Category: Reputational Risk
Why Bad PR Isn’t Always the Cause of Reputation Crises
Many organizations fall into the trap of always believing that Reputational Crises are caused by Bad Publicity.
This could not be further from the truth. All Crises or incidents have a root cause, a catalyst that sparked it. Often we only encounter it when it appears in the spotlight.
In a must read in Forbes Bad PR Isn’t Causing PetroChina’s Reputation Crisis – Forbes a lot can be learned.
Reputational Crises have stakeholder impact and influence.
I would take this article and circulate it to all Executives and Management. Then as an Organizational Learning/OD exercise I would ask them to read my post http://deonbinneman.com/2012/08/04/executives-need-to-learn-a-new-style-of-decision-making/
Reputation Risk is rooted in poor decision-making.
Reputation is like a Burning Flame
The reason for the custom header photo – Reputation is like a flame, easily blown out and fickle unless you keep the flame going.
A person’s or Business’s Reputation needs constant attention – building it, sustaining it and protecting it, and when the time comes that things go wrong – effort and attention to restore it.
I am here to assist you.
The Triple Filter Test–One Way to stop Gossiping & Rumours
In ancient Greece, Socrates was reputed to hold knowledge in high esteem.
One day an acquaintance met the great philosopher and said, “Do you know what I just heard about your friend?”
“Hold on a minute,” Socrates replied. “Before telling me anything I’d like you to pass a little test. It’s called the Triple Filter Test.”
“Triple filter?”
“That’s right,” Socrates continued. “Before you talk to me about my friend, it might be a good idea to take a moment and filter what you’re going to say. That’s why I call it the triple filter test. The first filter is Truth. Have you made absolutely sure that what you are about to tell me is true?”
“No,” the man said, “actually I just heard about it and…”
“All right,” said Socrates. “So you don’t really know if it’s true or not.
Now let’s try the second filter, the filter of Goodness. Is what you are about to tell me about my friend something good?”
“No, on the contrary…”
“So,” Socrates continued, “you want to tell me something bad about him, but you’re not certain it’s true. You may still pass the test though, because there’s one filter left: the filter of Usefulness. Is what you want to tell me about my friend going to be useful to me?”
“No, not really.”
“Well,” concluded Socrates, “if what you want to tell me is neither true nor good nor even useful, why tell it to me at all?”
This is why Socrates was a great philosopher & held in such high esteem.
Next time someone starts gossiping, you know what to do.
Barclays–More than a Scandal Flowchart
An Article in the UK Telegraph caught my attention this morning.
In an article Barclays libor scandal:lock them up Jeremy Warner writes “
Virtually all financial scandals follow the same pattern. First there is the initial exposure of wrong doing, then comes the mitigating claim that it was common practice and everyone was up to it, and finally it emerges that the regulators knew all along but failed to act.
This is a flowchart, but what this article clearly shows is that there is a problem with mind-sets in the Banking world.
Corporate culture i.e the way we intuitively do things is regarded as one of the 3 main culprits in Reputation Risk. By now, it should be obvious that there is a mind-set of greed and taking chances in the Banking world.
It is also well known that Reputation Risk is created by regulatory failures. Hence the importance of Compliance Officers in the New World.
However, what the Competition Commission in South Africa has revealed is that often it is the prevailing level of thinking that causes problems and issues. AND, some of that thinking occurs intuitively. With other words, it has been ingrained in some.
Immediately what comes up in my head is the Cycle of Learning. Moving from Unconscious incompetence right through to Unconscious Competence. Except that Unconscious Competence is the most dangerous stage of learning.
Overcoming this will take a lot of unlearning.
It should also be rather obvious that some serious work needs to be done in the Financial sector by OD (Organisation Development/Organizational Behavior ) experts to create unlearning.
Jeremy Warner ends of the article with a statement – “If this were a pharmaceutical company, it would by now have been stripped of its licenses, closed down and its officials had up for endangering the public”
I fully concur. Years ago someone joked and said: “ Bankers are manicured pawnbrokers”.
