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Reputation risk management matters for all companies, but for financial services, it probably matters more. Last week we suggested our five top things to do if you would like to start managing yours successfully. Now you know what to do to manage your reputation, here's what NOT to do.
The rise and rise of digital technology and the power of social media means bad news spreads like wildfire (let’s face it, much more quickly than good news). No company can afford to leave bad news managed hoping it will "just go away". So, in case of a reputational risk, what steps can help you avoid a disaster?
1. Don’t cover up or lie
There’s no magic bullet when it comes to developing a good, solid reputation. Building a strong profile takes time and effort and an enormous investment in branding, well before, and certainly not after, disaster strikes.
The first step is to think strategically about what drives your business, what you stand for, and whether you’re conveying this to your customers and the broader market.
What your customers think and say about you is crucial. Just as they are in personal lives, our deepest customer relationships are the ones in which we’ve invested the most time and care. The better you are at building long-term relationships with your customers, the more likely they are to think and say good things. Which in turn boils down to expectations. If you over promise and under deliver by dressing up your offering and raising expectations you cannot meet, your customers are entitled to feel disappointed. On the other hand, if you create trust with honest branding that clearly articulates your company’s values and you try to always be true to these values, you can expect trust and loyalty in return.
Corporate responsibility efforts are to be applauded if they are real. If, however, they aren’t aligned to your brand or used to cover up other problems, you’re in for a rude awakening. You are sure to be exposed eventually, and the fallout can be monumental. In the now infamous case of Volkswagen, not only did the company lie, but they had presented themselves as committed to manufacturing environmentally friendly cars. In reality, the perception is, they were actually poisoning the planet.
2. Don’t have a poorly integrated crisis process
A sustainable reputation relies on the leadership team driving and taking responsibility for the company’s reputation risk management strategy, and integrating it into the overall business strategy.
Reputation risk management should be a multi-disciplinary approach. The chief risk officer must coordinate with customer-facing business functions and PR experts. Everyone within your organisation should know the process to follow in the case of a crisis and each functional business unit should have risk management elements built into their teams.
It’s important not to create a negative culture around risk management, whether intentional or not. Transparency and a strong commitment to getting it right should be inherent in the way you operate. Creating a strong culture that encourages others to manage risk in a proactive manner will lower costs and sustain reputation during times of trouble.
3. Don’t forget to identify all potential risks and threats
To get good results in reputation risk management you need robust risk and crisis management processes in place. The first step is to identify as fully as possible all the potential risks and threats to your reputation, so that you can take steps to reduce risks and minimise reputation damage when threatening events occur.
Companies should have independent auditing and monitoring capabilities in place to evaluate compliance effectiveness as well as a system where employees can report any wrongdoing and notify the company of this without negative ramifications.
Once there are reports of suspected violations, to policies or regulations, acting quickly and effectively is key. Take action immediately to resolve issues and make it right. This includes thoroughly investigating the allegations, seeking advice from relevant experts, disciplining the individual(s) involved, and notifying the appropriate stakeholders.
4. Don’t ever, ever, ever stop learning
Strive to always be improving. Companies with a strong reputation are known for their commitment to quality, which means the discipline and will to keep improving.
Monitoring your company’s interactions with stakeholders, using tools like social media to monitor external company perceptions, company reporting, and benchmarking of reputation across markets will help you to gain insights into best practice. It can also reveal a great deal about your company’s position relative to competitors.
Don’t forget to learn from past experiences and the mistakes of others – the lessons you draw from others should be integrated into your own practices.
5. Don’t underestimate the importance of communication
A stellar reputation requires effective communication to match.
Two of the main tenets of a company’s reputation are the customer’s experience of you, and the information they receive from and also about you. This means that high quality customer communication is key.
Best practice communication principles include:
- Consistency in messaging – have a set of defined key messages and a detailed communications calendar in place for your proactive communications and plan for any reactive situations
- Carefully choosing your language to match your company ethos and audience – your target market should drive the way you communicate
- Maintaining a genuine tone – avoid being defensive in difficult situations. Always aim to accept responsibility, acknowledge the problem, and state the solution
- Timing in communication matters is key – there’s no such thing as over communicating. So even if you’ve got nothing to say in a bad situation, an update of “no news” is better than nothing at all.
