“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Warren Buffett’s famous quote sums up the realities of reputation: something that is carefully cultivated over years can be destroyed instantaneously. Massive scale cyber-breaches, avoidable industrial accidents and scandals can harm organizations to the point of collapse.
Whether built on superb customer service, associations with luxury or simply exceptional products – brands and the identity they portray are generally the product of years of work. When people pay for a product or do business with a company, they choose the intangible values that underpin it. And when those values – like quality or safety – are undermined, entire organizations are impacted.
Recent findings place “reputational or brand damage” as the top global risk faced by businesses. Major headlines about massive data breaches, integrity issues, large-scale product recalls, and aggressive government investigations have raised the profile of corporate reputation and brand damage. The unpredictable nature of such crises in an age of 24-hour news cycles and instant social media poses a serious threat to a company’s hard-earned global image. However, with proper planning and education, there are opportunities to rebound from negativity and even turn critics into advocates.
Crises, whether they are the result of scandals or unpredictable events, are arguably inevitable. What is certain is that when they strike, their impact can be significant. “Events impacting brand and reputation are normally the result of crisis, and the other way around,” says Dora Horjus, Managing Director, Aon Crisis Consultancy, EMEA. When such issues arise, “they usually leave people and organizations in a state of shock and confusion.”
The challenge for business leaders is how to prepare their organizations for the unpredictable. Vince West, Head of Aon Risk Solutions’ UK Business Resilience Practice, adds “people don’t set out to be involved in a crisis situation – however, those who effectively prepare have the ability to turn almost every negative event into an opportunistic one – one that benefits all of their stakeholders if they are able to handle the incident well.”
Developing An Effective Brand Response To A Crisis
Whether crisis events are the fault of a company or other parties are responsible, Horjus states that these types of situations cost companies lots of money – upwards of millions in damages – across lost revenues and fees. What can be even worse, she adds, is the organization’s shift of resources normally focused on growing the business now put to managing the immediate crisis situation and restoring the trust of stakeholders, what Horjus calls “defending the license to operate.”
Also at stake is the often unquantifiable cost and long-term impact of brand damage. “Companies spend tireless efforts to build brands and cultivate positive reputations. Whether they themselves are responsible for the event or not, they are the ones that are responsible for how they respond to it.”
In a crisis situation, well-informed decisions need to be made quickly, and these often do not allow for a lengthy fact-gathering process. Instead, decisions must be made on information known, however little there might be. According to Horjus, decision-making is a core competence of adequate crisis management – the most effective leaders can read situations and act calm but be decisive should the exceptional occur.
Whether resulting from anything from a cyber-related data breach to an ethical scandal or even fraud, these type of events rely on various cross-functional teams coming together to provide essential information and take appropriate actions to best handle the situation.
5 Steps To Mitigate (Brand) Damage During a Crisis
Although not all crisis situations are created the same, Horjus offers key lessons learned from how organizations have effectively managed crisis.
1) Learn from Past Crises: History, as the saying goes, repeats itself. By understanding and learning from past incidents, organizations can improve not only their resilience to these types of events, but how to approach similar situations when they arise. This might mean an organization needs to look within to understand where its vulnerabilities lie, or look to identify industry crisis-types. But the other way around is true as well: it’s not enough to prepare for the last crisis, teams should be prepared for the ones on the horizon.
Organizations should seek to have a holistic view and prepare for the types of crises they might face. For example, analyzing historical patterns can help answer questions such as “what led to this type of crisis?” and a look at historical responses can answer “what was the response and how effective was it?” and “which key stakeholders should we engage, address and what will their role be?”
By looking at the past, organizations can better understand the likelihood of facing such an event, how they can best approach it – including what decisions will need to be made.
2) Deploy Strategic Teams: Having an understanding of how equipped an organization is to handle a potential crisis is important – knowing this before the crisis actually occurs can be crucial to a swift and effective response – both intellectually and logistically.
From PR teams tasked with responding to media inquiries, to internal communications teams responsible for communicating with employees, to brand and social teams who can monitor reputation via online channels, various communication teams come together to address crises. In addition to these, other teams such as legal and compliance should be engaged and made to understand their role during a time of crisis with a core team dedicated to making the critical decisions.
A multi-disciplinary approach is essential as Horjus advises, various types of expertise is needed – quickly – during a time of uncertainty. From the best claims lawyers to reputational experts, to HR teams, understanding which skills are needed – and being able to deploy them when necessary – can help organizations respond and rebound quickly.
3) Train and Practice: While crises are by their very nature unfamiliar events, having a strong understanding of the types of crisis that an organization might face can help organizations create drills and trainings as a way to practice their response.
In turn, identifying the roles and responsibilities of the various teams involved in crisis response means that teams can practice various types of scenarios so they can have experience in how to best respond before addressing the scenario in a real-world situation.
While these kinds of preparations don’t reduce the likelihood of an event occurring, they enable an adaptive response and can help reduce the impact. Having such training in place and investing in preparation can help leaders start at “minus 3 when a crisis actually occurs, as opposed to starting at minus 10,” says Horjus.
4) Listen And Respond To Customers And Employees: Today’s 24-hour news cycle and the prevalence of social media mean brands now have to pay attention to more communications channels than ever before. Whether a crisis is occurring and social channels are fueling the fire, or even if an organization’s own marketing campaign is backfiring, listening and responding to customers’ concerns and questions and those of other affected parties should be a central focus to communication strategy during a crisis.
Also worth remembering, notes Horjus, is that today organizations are now judged not only whether they offer an apology, but in how they apologise. These details “make a huge difference” in how the brand’s response is viewed both in the short and long-term, she adds. “Research tells us that a late – but authentic – apology delivered from the appropriate representative can be better than none.”
5) Embrace Social Media: When done well, a 140-character acknowledgement can be the detail that helps an organization rebound quickly during a time of crisis. “Although sometimes perceived as chaotic, in actuality, social media can be very helpful during crisis situations,” says Horjus.
Having a strong grasp of social channels allows organizations to not only monitor sentiment in real-time but also to participate in a two-way dialogue about unfolding situations. Some organizations that have faced pretty negative allegations have been able to change sentiment based on their use of social media, Horjus notes. The timely and one-to-many nature of social media can “help turn negative situations into positive experiences,” she says.
Making The Best Of A Negative Situation
Crisis management can be seen as equal parts art and science – learning from the past, deploying strategic teams when needed, and authentically responding in a right manner – including making apologies and taking appropriate steps to rectify any wrongs.
Communication is the key to minimizing the immediate impact of a crisis and, is vital in reducing the potential negative effects on brand and reputation. West notes, “without proper analysis, planning, and preparation, even the most skilled teams may struggle with their response.” Teams that prioritize capability building – including training and drills – have the opportunity to make the best of the situation and may emerge with an even stronger brand and reputation.”
“In an economy where 70 to 80 percent of market value comes from hard-to-assess intangible assets such as brand equity, intellectual capital, and goodwill, organizations are especially vulnerable to anything that damages their reputations.” – Harvard Business Review
- Managing Reputation Damage Requires Good Crisis Management – Business Insurance, September 14, 2016
- Risk Managers See Reputation Damage As Top Threat – CFO, April 28, 2015
- Aon Global Risk Management Survey 2015 – Aon report