Reputation, communication and corporate governance

In this article published by Hacer Empresa, Yago De la Cierva discusses why reputation is often mistakenly assigned to corporate communications departments. In reality, it reflects how stakeholders perceive an organization based on repeated experiences. Reputation should therefore be treated as a cross-company responsibility led by top management, with communications acting primarily as a listening and coordination function.

Yago de la Cierva, President Fondazione Villanueva

After teaching Business Communication, Crisis Management and Communication at IESE Business School, both in the MBA program and in open and business programs for 12 years, in 2025 Yago De la Cierva was appointed president of Fundación Villanueva, owner of Universidad Villanueva. He is responsible for institutional relations and special projects. In this article he explores the topic of reputation, communication and corporate governance.

Reputation and communication

It is not uncommon for companies and organizations to assign reputation as one of the responsibilities of the communications department. At first glance, this should not be the case: it would be like confusing image — the result of what the organization projects of itself through marketing and communication — with reputation, which is, in a way, something passive: what my stakeholders perceive of me and of my products or services, based on repeated experiences over time.

If a company’s reputation depends on how it treats its stakeholders — whether working conditions are fair, whether products are of good quality and reasonably priced, whether customers are treated well, whether banks and suppliers are paid on time and in full, and so forth with all stakeholders — what sense does it make to hold the communications department accountable for all this? Are these not rather the responsibilities of other divisions, such as human resources, operations, finance, marketing, or customer service?

Such an attribution would be the consequence of giving too much importance to the media in the creation or destruction of reputation. Indeed, it is often said that reputation is built with effort over time, but can be lost in an instant, through a momentary mistake.

"Reputation" or "reputations"?

In reality, things do not happen so simplistically. If one has a solid reputation, consolidated over time, a mistake will not make it collapse. In fact, it is often said that reputation is the best defense in times of crisis — not because it prevents serious mistakes, but because it has already created a reservoir of goodwill that, when we make a mistake — however serious — we do not lose the trust of our stakeholders, who tend to think it was an accident or at most negligence, and that we will be able to solve the problem.

Those who think otherwise give too much credit to the impact of the media on our stakeholders. I will not minimize the role of the press in building reputation; but its impact is smaller in organizations where communication is well organized — that is, when they have their own channels to engage with each of them. If, for example, internal communication works well, what employees read in the press will have little influence, because they “know better.”

In my opinion, it might even be better to speak of “reputations” in the plural, because we have one for each stakeholder group: we all know companies that enjoy an excellent reputation with their customers, but a very fragile one with their employees; strong with shareholders, but much weaker with regulators, and so on.

The role of top management

From this perspective, it seems reasonable to conclude that the ones who should foster and protect corporate reputation is top management, because it is a responsibility shared by everyone in the company. As is often said, through our behavior we all contribute to creating or destroying reputation.

That responsibility lies first with the executive committee, since it is in charge of the company’s daily operations. But it also lies with the Board of Directors, because certainly good relationships with all stakeholders form part of strategy.

I can think of five steps to articulate this cross-cutting responsibility.

First step

Have a non-market strategy. Every serious company has a market strategy, but it is less common to have a non-market one. Relationships with stakeholders who are not current or potential customers must also be analyzed and planned: I must have a clear stakeholder map, a profile of each of them, set goals, schedule concrete initiatives in a calendar to improve those relationships, and establish measurement mechanisms. If I do not measure, I cannot improve.

Second

Understand that the main mission of the communications department is corporate listening: having “the ears of the organization” wide open, as my colleagues José Ramón Pin and Ignacio Bel wrote in a fantastic book I highly recommend.

Third

Hire a communications director who is truly up to the mission: managing relations with all stakeholders, internal and external. The profile of a good comms director rests on three pillars: communication skills, managerial ability, and knowledge and commitment to the corporate identity. All are important, but if you cannot find someone with all three, the least important is the first, because communication can be learned. Being a good manager (knowing how to lead people, manage a budget, plan, run meetings, debate as a peer with the CFO or operations director, etc.) is much harder.

Fourth

Give the comms director a seat on the executive committee: let them participate in the bodies where decisions are made, and not only be tasked with communicating them after the fact. This is possible if my third recommendation is taken into account, and it is the consequence of that epochal shift in corporate governance, which no longer primarily seeks the maximization of shareholder value, as Milton Friedman argued, but now aims to serve all stakeholders, as Edward Freeman sustained and as is today accepted as good governance.

Finally

Change the name: move from “communications” — which we have seen is often understood as centered on media relations — to “public affairs”: a department capable of managing relationships with an integrative approach, because we cannot privilege one stakeholder if that means harming another, nor say different things to different groups, since the cost of inconsistency is high.

It is clear, then, that assigning reputation to communications — understood as public affairs — was not such a bad idea after all.

---

Published August 2025 - translation from Spanish by ChatGPT - subtitles used to improve readability

#reputation #crisismanagement