The Big Idea: Reputation is Everything

Peninsula Team

July 30 2010

In recent months, several of the world’s leading companies have taken enormous hits to their reputation due to unexpected crises befalling them. In particular, Toyota’s recall of its cars due to faulty braking systems and BP’s ongoing woes following the explosion of the Deepwater Horizon oil rig have been played out in the newspapers, on the internet and rolling news channels. Both companies have taken huge – some would say irreversible – damage to their reputations.

It’s all too easy to think as an SME that either you’re too small to be affected by this sort of issue or, conversely, to think that if the big boys can’t manage their reputations effectively then there’s no hope for an SME. Both views are wrong. Reputational risk is as real a problem for an SME as it is for BP. There are many helpful and simple measures you can put in place to reduce the potential impact a crisis might have on your business.
Reputation, as we’ve seen in BP and Toyota, can be destroyed in a matter of hours, particularly with the global and immediate nature of the media. On a smaller scale though, the same thing can happen to an SME. With instant access to the internet, social networking sites, video streaming and even local media providing regular website updates and instant RSS feeds, there are a lot of ways for a disgruntled customer to voice their unhappiness extremely quickly. 

So what can you do to minimise potential reputation damage? The absolute key to this is that forewarned is forearmed – so get prepared. Sit around the table and brainstorm where the potential damage could occur in terms of your business’ reputation and where you are most vulnerable to criticism. If you’re a supplier, are you sure about your supply chain and the ethics of your sourcing? If you’re a retailer, what is your policy on returns? If you’re a hotel, what do you do about customer complaints? God forbid, what if someone drowned in your pool? If you’re an IT provider, what happens if your systems malfunction? If you lose data? If you’re in financial services, what would happen if an employee commits fraud? And so on. 

From there, work out what your key messages would be in a real crisis and rehearse them. Speed of response is essential, so if you’ve thought beforehand about what you might say in a crisis, you’ll feel more confident if it actually happens. Also develop a clear cascade system for informing all your staff if a crisis were to arise e.g. an email alert and text to all their mobile phones with the basic information on the situation and the point of contact for enquiries. Only designated spokespeople should speak to the media in a crisis, and staff need to understand who that would be so they can pass on enquiries. 

This isn’t a particularly time-consuming process and will set you in good stead for a crisis. But you may think, “I’ve got enough to do day-to-day running my business. Why would I waste my valuable management time planning for something that may never happen?”
The answer is that another benefit of this sort of crisis planning is that it can help strengthen your day-to-day business activities. By brainstorming the areas where your business may be vulnerable, you can implement changes right now to strengthen the business thus reducing your exposure to potential crises. So there can be a real, tangible and immediate operational upside from this process as well as the long term crisis management benefits.

Ultimately the most important thing in a crisis situation is incredibly obvious but often overlooked. Sort out the cause of the crisis as quickly and efficiently as possible, and communicate how you are sorting it out. Explain what you’re doing, why you’re doing it and when the root cause will be found. As Richard Torrenzano, a leading US crisis management expert said in a recent FT interview: “All the great communications in the world are not going to sort an operational problem.”

However by planning, preparing and rehearsing right now, you will put yourself in a strong position both to face a crisis if the worst should happen and you may be able to institute some operational benefits right now to minimise that possibility. 

Deborah Done, the author of our Big Ideas, is founder and director of Nab Communications, a freelance public relations agency which provides sensible and value for money PR advice to regional and national businesses.

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