- 2 years ago
19 November 2021
The COVID-19 pandemic has potentially provided a once-in-a-generation opportunity for the pharmaceutical industry to reset its reputation should it want to, although whether there is the will in industry leaders to do so is yet to be seen says leadership expert Wayne Burns.
The Executive Director of the Centre for Corporate Public Affairs says while the medicines industry’s reputation has benefited from the rapid development of multiple vaccines, potential reputational pitfalls lie ahead – particularly if companies are seen to make ‘super profits’ out of the pandemic.
The latest Ethics Index released by the Governance Institute of Australia this week showed reputational gains made by the industry in 2020 were short-lived, with pharma given a net score of eight in 2021 – down from 14 in 2020. While this fall was in line with an overall dip in public perception regarding ethical behaviour, it also means gains made in Covid are fast deteriorating.
“It doesn’t matter what industry you’re in, you look for opportunities coming out of Covid to think, okay, if we need to reset reputation, what do we need to do?” says Burns.
“There’s a lot of disequilibrium out there at the moment and people are still uncertain. That’s the best time to actually lead change, to take that uncertainty and chart a path, then take the risk of putting yourself out there and asking people to follow you along that path.
“Once Covid is over and it becomes endemic, the burning platform for change is not there.”
Burns said whether there’s the will among pharma company leaders “or at the Medicines Australia level remains to be seen”, but the “burning platform” will not be there for long.
He pointed to the Banking Royal Commission in Australia, established in late 2017, as providing banks and large insurers with their burning platform and the opportunity to “push the reputation reset button”.
“A couple of the banks really made big changes in in the way they behave, in the way they manage their culture, and also in the way they interact with customers and what they offer in terms of products and services,” he said.
“The reputation of banks has actually improved over the last couple of years and the Royal Commission provided a reset button for that just as Covid has for the pharmaceutical sector.
“It’s going to be interesting to see over the next couple of years who in the industry was able to get up on the balcony, see what’s happening across the industry, and have the smarts to understand what the sociopolitical expectations are, to hew a different path and, if needs be, to reset the reputation of their company and how it actually does business.”
The risk of Covid super-profits
Burns says companies must be perceived as acting ethically, both from a business perspective and in order to attract and retain top talent, and while rules and regulations dictate company behaviour, company’s decide their culture.
“If it’s perceived as Rape, Pillage and Sack Pty Ltd, that’s because of its actions and the way it does business, not necessarily the business that it’s in, so that’s an opportunity for change,” he said.
Burns warned pharmaceutical companies, retailers and energy companies who emerge from Covid having made super-profits are at risk of public opinion turning against them.
“That’s one to watch. The general population doesn’t like that type of positioning or behaviour, they’re suspicious of super-profits and companies that are making super profits are going to be under the microscope in terms of their values and behaviour.
“All of the fracas here in Australia about companies making profits and keeping their job keeper payments is microscopic compared to what we see happening in the US, and it’s happening here, with companies coming out of Covid with super profits and being arrogant about that and not boosting their corporate responsibility spend.
“That hubris and arrogance do not go down well with anyone, especially legislators and regulators, and if it feeds through to the way those companies deal with regulators, well the regulators will do things by the book but those companies are probably not going to be first in the door compared to those that have a good relationship with the regulators and aren’t arrogant in the way they deal with them. Public servants and regulators are just there to do their job.”
Burns said companies that live their values and maintain a high reputation also find it far easier to recruit and retain employees and are more productive because their employees believe they are working in a place that makes a difference.
“It can be a buoy in a storm or a wind at your back when things are running smoothly, so it’s always good to try to behave and work towards having a good reputation with your stakeholders. If you are arrogant when the storm comes, not a lot of life jackets are going to be handed out to you.”