by Bruce Ruddy on November 4, 2016
There is nothing more important than reputation for a company. In the digital age, bad news travels faster than ever and corporate reputations can be destroyed in the click of a mouse.
Legendary investor Warren Buffett says it takes 20 years to build a reputation and five minutes to ruin it.
And we need to look no further than the problems facing major brands such as Volkswagen and Samsung to see the reputational damage a major issue can cause. The stakes are high as consumers today value how a company acts as much as the product it makes.
Executives must do things differently and consider whether they have the right priorities and plans in place to restore a company's reputation, should a crisis strike.
What are the important things a company can do to assist in rebuilding their reputation following a major crisis?
1. Take immediate action
The worst thing any company can do in a crisis is not respond in a timely manner. If they do not, there will be no shortage of stakeholders including customers, the government and the media who will speak up and shape perceptions about the company. It's much better to be an active participant in shaping the narrative during a crisis than having someone else do it for you.
2. Be confident, genuine and strategic in your response
When a crisis hits you need to respond in a straightforward and timely manner. But remember whatever you say at the beginning of the crisis must stand the test of time, in the glare of the public spotlight, as all the information emerges about the issue. If you provide detail which is later proved inaccurate or misleading, then your corporate reputation will take an even heavier hit.
3. Accept responsibility
Denial is never a defense if things have gone wrong and the company is responsible. You need to be transparent and show you have nothing to hide. Those companies and individuals who have tried to hide their mistakes have ultimately paid a much higher price in terms of loss of consumer trust.
4. Apologise if you have made a mistake
No matter how large or small the corporate issue, if the company is responsible for the situation it must apologise genuinely and whole heartedly. Companies need to own their mistakes if they are going to build trust again.
5. Fix the problem
All the words in the world won't make a scrap of difference to a company's corporate reputation unless they take a proactive approach to fixing the problem immediately. While taking responsibility and apologising is a good start, winning back public trust also requires an operational response from the company's leadership. Consumers need reassurance that all steps are being taken to prevent a reoccurrence.
6. Communicate the actions you will take to fix the problem
It is also important to let your stakeholders and the media know what action you are taking to resolve the issue.
How organisations bounce back from major issues depends on the company's leadership and other factors, such as the size of the issue and whether it was internally or externally driven. However, with time and the right strategy, brands have shown they can recover.