Reputation Resilience


Reputation resilience is a topic I often think about because it should be on all leaders' minds. How can I build the most resilient culture so that we can withstand a crisis that risks our hard fought for reputation? A new report from Schillings in the U.K. examined UK FTSE 350 and leading private companies about reputation risk and resilience. Respondents were Communications, Legal and Risk executives. Here are some of the findings:

  • All executives surveyed are spending more time on reputation risk management than they did two years ago -- 80% say more time (among risk managers), 68% (among communications heads), and 53% (among legal executives). No one said less time.
  • Only 17% say that there is formal reporting to the board of directors on reputation risk. Clearly, not good enough.
  • The top five threats to their company's reputation are (in rank order): business underperformance, information risk, operational risk, health and safety incidents, and employee behavior. Social media comes in at 6th place.
  • When asked what was the biggest obstacle to making reputation risk management top of mind at the company they work for, 37% of respondents said "CEO/Board removed from reputation risk: lack of focus without a crisis and too much reporting." That is unfortunate.  Companies should not need a real crisis to get them to pay attention to risk management.
  • Fortunately, communciations and legal executives are onto it. They know that their jobs require them to take charge of their company's reputation and any associated risks. A full 72% of communications executives said they feel directly responsible and 63% of legal executives are responsible for their company's reputation.
  • How resilient are companies to facing challenges to their reputation? There is a surprising (to me) fair amount of confidence. 55% are "confident enough," 29% are "very or extremely confident" and 16% are "not at all confident or unsure." Although this bodes well for many companies, I would be wary -- essentially 84% of top executives are confident.  If you ask me, they are not worrying enough about all the possibilities that could befall their reputations. Risks to reputation seem to be coming from all directions today and being over-confident is the wrong stance.

Another interesting aspect of this newly issued report is that Schillings is a law firm. They have rebranded themselves to be all about managing reputation risk. Their tag line is "Law at the speed of reputation." Serious business. What would compell a law firm to switch to focusing on reputation? Here is what they say about their transformation: "To continue to lead at a time of such extensive change, we’ve fundamentally changed our own offering. By combining our unrivalled expertise in reputation law with new risk consulting and IT security expertise, we have been able to create an integrated offer that continues to safeguard the successful businesses and individuals we represent whilst living up to the promise that underpinned our business from day one." It would be hard to name many law firms that have done the same. Reputation is changing the face of organizations all across the globe and some firms see the opportunity ahead. Maybe Schillings sees the risks down the road for them as a law firm and are taking their risk by the horns. Interesting approach.

What Not to Do

When I was speaking at the YPO/WPO luncheon in Minneapolis two weeks ago, I mentioned that I was talking about how to prepare for a public relations crisis that can cause reputational damage and what can be done. I always like to find examples that might resonate with an audience and I found this one which I still can not get out of my head. In the checklist I provided attendees regarding preparing for a crisis, I mentioned the importance of establishing a chain of command. It is important that everyone knows exactly what to say and who should be saying it when crisis strikes. This control over a chain of command starts with the person who answers the phone! Two weeks before I arrived in Minneapolis, I had come across an article that described exactly how it should NOT be done. The article was about how some workers at JFK airport filed a complaint with the TSA about how they were being rushed to do their jobs to avoid schedule delays.  And the jobs they get paid to do are important. One quarter of these workers -- security agents -- employed by this small business complained that they were unable to search flights in enough time to discover if there were any weapons, drugs or explosives left behind after the passengers left. These agents are supposed to pull down every tray, check every overhead bin, probe seat pockets and use metal detectors to make sure the planes are safe and secure as mandated by the federal government after 9/11.  Since airlines are very concerned about flight delays and on-time arrivals, these employees felt that they were being given little time to do their jobs. As one employee said, they were being asked to do their jobs in three minutes when the minimum amount of time needed was 25 minutes.

