The case for reputational capital

On the evening of December 29, 2011, most Jamaicans rode a roller-coaster of joy and shock, or dismay and shock, depending upon which side of the political divide they sat. Why were the predictions so wide of the mark? What was it that the PNP had, did or didn't do that the JLP had, did or didn't do that had such an unexpected impact upon the results? What, if anything, can this unanticipated landslide win teach business owners and executives?

I believe the answer is hiding in broad daylight.

Paradigm shift

"There is only one social responsibility of business," Milton Friedman once proclaimed, "to increase profits." However, current trends suggest that the ruthless approach to business being the only way to beating competition is not only outdated, it is plain wrong. In recent years, there has been a paradigm shift in business so that consumers and stakeholders continue to expect solid financial results from business, at the same time as demanding that companies attain financial returns through fair play and socially responsible conduct.

Today, people admire corporations that demonstrate concern for all of their constituents and criticise those that do not. Today, business reputations matter. It is a clear task of business owners and executives to build and sustain reputational capital, and to avoid reputational liabilities: simply abiding by the laws of the land and holding to customary business practices isn't sufficient to generate reputational capital in the modern business environment.

International business is well aware that globalisation, a 24-hour media, increased competitiveness, increased regulatory controls and the shift through privatisation from governments to commerce are among the factors that are driving this change. The contemporary message is clear: to survive in the long term, a business must increase its reputational capital.

Reputation must be real, however, and not be the result of public relations and marketing manipulation, or gimmicky codes of conduct. For while the concepts of corporate image and corporate reputation overlap, corporate reputation runs deeper than surface impressions. Reputation requires consistent behaviour over a period of time to develop; it is based on a firm's character that is hard-wired into the firm's values, culture and conduct; and it is associated with all aspects of the organisation - cutting across all departments and divisions - and impacts all of its constituents: investors, shareholders, employees, business partners, suppliers and communities.

A company builds its reputational capital by catering to the expectations of its constituents, while remaining true to the company's inner integrity. Reputational capital is a form of intangible wealth, somewhat akin to 'goodwill' and 'brand equity'. And, like other forms of wealth (tangible and intangible), it can be preserved or increased, depleted or squandered.

Reputational capital and politicians

Politicians and political parties are subject to the same principles as business when it comes to reputation. They, too, acquire a character portfolio captured by multiple images of their political probity held by their colleagues, members of the Opposition, the international community and the voting and non-voting public.

Also, the assets in their character portfolio are spread across a variety of virtues such as honesty, loyalty and fairness, permitting occasional losses in one area to be offset by large reserves in another area.

During the recent campaign, the joust between the two political rivals provided an opportunity for both parties to poke holes in their opponent's reputational armour while attempting to protect their own. Some of the platform agenda items were stewardship of the economy, the perceived international reputation of the leader, corruption, perceived intellectual acumen and popularity among the voting populace.

There is no doubt that both parties have contributed successfully to Jamaica's development in highly tangible ways. Clearly, with almost 18 years of successive power, the PNP has provided more for observers and opposition to take a swipe at.

But in the end, the Xs marked on the voters' ballot papers last month were the result of both tangible and intangible factors, not least, I suspect, the intangible reputational capital that Portia Simpson Miller was able to draw upon. Drawing reference to her humble roots, her love for the poor and vulnerable has been a long-held trump card of the PNP's undoubtedly most-popular and most-successful female politician.

Notwithstanding her clear missteps in the various offices held over her career, her maternal association to the powerful voting base has afforded her forgiveness and understanding, enabling the accreditation of reputational deposits that others have come to envy.

impact of nebulous values

It was said by Don Anderson (the pollster who came the closest to predicting the PNP win), that the winning party would come down to which one was more organised on the day. The party that was victorious must, however, have been so as a result of a number of factors, some obvious and tangible, others not so obvious and intangible. Who will measure the impact of the more nebulous values of 'love' (did anyone count how many times Portia used that word during her campaign and on the victory podium?), 'fairness', 'humility', 'kindness'?

Portia Simpson Miller may feel a sense of well-earned vindication at her victory. Rewards from reputational capital are reaped according to the depth of the balances on the account: if the levels of the account are shallow, then there will not be much to reap and the glory short-lived.

Let us trust that Portia's reputational account and, by association, the party she leads, have or will soon be imbued with such sufficiency of authentic credits over time that they will contribute to a larger, healthier and more robust account to which all Jamaicans can submit additional deposits and rightfully draw succour and sustenance.

Lorna Phillips is an attorney-at-law and member of Jamaican Professional Partners, a business advisory service for overseas investors. Email feedback to columns@gleanerjm.com and lawsupportprofessional@gmail.com.