Well, it is time that we are no longer pawns. As consumers we have choice. BUT, what happens if an industry can no longer be trusted.
This is the danger that regulators are underestimating.
Making the List of the Most Unadmired Companies Survey
The World’s Most Admired Company survey by Fortune magazine – see 2011 study results at http://money.cnn.com/magazines/fortune/most-admired/ have been one of the ground breaking annual studies to have been conducted in the field of Reputation and have added much to our understanding of what makes companies great.
But what about those companies that did their utmost to destroy their carefully crafted reputations during the past year (and years). Many companies, institutions and individuals have made this list in the past twelve months.
Perhaps we should start a World’s Most Unadmired Company List. Without being specific, there have been many examples. Many websites and other bloggers have asked their audiences for their thoughts on the matter. Take a look at the examples cited in articles such as:
The Holmes Report – The Top 10 Crises of 2011 – http://www.holmesreport.com/featurestories-info/11377/The-Top-10-Crises-Of-2011.aspx
Australia’s 2011 List – http://prdisasters.com/?p=944
These examples show that no organisation is immune against potential crises and incidents that can destroy their good names. The question that should be arising in your mind is:”What is the potential for my organisation to find its way on to this list?”
An interesting study from Willis Group Holdings on reputation risk caught my attention. They examined 600 publicly-held companies. Here are some of the more interesting details:
- 95% (a lot) of major companies have suffered at least one reputational crisis in the past 20 years
- Major companies suffer a “significant” reversal of fortune every seven years
- One out of two (50%) of these reputational failures were tied to having the wrong business strategy or model; 15% from lawsuits; 10% from merger and acquisition issues. Interestingly, the CEO of Willis Global Solutions Consulting Group said that none of the crises were related to natural disasters until 2011. That is hard to believe since there have been plenty of natural catastrophes over the past 20 years that should have impacted companies such as floods, hurricanes, droughts, food shortages, cyclones, earthquakes, SARS, etc.
Also wanted to mention a recent analysis that came from the 2012 Harris Interactive Reputation Quotient (RQ) and was reported in PRWeek. Harris Interactive reported that advertising has less of an impact on company reputation than social media or new stories.
Research continues to show that word of mouth from news stories with negative information about companies drives perceptions more than we realize.
Weber Shandwick reported in their Company Behind the Brand: In Reputation We Trust that consumers are talking about more about company wrong doing than right doing and advertising may not be as able as it used to be in rehabilitating brand reputations.
The key word now is stakeholders. So many companies have customer service or shareholder programs in place, ignoring their other stakeholders. What are the perceptions of suppliers, the government and the media with regards to your company?
Let me leave you with a question: Who in your organisation has assumed a holistic (systemic) view of managing stakeholder reputation?
If there is no one, your organisation is in danger of making the unadmired company list. If you want to find out more about how you can safeguard your company’s reputation or if you want me to address your management team on this issue, e-mail me.
A Social Media Policy can Protect your Corporate Reputation
Time and time again the issue of Social Media is raised in my Stakeholder Reputation workshops. Is it a must? Is it a Stakeholder Engagement tool? What is its value? Should we restrict its access?
Companies are coming to terms with the growth and use of Social Media within and without their organisations and some of the companies that I deal with are grappling with its implications and how to use it in a positive way. Others simply do not allow it and damage their own reputation by not viewing it strategically. Others just implement it without giving adequate thought to potential reputation risk.
The benefits of social media are real, and use of this communications medium as an important Stakeholder engagement tool will likely only increase. However, for organisations to reap the full benefits, it is critical to take a customised, strategic approach to managing the risk of social media vs. reputation.
For me it is important for companies to determine that it fits the purposes of it stakeholder engagement plan and is supported by necessary policies, processes, technologies and roles to manage the risk.
Having a well-designed Social Media Policy is the start. Jeff Bullas define it “A social media policy plain and simple outlines for employees the corporate guidelines or principles of communicating in the online world”.
