How to restore Barclays’ soiled reputation

Reputation3Responsible leadership is all about cherishing your reputation. Not just the perception of being ethical, but demonstrating this in action. Winning people’s trust stems from their experiences of your actions, not sound bites, assertions, or promises.

There are few issues that are quite so challenging to manage as reputation. Corporate reputation, CIMA, 2007

Reputation plays such an important part in deciding the worth of an organisation. For example global business executives surveyed in Weber Shandwick’s SafeguardingReputation™ with KRC Research estimated  it contributed 63 percent of a company’s market value. 

Despite being a highly influential value driver the actual value of company reputation tends to be an unreported . We have yet to hear for example what the present reputation loss is costing the bank.  

THREE QUESTIONS

Ethical leaders concerned to build or repair reputation must be able to answer three basic questions  
What is our purpose? What matters to us? Who is this organisation for?

The last of these three questions “For whom is this Institution being run?” came as an exasperated cry from the head of Corporate Governance at the UK’s Institute of Directors. [1]

This was his despairing reaction to news Barclays will pay yet another huge bonus to its best people, despite a large fall in profits and large, impending staff cutbacks.

High potentials and other  performers will share bonuses of around £2.4 billion ($3975million). Only those used to living in the elite echelons of a bank can even envisage such an amount!

Compare this with what the actual owners will receive– a mere one third of the employee pay out. Dubbed St Antony by some city cynics, CEO Antony Jenkins is bent on cleaning up his bank’s act and restoring its tattered reputation. Yet another row over bonus payments hardly helps. As another commentator put ithalo

 

The halo is starting to look tarnished

A major requirements of ethical behaviour means you care about how your decision will affect others. Barclays reputation for integrity and trustworthiness is still far from being repaired.

When outside the walls of your institution the world views you in such negative ways how do you re-build your soiled name? 

REPAIRING

Of the many steps Barclays can take to repair its reputation, the most important is a commitment to being a good corporate citizen. On that test alone the repair job is seriously awry.

You cannot rebuild trust by paying selected  staff huge sums as if “market forces” do not exist. So far, for example, there is no convincing  sign of any real shortage of banking talent. Nor can Barclays boast an impressive abundance of profits.

With a pre-tax drop in profits of 37% and an expected cull of several thousands on the payroll, the top managers and Board appear to live in a fantasy world. Do they really believe the latest decisions will not further dent Barclays’  notoriously battered reputation?

Many outsiders see this bank as missing a basic integrity and not a good bet for investors. To be fair, it is fine for staff, so long as you’re not amongst the projected 10,000 on the redundancy chopping board.

TRUST

Damage is not just about financial cost, immediate or deferred, but is about what it leaves in the way of diminished trust

Reputation management is a discipline in its own right. Specialist Leslie Gains Ross  suggest four essential stages of repairing corporate reputation:

  • Stage 1: Rescue: (Take the Heat — Leader First; Communicate Tirelessly; Don’t Underestimate Your Critics and Competitors; and Reset the Company Clock)
  • Stage 2: Rewind: (Analyze What Went Wrong and Right; and Measure, Measure and Measure Again)
  • Stage 3: Restore: (Right the Culture; Seize the Shift; and Brave the Media)
  • Stage 4: Recover: (Build a Drumbeat of Good News; Commit to a Marathon, Not a Sprint; and Minimize Reputation Risk)

drumbeatWhile Barclays’ CEO seems happy to brave the media, he remains a long way from creating a drumbeat of good news. Re-building this battered institution as an ethical enterprise still appears far over the horizon.

Barclays does not directly own or control its reputation, the stakeholders do. Gaining their trust is a continuous process. Once your good name is damaged the most important step is accepting this and making sure you understand the exact nature of the problem. If you don’t take into account all the relevant factors you end up with a superficial repair strategy that often makes the problem worse.

This seems to be happening at Barlays.

The bank’s actions are regularly at odds with the otherwise impressive declarations about reviving integrity and pursuing core values. One of the fundamentals of reputation repair is you will only change it when you also change.

The latest bonus saga suggests Barclays has yet to change and the message has not been lost on the rest of us.



[1] Guardian 19th February 2014

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