Henry Kissinger famously said “a crisis ignored is crisis ensured” – statement that encapsulates the essence of reputation management.
When most of us think about reputation management we generally think of crises – Enron’s fraud and bankruptcy, Shell UK’s Brent Spar disaster, Monsanto’s so-called genetically modified Frankenstein Foods, or the Exxon Valdez oil spill.
New Zealand has its own examples. Mercury Energy fell spectacularly from grace with its disastrous handling of the Folole Muliaga case, when the oxygen-dependent Mangere woman died after having her power cut off. This case, together with Ribena’s Vitamin C (or rather lack of) saga and the NZ Exchange’s $10 million share offer to chief executive Mark Weldon, will surely go down in the annals of the burgeoning new business discipline of corporate communications during crisis.
We all saw what went wrong but how many of us have actually taken these lessons on board and begun crisis management planning in our companies? We suspect very few. In fact, if your organisation is anything like the companies in Britain, you may have breathed sigh of relief and said “phew, rather them than me” and then gone back about your business. It’s very easy to turn blind eye to crisis management, until of course, it’s too late.
From time to time corporate incidents and/or accidents do happen. If your board or management team hasn’t thought through how your organisation will handle crisis and then planned (and practised) for it, you’re likely to make colossal mistakes which then have direct impact on your financial bottom line.
Organisations in fields with high public risks, such as airports and oil and gas, have sophisticated communications plans and risk contingency plans which are rehearsed in great detail. But the basic principles of good management are the same for whatever industry you are in, whether you are multinational company or small-to-medium sized business. To quote Benjamin Franklin, “By failing to prepare, you’re preparing to fail.”
Underpinning reputation management is issues management, which we define as the gap between corporate performance and stakeholder expectations. The wider the gap between what the stakeholders expect and the performance of the company, the more trouble the organisation is in (in the sense of reputation and crisis communications).
The management of issues is often described as “crisis creep”. Statistically if we look at what constitutes corporate crisis, it’s actually not the jumbo jet landing on the warehouse roof, it’s an issue that is out there, that creeps towards an organisation, and if it’s not spotted in time and dealt with appropriately, it can develop into full-blown crisis for the organisation.
The most essential parts of crisis management are proactive communication and preparation. We live in an environment where unfortunately people don’t know who to trust anymore – particularly big business. To counter this, companies need to be more communicative, and prouder of their achievements and the benefits that they bring to society. The essential aim is to create awareness of the company and goodwill in the public eye.
Good reputations are built over time – but can quickly be destroyed. The more goodwill your company has in the public eye, the more likely you are to escape crisis relatively unscathed.
So, what to do in the event of crisis? If there’s one thing we have learned from the Ribena and Mercury Energy crises, it’s the need to communicate and respond early on. And to be highly conscious of the impact that both our actions, and the tone and manner we use, has on the way that we are perceived.
Major crises create an enormous amount of public interest. In 2005 the Buncefield oil depot explosion outside of London attracted more than 2000 media calls in the first 24 hours. We can’t stress enough the importance of having contingencies in place to deal with this interest proactively.
Your organisation has to be able to tell its own story to the media and all stakeholders – staff, customers, families, shareholders and so on – right from the outset about three simple things:
1What has happened.
2What we are doing to make it better / to remedy the situation.
3How you feel about it (especially if people or the environment has been impacted).
Tell it all, tell it fast and tell it truthfully – and don’t stop telling the story until the crisis is well and truly over. When something goes wrong you have to be seen to do the right thing and you have to be heard to express the right sentiments and explanations as best as you can in the moment.
In other words, you need to put human face next to what is otherwise corporate amorphous mask. If you can manage to do that as an organisation while people are shocked at whatever has happened, that shock doesn’t tend to escalate into anger.
This approach has proven time and time again to be the best method in minimising the negative effect on an organisation’s reputation.
Of course, this is in complete contrast to what your lawyers may advise you – “say nothing, do nothing, admit nothing”. But at the end of the day, we’re both trying to protect individual reputations as well as corporate reputations when something goes wrong – we just take different approaches.
Our advice will always involve you fronting up to affected parties, other stakeholders, and the media. Simply put, you have to do press conferences, you’ve got to go and see the families – you have to stick your head above the parapet. The lawyers’ advice is certainly easier to follow (do nothing), but is not necessarily the best in reputation management sense.
Effective crisis management plans incorporate both legal and general communications needs – ensuring seamless management throughout crisis.
The best advice we can give is prepare, rehearse, exercise and practise and above all, communicate. It is possible to take steps to manage and safeguard your reputation should the worst happen. Companies that do, suffer much less damage than those that don’t.
Risking reputations – the New Zealand situation
In crowded market place, maintaining positive corporate reputation can be the difference between business success and failure.
Yet, according to new piece of research, only half of senior managers see corporate reputation as one of their primary assets – compared with 90 percent globally.
Senate Communications and TNS Global surveyed CEOs and communications directors about reputation management in more than 50 organisations including top listed companies and major public sector organisations.
The research found the things organisations most fear are all reputation issues: failure to deliver product or service to an expected standard, exposure of unethical practices and bad management of crisis.
Despite this, Senate and TNS found fewer than half of all boards and executive teams consciously attempt to influence their organisation’s reputation.
Summary of findings:
•Six out of 10 chief executives thought reputational risk management was not understood well enough in the country’s board rooms.
•Four out of five senior managers thought directors should do more to understand the management of reputation.
•More than 40 percent of respondents said they had faced what they regarded as crisis in the past year.
•Many organisations had operational plans or crisis plans in place but 40 percent admitted they didn’t have plans in place to deal with communication in crisis.
•Few organisations had recognised the effect of the crises on their reputations or integrated their existing plans into an overall reputation management process.
•Eight out of 10 organisations said they had never monitored the perceptions of political activists and pressure groups.
•Two thirds of organisations admitted to never researching the perceptions of the general public towards their organisation; while quarter said they had never monitor