Here's what stunned me. When the company that employs these agents was asked about the complaints, the pr director responded by saying that the employees were lying. "It is impossible for these allegations to really take place." Here is an example of a company caught unaware and responding poorly. Within a few words, the director put the company's reputation at severe risk. When The New York Times calls to find out information about an alleged complaint, the company spokesperson should have said that they would get right back to the reporter with a response and more information. Saying that one's own employees were lying just does not cut it. From what I can gather, the PR director said that the employees were trying to unionize and therefore intent on aggravating the situation. Whatever the reason or excuse, this was quite the example of self-inflicting repuational harm. One for the books!

Protecting Reputation in Peace Time

Some good points on how to protect reputation from Bloomberg BusinessWeek. The article reminded me of the piece I wrote for HBR, Reputation Warfare. My article made the point that companies no longer have to just sit there as their reputations get pummeled. There are strategies that can be deployed to get your side of the story on the record. Plus it always helps to respond in the same format (YouTube, Facebook, blogs, etc) as your opponents. This BusinessWeek article by Felix Gillette says: "If there’s any solace to shareholders, in the endless push-and-pull between company critics and corporate defenders, the media environment seems lately to have handed an unlikely advantage to brands." Gillette makes the point that brands can create their own messages now and get them out in defense. So what can a company do to protect its reputation and get its point of view across as swiftly as their biggest critics. Here are a few pointers that are discussed in the article: 1.  Craft Your Brand Image in Peace Time. Get your content ready to go during quiet times and push it out aggressively when the spotlight is on your company. “The idea of producing a bank of preemptive content—about how we produce our food, how we pay our employees, how we run our diversity policies—and then activating them with paid media at the moment that the controversy arrives is almost a prerequisite strategy for everyone now," says a media buyer CEO.

2. Buy Ads & Keywords on Google that counteract boycotts or protests. If you search for BP oil spill on Google, you will come across a site from BP on their preparedness. Get those sites up and ready before you need them.

3. Do a vulnerability audit before crisis strikes. Plan ahead of time for your deficits and what you need to do to defuse the situation when it happens. Vet yourself. Most crises are self-inflicted and companies know ahead of time what their weak links are. There really should be no surprises.

4. Get your Advocates in order. This again is good old common sense. Make sure that you know who is likely to defend you in time of need. Keep in touch with your supporters. Today I saw the CEO of TDAmeritrade quoted saying a few good things about trading group Knight Capital who practically melted down this week when their computer system went amok executing trades.

5. Get your monitoring software in place. The article points out that having the right monitoring software in place can now help companies know how many people are actually expressing outrage over an event and whether the anger is rising or falling. As we all know, the news cycle is less than 12 hours today so maybe those 10 critics are going to move on to the next fiasco. If you can measure it, you can manage it.

A Changed Man

  I must be on a "leadership" kick as this week ends. Yesterday I posted about leadership's role in crisis preparedness. Today I am going to post on the effects of crisis on a leader. At a dinner the other night, my colleague mentioned the impact of the killing of Osama bin Laden on President Obama. We agreed that he had to be a changed man. In yesterday's reading, Daniel Henninger wrote the following in the same vein:

A candidate is not a president. In the fall of 2008, after Mr. Obama won, our offices were visited by then-Homeland Security Secretary Michael Chertoff, a former anti-mob prosecutor. Asked about the Obama criticisms of the war on terror, Mr. Chertoff replied that it was impossible to overstate the sobering effect of learning the true magnitude of the threat and bearing responsibility for thwarting it. On another occasion, former Attorney General Michael Mukasey, who as a federal judge presided over terrorist trials in New York, was asked the difference between his understanding of terrorism then and as attorney general. "About the difference," he replied "between what you thought you knew in the sixth grade and a post-doctoral education."

Without a doubt, the decision to launch the Seals attack on bin Laden's hideout and the risks that entailed changed the man. Whenever people go through their CEO transition to finally land their company's highest office, they realize the enormity of the position. Nothing ever looks the same. The buck really does stop at that corner door. As you've undoubtedly heard before from Shakespeare,

"Heavy hangs the head that wears the crown."