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The Role of Reputation Management in Corporate Turnarounds: Insights from NBN CEO Bill Morrow

November 1, 2016

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It’s rare in Australia to meet a CEO who has been sought out around the world for his ability to transform companies – largely because Australia doesn’t have a high volume of listed corporate headquarters. However, we are lucky enough that our lifestyle, stable regulatory and banking system and our position as the gateway to emerging Asian markets is attracting global talent across many sectors.

Bill Morrow, CEO of the National Broadband Network (NBN) since 2014, is a true global leader.  He has implemented corporate turnarounds in five countries and his experience includes roles as the CEO of Vodafone Hutchison Australia, Clearwater Corporation in Seattle, Pacific Gas and Electric, Vodafone Europe and Japan Telecom.

Anna Whitlam People, with the support of the Commonwealth Bank of Australia, brought together Australia’s Corporate Affairs leaders in technology focussed businesses to give them the opportunity to listen to Bill Morrow’s invaluable insights on the role of reputation management in corporate turnarounds. It was also a rare networking opportunity for these leaders to share their own experiences on this topic and learn from each other in a Chatham House rules environment.

The practice of corporate reputation management in Australia is largely stable. There are challenges for Corporate Affairs teams that stem from having a domestic political and regulatory agenda that can compete against a global headquarters mandate. There are also cultural nuances and media practices in Australia that global headquarters have limited knowledge of. However, Corporate Australia hasn’t had a reputational crisis to the extent of Arthur Anderson, or a financial institution that significantly contributed to the GFC – both incidences sparking a mass ripple effect of transformation.

Yet, there are a common set of issues that face corporate affairs teams all over the world as they work within companies that are undergoing organisational and structural change. To best turnaround a company’s culture or reputation, there is a universal formula used by global leaders that is true to many change transformation processes. Bill Morrow gave his thoughts on how he has seen the formula applied in many companies going through transformation.

Firstly, change begins by uncovering the facts about what is going wrong, or what has gone wrong in a company for it to be in the position it is in.

Secondly, it’s important to separate fact from the protection of past decisions.

Thirdly, in seeking to separate facts from those past decisions, it is likely that senior management will give very high level answers that seek to protect their own legacy.

Mid-level management will provide answers that give further information but still protect management decisions, and the people on the front line will respond with a version closer to discovering the root of the problems.

Corporate Affairs, particularly for those leaders that also manage internal communications departments, is often the liaison between staff and executive management to provide insight into what is working and what isn’t when a strategy is implemented. The forum spoke of how front-line staff dealing with customers daily in call centres and customer facing roles were often the employees with the best insight into how management decisions have impacted customers and clients, and therefore a valuable asset in a change program.

For corporate affairs teams in operational and customer environments, we can all relate to this hierarchy of information flow, but how can we apply it in the best way to effect real change?

The expertise of the Corporate Affairs leaders in a change program is invaluable to its success. At the point where the discovery process has concluded and management has agreed to embark on a change strategy, the process of rebuilding must begin. If the change is a result of failing clients and customers, then the strategy must begin with the ‘mea culpa.’ It then follows with guiding the management team through a process of meeting key milestones on the brand re-building journey.

In managing corporate reputation through change, corporate affairs leaders are either fortunate enough to have a willing management team that shares the vision of change, or navigate change alongside management that is still tied to past decisions and reluctant to embrace the new strategy.

This is human nature – people are invested in their decisions, particularly ones they found difficult to make. There is a similar theory in politics – people become invested in their decision to vote for a party or politician, and feel that they must defend their decision despite the resultant failings.

Morrow says that in his experience, up to two thirds of senior management are gone within six months of a company turnaround project because of their failure to acknowledge their own contribution to bad decisions.

For corporate affairs leaders who have either an existing management team trying to do things differently, or a new management team, there are key areas of opportunity to rebuild. An understanding of organisational change theory can help communicators build a new ‘brand story’ internally and externally.

McKinsey1 cites Stanford social psychologist Leon Festinger’s theory of cognitive dissonance, which is based on the fact that people become mentally stressed when they feel their beliefs are inconsistent with their actions. In organisational change, the theory is applied to recognise that employees will change their behaviour and outlook if they believe in a company’s overall purpose.  Corporate Affairs leaders are responsible for creating a new brand story and a new purpose, and then communicating it all levels – to management, to customers and to staff.

Here, the value of the Corporate Affairs team and their experience in communicating with people in an emotionally heightened environment cannot be underestimated as a key element of success of any change transformation program.

Bill Morrow spoke of the importance of Corporate Affairs as his most valuable ally in implementing change that resulted in staff and customers reinvesting in the company’s brand.

He discussed the now famous Vodafone Australia ‘Break Up’ campaign that came to market as a way of apologising to customers following Vodafone’s flagging corporate and customer reputation. The award-winning campaign was the catalyst for the brand re-building in Australia to the point where it now has one of the highest customer engagement scores.

He also referenced a turnaround strategy from his time at Pacific Gas and Electric. He received feedback that staff were not proud of their work and didn’t subscribe to the company’s vision because it was viewed externally as a ‘big polluter’. As a CEO, he worked with corporate affairs to increase the company’s sustainability footprint. The company became invested in green initiatives and offered employees pathways to contribute.

The outcome was that Corporate Affairs developed a new brand narrative and staff became proud of the new activity, with the company becoming a sought-after employer of choice.

These two examples are success stories of the Corporate Affairs industry. They are testament to what can be achieved when management values and consults with communications teams to deliver successful outcomes through change.

In recognising successes, the forum discussed the importance of corporate affairs being tightly aligned with marketing. All leaders agreed that success was more likely when marketing and corporate affairs could all work to one integrated marcomms strategy.

However, many corporate affairs leaders have been part of change programs that have not led to success. The senior leaders shared some common issues that occurred in their practice as change managers.

A strong discussion point was focussed on strategies used in addressing a situation where corporate affairs leaders have given best practice advice that is not accepted by a CEO, board or management team, leaving corporate affairs to then ‘clean up’ a failed strategy – often under great media scrutiny.

A key learning among the group was that failure by a management team often results in them turning towards corporate affairs and only then seeing the value of their top communicators. This was noted as common in crisis management situations where being able to demonstrate value can result in more of a voice at the management table. In many cases, Corporate Affairs leaders had reporting lines into Legal or Marketing, but had achieved a more linear communication relationship with the CEO after having an opportunity to execute their skills in a difficult situation.

The recognition of your people and their unique skill in an organisation is a theme Bill Morrow returned to throughout the forum. He emphasised that ‘people are everything to a company’ and the number one investment you can make is in staff so they follow you on the journey of transformation. As he says ‘you can’t do anything without your people.’

And follow him they did. Since becoming CEO of the National Broadband Network in 2014, five years after its inception in 2009, the NBN has dramatically changed. The organisation now has an attrition rate of 7.4% when the telco industry rate is 15%. More importantly, NBN employees now embody the real purpose of a transformation – they are proud to contribute to the connectivity of rural and regional Australia.

Footnote1: McKinsey Quarterly June 2003, The Psychology of Change Management. Lawson and Price.

The views and opinions in these articles are solely of the authors and do not necessarily reflect those of Teneo. They are offered to stimulate thought and discussion and not as legal, financial, accounting, tax or other professional advice or counsel.

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