The pricey costs to social media reputation repair

The third annual study called the Computing Safety Index was just released by Microsoft and it has some real gems in it on the costs associated with online reputational risk. Repairing the damage from social media cannot be ignored because it comes with a big price tag. The facts below came from the blog of Jacqueline Beauchere, the chief online safety officer at Microsoft (cool title). 

  1. Nearly $6 billion was spent in 2013 "to mitigate risks associated with financial and time loss due to personal or professional damage."
  2. On average, the cost to users who experience online reputational damage and have to restore their reputation averages $632 per episode. When you look at this by country, the numbers are incredible. In Canada, the average U.S. dollar equivalent costs to repair one’s professional reputation totaled $484 per incident; in Japan, $500 per instance. In Belgium, that total balloons nearly four-fold to $1,979 per issue and, in the U.S., the average total was a whopping $2,600 per professional-reputation incident. Whopping is an understatement.

There are plenty of risks today but social mistakes are getting costlier and the clean-up sounds like it can wipe an individual out. It is wise to remember that social media can do wonders when it comes to helping you build reputation but it can also do horrors to wrecking what you've built. 

Thanks to Microsoft for collecting this data from 10,000 respondents in 20 countries. 

Reputation Actions That Absolve

In a recent post, I talked about new research that demonstrates how companies can repair their reputations by communicating their good deeds and what actions they intend to take to remedy their failure to (represent their numbers accurately, i.e. restatements). In the research report from Stanford and Emory University, there is an appendix of examples that companies took to improve corporate governance post-crisis and absolve themselves as well as regain financial value. I thought they were worth listing here as a reminder of the goodwill actions that get companies on the way to reputation rejuvenation:

Board of Director Actions

  1. Appointing new independent directors
  2. Require that board members obtain permission to serve on other boards
  3. Continuing education for board members
  4. Shortened board tenures
  5. Increased number of votes required for new board members
  6. Shareholders allowed to call special meetings via two-thirds vote
  7. Eliminating anti-takeover provisions
  8. Minimum stock ownership guidelines
  9. Technology/software for board members to access board materials remotely

Incentive/Internal Control System Actions

  1. Hire Chief Compliance and Business Ethics Officer reporting directly to BOD
  2. Remediation plans to address internal control deficiencies
  3. A different tone with respect to internal communications regarding application of GAAP
  4. Hire Chief Risk Officer 
  5. Hire Chief Regulatory Officer 
  6. New Statement of Principles and strengthened Code of Conduct


  1. A strategic refocusing
  2. New operating structures to align and clarify accountability

Customer Actions

  1. New worldwide re-branding
  2. New 10 day warranty on products, warranty extensions
  3. Announcement of various industry awards

Employee Actions

  1. New employee policies to cultivate a culture of compliance
  2. Announcing high ratings in best place to work surveys

Community Actions

  1. Announcement of charitable programs 
  2. Announcement of contributions to a grant program 



Reputation Call-Outs for the Week


Woefully, I did not get to write this week. It just flew by with meetings and work to be done. And here it is Saturday again and I'm catching up with my work and eager to get to work on my blog. I saved a few things from the week to write about because they all are reputation-related in some way. Here they are:

  1. I was very pleased to see the squarespace advertisement early on in the Superbowl last Sunday night. The feedback from what I understand has been positive. This blog is written using squarespace and I think their sites are beautiful and easy to create. They are a reputation-polisher.
  2. For all those new CEOs and executives out there, some timely advice from Fay Vincent, president and CEO of Columbia Pictures Industries in the WSJ. He has 10 suggestions for those in charge. Some are tried and true and worth repeating such as (#2) Be sure to manage down, (#4) Keep listening to and for advice and (#7) Never complain, never explain. Vincent says he wishes someone told him these when he started at the top.
  3. Talking of new CEOs, the new CEO of Microsoft was named. His introduction to the world was nicely done (check it out as a great First 100 Days strategy) and enhanced his down-to-earth reputation. I especially liked his email to employees on day one. You can tell that the new CEO, Satya Nadella, likes to read poetry from reading this email. It is simply stated but oh so well-written with a melodious cadence and authenticity. Right out of the box, he mentions how humble he feels being named to the honorable task ahead of him. He then describes himself and his mandate in four sections -- Who am I? Why am I here? Why are we here? What do we do next? The answers to all these questions are undoubtedly what employees want to know. Nadella had one paragraph that I found especially appealing and worth calling out. He wrote: "Next, every one of us needs to do our best work, lead and help drive cultural change. We sometimes underestimate what we each can do to make things happen and overestimate what others need to do to move us forward. We must change this." This is a great message because we are all accountable, not just leadership. No one can just sit back today and wait for permission to act.
  4. At the start of the week, the NYT columnist Andrew Ross Sorkin called for an apology cease-fire. He says that the avalanche of in lea apologies are calling into question their sincerity and turning into apology-theater. I too follow how apologies have become de rigueur for reputation repair. They are expected, whether they are mere performance art or the real thing. They have become habitual. Sorkin and management guru Dov Seidman have started an Apology Watch on DealBook and started #ApologyWatch on Twitter.  They will be looking at what companies do post-apology and keeping them honest. Poor reputations, beware!


