We are constantly reminded of how vital good corporate reputation is, and how quickly it can be lost.
“It takes 20 years to build a reputation and five minutes to ruin it” as Warren Buffett once remarked. How can so many global companies so publicly and so evidently fail to have paid attention to this most valuable defining company characteristics?
Dire mistakes and their resultant reputational damage extend back through the annals of time: today, at last, most corporate management boards, politicians and high-profile public figures recognise the need to get this right. At a recent event of leading London PRs each representing FTSE100 companies, corporate reputation was unanimously stated as being the No.1 issue of concern for business leaders. This is unsurprising today but rather belated given repeated sagas over the years and the magnitude of damage to individual and corporate reputations. It can take years to recover from a badly handled situation.
The cardinal rules for corporate reputation management are clear:
Respond quickly. Rapid and early corporate response is vital to prevent the build-up of negative presumptions by affected parties. Management should take and demonstrate early control, if necessary – and this will depend on the magnitude or public nature of the situation – by issuing a statement to show authority and responsible corporate action, and to give reassurance. This is not the same as admission of liability or culpability which should not be presumed too early.
Take account of all stakeholders, not least employees who may be badly affected by whatever damaging situation has occurred, so necessary information flow to each group can quickly and effectively be delivered. Accept that people, both within and outside the firm, will want to know what is going on. Indeed, if a publicly quoted or regulated entity, some will have an absolutely right and responsibility to know.
Keep communications tight: in today’s world of social media and citizen journalism, everyone will have an opinion. Limit the number of authorised corporate spokespeople – this can be as few as one person – and make sure they are senior enough to convey confidence and authority. Ensure all inward enquiries are routed to a central responsible individual or team and document everything as the situation unfolds and is dealt with. Always involve legal counsel and your communications advisers in your crisis response team.
Of course, the wisest companies anticipate there may be negative situations. They plan for a crisis. Identify their company’s strengths and weaknesses. Test systems. Know who their crisis team will be. Pre-determine policies and processes for how and who will respond to different eventualities, and regularly review their plans and procedures.
But nothing, surely, is as wise as prevention and the ability to abruptly crush a damaging situation before it really takes root. Listen to the market (financial firm) or social media chatter (consumer brand). In today’s world of citizen journalist and instant communications, everyone had an opinion and negative comment can go viral with astonishing speed. The quicker a company responds to a potential snowball situation, the better their chances of recovery or containment of the issue.
It is arresting to reflect that a 2015 study conducted by law firm Freshfields Bruckhaus Deringer found that the majority of crises became evident in 59 minutes, yet the quickest corporate response time was more than 21 hours: plenty of time for a company’s reputation to be severely, if not irreparably, damaged.
Corporate management should always bear in mind that throughout a crisis the company’s actions will determine the perceptions that critical target audiences will form. Calm, competent, controlled and timely action will build media and public confidence and help the firm recover from crisis as quickly as possible.
This post is derived from content that originally appeared on The Panel.