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Many leaders are spending an increasingly large share of their time worrying about their organization’s reputation. Companies are under closer scrutiny than ever from employees, shareholders, unions, the media, and activists, who are ready to pass judgment on corporate actions and impacts, especially regarding societal and environmental issues. This has left some leaders struggling to figure out how to build and maintain a positive reputation in the eyes of their key stakeholders.
In a world where social media in particular rapidly fuels narratives that organizations can’t control, it can be hard to believe that at one time, businesses could simply release some positive information about themselves to distract stakeholders from negative news. This was once a standard public relations practice, and even fairly recently some companies have continued to make pro-social claims in response to unflattering revelations about their business activities.
Today, this smoke-and-mirrors strategy is no longer viable, since negative information is now easier to share and discover than it used to be. As a result, organizations are more likely to treat the discovery of negative information as they would treat any other type of crisis: They apologize, ideally immediately and transparently, and promise to make amends.
Both of these strategies are reactive — and companies with a more sophisticated approach to communication have figured out that a proactive approach is far more effective for reputation management. Many companies, for example, forge partnerships with unions and nongovernmental, philanthropic, pro-social, or activist organizations. While they may do so to learn from these organizations, most also hope to gain stakeholder trust by association.
More recently, businesses have begun to engage in what has been called strategic silence, which is when an organization engages in socially responsible behavior or philanthropy without disclosing it. The literature on strategic silence shows that they do this to avoid potential allegations of hypocrisy: Social-impact watchdogs are savvy, and when they see an organization touting its good deeds, they often look under the hood to see whether its behavior is in fact consistent with what it espouses.
Our latest research has uncovered yet another reputation management strategy: the confession. In the wake of the massive wave of Black Lives Matter protests after the murder of George Floyd in 2020, as well as increasing scrutiny of organizational practices with respect to race, organizations began to adopt a new, proactive strategy for managing their reputations: They began to confess their sins.
Coca-Cola took this approach, issuing a statement that, in part, said that “corporate America hasn’t made enough progress and nor has The Coca-Cola Company.” It confessed to mistakes, including those that led to what it called “the largest discrimination lawsuit in U.S. history in 1999/2000.” The statement continued, “As the judge said, our biggest issue was not that we made mistakes and that there were individual cases, but that when we knew, we didn’t act to remedy and improve.”
Organizations began to adopt a new, proactive strategy for managing their reputations: They began to confess their sins.
The confession strategy has also been used by B Corporations, such as Patagonia, which said, “The Black Lives Matter movement has forced a reckoning of the deep racial injustice around us and laid bare our complicity. … We are a white-led outdoor company reliant on recreation on stolen Native lands that are not yet safe for all. … We must confront Patagonia’s lack of progress and take full ownership of the legacy of our failures.”
The strategy has been used by nonprofits as well. For example, a report Harvard University released on its historic ties to slavery acknowledged that “Harvard leaders, faculty, staff, and benefactors enslaved people, some of whom labored at the university; accrued wealth through the slave trade and slave labor; and defended the institution of slavery.”
Importantly, in almost all cases, the organizations had not been recently accused of poor practices with respect to race. However, the events of 2020 shone a light on the effects of systemic racism in the U.S. and other countries. This not only nudged organizational leaders to look inward at their own practices; it also raised the concern that the general public might assume that they were part of the problem of institutional racism.
How a Confession Affects Public Perception
We initially discovered this novel confession strategy in 2020, when, following the outcry over Floyd’s murder, we employed a research team to search for public statements related to racism, racial inequality, and the Black Lives Matter movement from every member of the Fortune 500 and all Certified B Corporations listed on B Lab’s website. We found that 46% of Fortune 500 companies and 21% of B Corps issued some kind of statement addressing these topics. The 525 statements we collected included letters to employees that were subsequently posted online, and open letters to customers and clients.
As we read these statements, we were struck by how many of them — 42% — included some kind of confession. We identified two types of confession: Some companies confessed to actions that were counter to the goals of racial equity, while others confessed to a lack of awareness about the extent of racial inequity. We dubbed these confessions of commission and confessions of omission, respectively.
Having uncovered this new approach to managing organizational reputation during a period of increased public scrutiny, we wondered what effect it would have on public perceptions. Would it lead people to view a company as more socially responsible?
To investigate this question, we conducted an online survey with 1,046 participants who were representative of the U.S. population with respect to age, gender, racial and ethnic identity, income, and education. We recruited these participants from Prolific Academic, an academic research platform maintained by the Oxford Centre for Innovation. To reduce selection bias, we advertised the study with a generic description asking people to read an advertisement and answer a survey. We paid participants $9 per hour as an incentive effort and included only participants who passed several attention checks. We also measured the participants’ political ideology: About half identified as liberal and half as conservative.
Each participant was asked to read one of the 525 racial equity statements, of which 42% contained a confession and 58% did not. The statements were randomly assigned to the participants so that nearly all of them were rated, including those that did not include a confession. Participants were then asked to give their opinion on the organization’s degree of corporate social responsibility (CSR) using a 7-point scale.
We found that companies received a higher rating for social responsibility when their statements contained either type of confession rather than no confession at all. In fact, our study showed that the presence of a confession in a racial equity statement nearly doubles the perception that the organization is socially responsible.
The presence of a confession in a racial equity statement nearly doubles the perception that the organization is socially responsible.
What about confessions of omission versus commission? When the statement contains no confession, the mean CSR rating is 2.4 on a 7-point scale, compared with 5.4 (a 125% increase) when the statement contains a confession of omission. When a statement contains a confession of commission, the mean CSR rating is 6.3 (a 162.5% increase), demonstrating an even more pronounced effect.
We must caution that this data came from a survey, thus we did not control for other aspects of the statements. While we did control for various characteristics of the companies, it could be that the statements containing confessions also signal a greater commitment to CSR in other ways. We are currently working on controlled experiments to see whether we can isolate the same effect.
Our work suggests that for companies that wish to build or maintain a positive reputation for social responsibility, this new, proactive approach is more effective than the reactive strategies of simply apologizing or just releasing positive information. Like the proactive strategies of forging partnerships with NGOs and employing strategic silence, the confession prioritizes building trust with stakeholders. It makes a company appear honest and more authentic. By confessing, companies admit to the worst but demonstrate transparency and explain how they plan to do better — in the process, bolstering that most valuable and fragile of reputational commodities, trust.