Companies without adequate social media policies are placing themselves at risk of security breaches and reputational damage, among other issues. Last year, a study from Protiviti Inc., a global business consulting and internal audit firm revealed that the majority of UK employees have not been provided with clear guidance on using social media networking sites.
- Many organisations had no policy in place regarding social media networking
- Many employees were unaware of such policies
- Social media usage in the workplace has grown enormously in recent years with more than half (51 percent) of workers surveyed now claiming to engage with a social networking site whilst at work. Almost a third (30 percent) of workers use sites such as Twitter, Facebook and LinkedIn on a daily basis, while more than five do so several times an hour.
Many organisations do not allow social media activity in the workplace, but this is an unsustainable policy as staff are still able to access social networks from home, posing the same potential risks to the company’s brand and reputation.
In this respect, it is interesting to note IBM’s view. In the spring of 2005, IBMers used a wiki to create a set of guidelines for all IBMers who wanted to blog. These guidelines aimed to provide helpful, practical advice—and also to protect both IBM bloggers and IBM itself, as the company sought to embrace the blogosphere. Since then, many new forms of social media have emerged.
I like Point 11 – “Try to add value. Provide worthwhile information and perspective. IBM’s brand is best represented by its people and what you publish may reflect on IBM’s brand” See more – IBM’s Social Computing Guidelines
The Gap Inc., struggling to make its brands stand out in today’s crowded marketplace, is turning its workforce loose on social media in an attempt to recreate some of the buzz for which it was known in the ’80s and ’90s.The clothier gives each of its 134,000 employees a no-nonsense social media policy titled: “OMG you will never guess what happened at work today!!” The policy serve as a guide to how a large, multinational corporation can strip away the legalese and provide a real-world manual on social media that keeps the company’s best interests in mind. Read more http://www.prdaily.com/Main/Articles/11088.aspx#
In designing your Social Media Policy, I can highly recommend that you also access the following resource: http://www.jeffbullas.com/2010/02/15/only-29-of-companies-have-a-social-media-policy-is-your-company-at-risk/
Common sense is also required. To prevent any online crisis on Social Media networks, you should monitor the names of companies, brands and employees. To ensure this, you need to develop proactive communication strategies to reduce both online and offline crisis. The simplest way to do this is to:
- Create Training Programs that show employees how to use Social Media effectively.
- Share Best Practices that give examples of how others use Social Media and respond to stakeholder interactions
- Develop Guidelines that clarify in simple terms how Social Media should be used and the exceptions you need to avoid when using these channels.
- Monitor how staff use Social Media and made the necessary corrections, adjustments or interactions where necessary using influence & guidance.
Employees will stop using Social Media if they feel there are being policed. Instead adopt a light touch policy where you try to help employees do their job better with Social Media and reward those who get it right.
If you’re looking for ways to control your Online Reputation, then ensure you have a well-designed and communicated Social Media Policy in place, one that focus on what’s important: engaging the stakeholder.
Does Reputation Really Matter?
Does Reputation Really Matter?
For the past 15 years I have been speaking and training that it does.
Well it does! My views are now more and more vindicated by on-going international research such as the interesting findings from the Global Corporate Reputation Index study conducted by Burston-Marsteller amongst 6000 companies worldwide and the 2011 Lloyds Risk Index.
Burston- Marsteller’s studies show that Corporate Reputation is underpinned by 2 main drivers namely Performance (Putting your money where your mouth is) and Corporate Citizenship. View the findings on – http://www.slideshare.net/BMGlobalNews/global-corporate-reputation-index
(I find it still interesting that this terminology is used as there is a drive worldwide to just call it Corporate Responsibility)
They found that the average age of the top 25 companies had an average age of 87 years in business with the oldest company having been around for a 147 years. This reminded me of the story about Agatha Christie’s famous play – The Mousetrap that ran at London’s West End Theatre for more than 35 years. Over the years, directors and actors were changed but the standards never wavered. Most certainly a lesson for compliance and adherence to standards of commitment.
What stood out for me is that the world’s most reputable brands set high corporate responsibility standards for themselves and their partners and deliver consistently over time.
