. Today the company’s reputation will more readily suffer and it will take longer to recover than before.

Once greatly admired Wells Fargo, for example, still remains in the dog house after its fraudulent customer accounts scandal in 2016, leading to a Federal Reserve asset cap. Since then, Wells Fargo has had three CEOs, suffered an exit of top talent, multiple quarterly losses and incalculable lost time as executives spent inordinate time attempting to deal with the crisis. All in all the scandal is estimated to have cost the bank $4 billion in profits. Its reputation may finally be seeing some light at the end of the tunnel but reputational loss was still catastrophic. 

Reputational harm is degenerative, takes years to recover and is probably harder to course correct than it was to build a strong reputation in the first place. Vulnerability to reputational loss is likely to continue in the foreseeable future as the benefits of well-established past reputations continue to be less resilient.

5. The Rise of the Public Health Stakeholder.

Prior to COVID-19, the list of corporate stakeholders was fairly consistent—investors, employees, customers, partners, media, legislators, NGOs, and so on. With the onset of COVID-19, public health professionals have now been added to that list for obvious reasons.

Public health professionals and infectious disease experts were desperately needed to advise companies on when to bring employees back to the office, how best to maintain safe and virus-protective facilities, and to advise on health-related issues including how to lower mental health problems and burnout on the job. Some companies went as far as hiring chief public health officers to manage the wellbeing of employees.

Being on the wrong side of a health issue, being unprepared or unresponsive to COVID-19 related protections, runs the risk of a substantial reputational hit today. Accordingly, most companies have and will undoubtedly continue to respond proactively to fostering mental and physical health at work for the long-term. As I predicted in last year’s 2020 trends, mental health care is likely to become a premier driver of reputation in the workplace.

6. The Burnished Image of the Essential Worker.

Bring on the trophies for our essential workers. The reputation of essential workers—health care, food service, teachers, and public transportation, among others—has increased this past year. In fact, most of us did not even know who was deemed an essential worker until this past March. There are now nearly 800 million Google hits for what constitutes an “essential” worker.

These individuals—primarily lower-wage earners—deserve this sudden and unexpected increase in public reputational esteem. A survey of 1,000 U.S. adults last spring found changes in respect for different professions—healthcare workers were most admired (80%), followed closely by grocery store workers (77%) and delivery drivers (73%). Time will tell how long this reputational boost lasts and what substantive benefits, if any, will eventually accrue to these heroic workers. But for the moment, the esteem of a nation and indeed the world is nothing to scoff at.

7. The Rehabbed Image of Big Pharma.

The reputation of the pharmaceutical industry has risen dramatically over the past 12 months. For years, the pharmaceutical industry consistently fell in the bottom tier of industry ratings. Complaints abounded about inflated and unfair drug costs and alleged industry reluctance to develop drugs treating illnesses that did not yield substantial profits. 

Yet all this has largely been put aside now that the COVID-19 crisis and rush for a vaccine have lifted the industry’s reputation to soaring heights. Eli Lilly CEO Dave Ricks said in April 2020 that the biopharmaceutical industry has a “once-in-a-generation opportunity to reset its reputation."

According to the Harris Poll, 41% of respondents now have a more positive view of companies developing COVID-19 vaccines, while 40% have a more positive view of the pharmaceutical industry in general. In the years ahead, the industry might also find itself benefitting from a groundswell of students opting to pursue public health and science degrees as a thankful nation has become enamored of the contributions by medical experts such as Dr. Anthony Fauci. The Fauci effect might have long-lasting consequences—medical school applications have risen 18% since last year. The next few years just might be the decade of science.

8. A Reset on Seniors. 

Has anyone besides my peers—the OK Boomers—noticed that the new U.S. administration is loaded with elders—from the president-elect himself (78 years old) to newly nominated Treasury Secretary Janet Yellin (74 years), climate envoy John Kerry (77 years) and Secretary of Defense General Lloyd Austin III (67 years). Don’t forget those congressional stalwarts who already hold power—Nancy Pelosi (80 years) and Mitch McConnell (78 years). Further still, other aged political leaders around the globe are sitting in positions of power—Chancellor of Germany Angela Merkel (66 years), President Xi Jinping of China (67 years) and Israeli Prime Minister Benjamin Netanyahu (71 years).