These are also the companies that invest heavily in corporate responsibility practices and adherences to codes of standards and conduct like ISO and ensure compliance with these codes of governance and best practice.
These companies also view potential Reputation Risk in a serious light and understand how dangerous it can be in a interconnected world. According to the world’s largest reinsurer Lloyds Reputational risk rose to No. 3, up from No. 9 in 2009, according to the 2011 Lloyd’s Risk Index. View the report – http://goo.gl/NlQRb.
In fact, A 2010 study of the world’s 1,000 largest companies found that 80 percent lose more than a fifth of their value every five-year period because of a major reputational event.
Studies also show that the role of Social Media can no longer be ignored and that these companies have to have a dedicated function to deal with its Digital Reputation and the flow of messages in nano-seconds.
Late last year a new white paper by Deloitte developed in collaboration with RiiЯ Ltd entitled ‘A Risk Intelligent view of reputation – An outside-in perspective” once again highlighted the strategic importance of reputational risk. The report highlighted the fact that Reputational Risk is now regarded globally as a “meta risk, “standing at the forefront of key strategic and operations concerns, right alongside new competition, technology failures, talent issues, and changing regulations.
As executives in the study recognized, reputation, quite simply, can make — or break — a company. Reputation is an important factor across all four major risk areas of the Risk Intelligent Enterprise — strategic, operational, financial, and compliance — particularly of the former two, strategy and operations, because it is a constantly evolving and fully embedded part of why and how the company achieves its objectives.
This catapults reputational risk to what the writers call a meta risk, or a potential menace to fundamental business strategy, and possibly an even greater hazard to organizational survival than a financial restatement or problematical findings in a compliance report.
Read the Report – http://bit.ly/ph6omX
Can you define this Meta Risk in 4 different ways as well as describe the mitigation & prevention strategies required to prevent & respond to the risk that has been called the most dangerous and difficult to manage? I can help.
On the 5th – 6th March I will facilitate an intensive 2- day workshop on how to Manage and Mitigate Reputation Risk for those interested – More information available at http://goo.gl/6WM8M
Many people have asked me why I help companies to protect themselves against Reputation Risk. Why? Well this quote says it all – “If someone is going down the wrong road, he doesn’t need motivation to speed him up. What he needs is education to turn him around.” – Jim Rohn.
My presentations and trainings are dedicated to create the necessary awareness and know-how to help companies to safeguard their fragile reputations.
Reputation does matter, and not only too companies. It is valid for us all. Read my blog post – http://deonbinneman.wordpress.com/2012/01/10/your-name-is-a-precious-commodity why your name is a precious jewel.
Corporate Reputation & Product Reputation (Brands)Now Nearly Indivisible
Corporate reputations impact brand and product sales performance. That’s one of the key findings from a recent global study by Weber Shandwick called The Company Behind the Brand: In Reputation We Trust.
As the survey report states, “As consumers around the world have greater online access to a brand’s lineage, the influence of the brand parent, or company behind the brand, matters even more.”
The study identified Six New Realities of Corporate Reputation, which the PR firm says serves as reminders that business leaders cannot view their company’s reputation and their product brands as separately as they once did.
These six “new realities” are:
1. The corporate brand is as important as the product brand(s). For instance seventy percent of the respondents said they avoided buying a product if they dislike the company behind it.
2. Corporate reputation provides product quality assurance.
3. Any disconnect between corporate and product reputation triggers sharp consumer reaction.
4. Products drive customer discussions, with reputation close behind.
5. Consumers shape corporate reputations instantly.
6. Corporate reputation contributes to company market value.
In actuality, none of these are truly “new” realities, other than perhaps the ability of consumers to now shape corporate reputations instantly via social media.
What is also very clear from the survey is that Crises like product recalls or any incident involving the company can cause irreparable damage to the brand and reputation.
In reading the report, the value of minimising potential reputation risk became apparent. For instance, if a Reputation Manager paid attention to the top 5 talking points that the research revealed, he or she could develop strategies to minimise the risk before it occurred.