71.5 years is the average age for “old” in the U.S. That’s considerably younger than the old-old (85-94 years) although president-elect Biden will be soon approaching that not-so-ok stage if he runs for a second term. You have to hand it to the Boomers who’ve redefined what it means to grow old and have reset our reputation from grey-haired adults just cashing in on social security checks, perfecting golf and bridge hands and hanging it all up in retirement villages. According to the Bureau of Labor Statistics, workers 55 years and older represented 12.7% of the entire U.S. workforce in 1999; by last year, that number had nearly doubled to 23.4%. Boomers are more than OK and they’re not planning on leaving the stage just yet.

9. Getting Serious about Diversity at the Top.

 In my world, Nasdaq’s recent push for a new rule requiring all companies to have at least two diverse directors if they wish to remain listed on the exchange broke the sound barrier. The rule provides that one of the diverse directors be female and the other be either a minority or LGBTQ+. The proposal was sent to the S.E.C. on December 1st. Although companies who have difficulty meeting this requirement may seek an accommodation (with foreign and smaller companies given more flexibility), there is no reason to believe that Nasdaq intends anything but long-term enforcement and greater diversity disclosure with its new rule. As Nasdaq’s CEO Adena Friedman said: “There are many studies that indicate that having a more diverse board…improves the financial performance of a company as well as lowers the risk profile of companies.”

Progress has been slow in getting corporate boards to become more diverse. Underrepresented racial groups comprise 12.5% of board seats and women make up 21%. Goldman Sachs and the state of California have also imposed requirements for minority representation. Nasdaq’s SEC proposal applies to more than an additional 3,000+ companies. Since more than 75% of Nasdaq listed companies do not meet this newly proposed diversity requirement, this mandatory rule is no small matter. It raises the stakes for not promoting diversity and should enhance the reputation of governing boards in America and abroad if and when enacted. A welcome announcement at the end of a tough year and a prediction that more bold moves like this are ahead when it comes to fair and diverse representation at the very top.

10. Make the United States Reputable Again.

This past September, the Pew Research Center headlined their research on how 13 nations view America: “U.S. Image Plummets Internationally as Most Say Country Has Handled Coronavirus Badly.” Pew's conclusion was disturbingly frank: “In several countries, the share of the public with a favorable view of the U.S. is as low as it has been at any point since the Center began polling on this topic nearly two decades ago.” In light of America's confused response to COVID-19 and the politicization of medical guidance, Trump's “America First” political strategy and weakening of ties with age-old allies, and the nation's continued racial unrest and divisive politics, the U.S. reputation has plummeted. We simply can no longer fool ourselves into thinking we are top dog.

If America were a corporation, executives would be hell bent on re-establishing the U.S.'s reputation. They’d research the heck out of stakeholders, hold focus groups, conduct in-depth interviews with key influencers, study competitive nation states and learn how the best-in-class rebuilt their reputations. They’d examine the root causes of decline and reexamine and refine the company's purpose, culture and values. They’d apologize for grave missteps and vow never to let it happen again. At the very least, they’d probably remove the CEO, board and executive team on whose watch such an abject failure occurred. Incensed shareholders would be holding the corporation's feet to the fire and remaining company executives would be doing their very best to rebuild trust and transparency.

But America is not a corporation. There is no America Inc., and many Americans appear to believe that current policies can still lead to the United States becoming Great Again. None of this would be tolerated had it occurred in the business world.  

We now have a chance to build back our country’s reputation. We need to charge a coalition of our smartest, most strategic and creative people in communications, marketing, public affairs, crisis management, data analytics, and advertising to make America reputable again. Shoot me a message if you have any ideas on how to make this happen.

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I can't wait until next year when a whole new set of plain-Vanilla reputational issues and challenges will present themselves. When I will write my trends for 2022, I will no doubt be referring to news and events as BC and AC…before-COVID and after-COVID. And maybe we will be lucky enough in 2021 to have a boring, ho-hum year of companies doing good, employees being hired and reputations for social injustice refurbished. Happy 2021!