These five talking points are customer service, how employees are treated, company scandals or wrong-doing, and their feelings about the company as a whole (its reputation).
Understanding Reputation Risk and what could destroy value is now a vital competency for any Reputation Manager.
The report also clearly shows that Reputation Matters now even more than ever, with more than 60% of a company’s market value attributed to it.
The report which makes for excellent reading, is available online here
10 Compelling Reasons Why You Should Attend The Reputation Risk Management Masterclass
If you have not yet registered for my Reputation Risk Management Masterclass in Johannesburg, you will reconsider after reading the following ten reasons.
Now I know that you are extremely busy, but it is a fact that successful people MAKE TIME to spend time on their own development & increase of knowledge, and knowledge of minimizing and mitigating reputation risk in today’s connected society is vital.
You choice. Your decision.
Here are TEN compelling reasons why you should attend it:
1. ‘A Company’s Reputation is its greatest asset and risk, and it should be protected at all costs’. Mr David Glass of Wal – Mart. This course takes a close look at how to protect and defend this asset.
2. Warren Buffet, the world famous investor and richest man has on numerous occasions said these famous words: ‘It takes 20 years to build a reputation and 5 minutes to ruin it and if you understand this you will do things differently’ . Why? Well, Mr Buffet understands that money can always be made, but that a reputation, once lost, is not easily restored. In fact, some studies show that it can take between 3.5 to 11 years to restore a damaged reputation. Want to prevent reputation damage before it even gets public?
3. Reputation Risk is listed in more than five international surveys as a company’s most dangerous and volatile risk, yet, less than 43% of companies surveyed had a plan to deal with reputation risk both from a mitigation and reputation incident perspective. Question: Is your Company ready to deal with a Reputation incident? If you are not sure, take this survey – http://bit.ly/d5ej9s and attend to learn more tips and strategies to protect your organization.
4. As part of your company’s planning for crises and dealing with reputation risk, have you embedded Reputation Risk into your Enterprise Wide Risk Management system and have you defined reputation risk in 4 different ways so as to determine and implement different perspectives and mitigation strategies? Would you like some assistance with that process? I can guide you.
5. Did you know that this Class integrates best practice and thinking from many disciplines including Reputation Management, Public Relations, Risk Management, Corporate Communications, Corporate Responsibility and Strategic Management, and is a must attend for Corporate Affairs, PR, Risk Managers, Compliance Officers and any staff member responsible for maintaining and protecting a company’s fine reputation. Attend to get a systemic view of this asset and risk.
6. The damage of a reputational crisis can be direct and indirect. These costs could include penalties incurred because of a lack of legal compliance, litigation, media conferences and advertising costs, hiring of crises communication consultants. BUT what about the indirect costs, the effects on various stakeholders? The increased scrutiny leading to additional problems? The customers that do not return? Does your plan of action include both Reputation Incident and Reputation Erosion possibilities?
7. Do you know how to identify reputational risks including the gap between stakeholder’s perceptions/beliefs and the company’s actual performance, areas of vulnerability and current & emerging issues? (Studies show that perceptions and concerns of stakeholders was an extremely or very significant issue, making Stakeholder Reputation Risk the highest-ranked challenge – This is one of the definitions we will explore).
8. What is your organization doing to prioritize reputation risks and assessing the probability and the impact of the risk on reputation? Reputation Risk is extremely difficult to quantify. What efforts are being made in your organization to quantify the value & risk of reputation. I will take a look at alternatives exist?
9. Did you know that you and your organization be Googled, Facebooked, Twitter searched & measured by what you share & who you know? Does your Reputation Risk framework and Response plans take the impact and intricacies of Social Media into account?
10. Reputation recovery is a function of pro-activeness, communication and readiness prior, during and after a crisis. We will take a look at each of these steps.
Your Choice to attend.
Book now, by e-mailing reputationeducation@icon.co.za or by registering online – http://reputationriskmasterclass.invite43.com/