Obama's small step repair strategy

Leadership is very messy. I was asked the other night at dinner why President Obama was not coming out slinging on the repair of the healthcare website. Why was he not saying anything? And why were his advisors not telling him to speak up and put a stop to the constant naysaying? Well, for one, I think the reason is that there is nothing to say until it is fixed.  He apologized and put a bookend on the mess for now. That was the right strategy. Now he should say nothing until it has been resolved. Why keep it in the headlines by saying something? No one wants another BP oil spill where the headlines went on for weeks regarding how much oil was spilling into the Gulf. I read the New York Times columnist Bill Keller's to-do list for President Obama on how tosalvage his reputation now that it has stalled. Keller basically says that now is not the time for "grand new initiatives."  True. He goes on to say, " It’s not that I want the president to think small; by all means, address the threat of climate catastrophe and push ahead on early childhood education. But he needs to get a few wins on the scoreboard."  Absolutely. Now is not the time for the big speeches, big sweeping initiatives, big words. Now is the time for small, incremental steps that change the conversation and get him back on track. I also found it interesting that Michelle Obama chose this time to release news that she is going to focus on higher education for low-income students. Clearly, a great policy decision but the timing is not coincidental. The White House needs some positive news to overshadow the constant barrage of negative sentiment surrounding the White House. Everyone loves Michelle and who can argue with her for coming to the rescue. Wonder if we will be seeing more of the kids now.

However, this too shall pass. Maybe we should spend more time focusing on the devastation in the Phillipines and what we can do.

Reputation Repair for the Church

vaticanBill Keller wrote this fascinating piece in The New York Times about how the Catholic Church could repair its reputation. As he points out, the Church operates just like a business with more than one million workers, one billion or more customers, more outlets than Starbucks, more real estate than Trump and a powerful lobbying arm. And like many companies today, it just lost its CEO and has the opportunity to reset its reputation and restore its luster now. Keller asked several consultants how they would go about advising the Church to repair its reputation as they name a new Pope and move forward. Here are their suggestions:

1. Find the right new pope. One with drive and charisma who is communications savvy. One who is more than a caretaker. A Pope who is dynamic as well as a road warrior with unending energy to persuade customers back into the fold.

2. Manage the culprits out. Out with those who have sullied the Church's reputation. Or as they say, "managing out" the ones responsible for the abuses of recent years.  This would include full disclosure behind how predatory priests were allowed to stay within the institution. And third, hire a highly-regarded compliance or ethics officer who would have full support from the top. Keller quotes Wharton's Michael Useem and his experiences helping to clean up the Tyco mess of years past.

3. Understand the past but look ahead towards the future.  One consultant suggested a big time summit or strategic review that would be responsible for developing a new and improved Church strategy, mission and values with a plan to execute accordingly.

4. Adopt a global/local point of view. The article describes one consultant's idea to let its 220,000 parishes make their own decisions attuned to local customs and preferences. "Rome could encourage the parishes to be laboratories of worship." Interesting idea. Beta labs full of women participating, gays welcomed, local music.

5. Go social. Bring the Church into the digital  I did not realize this until Keller pointed it out but Pope Benedict tweeted as @Pontifex but only 35 times despite having 1.5 million followers. A social media strategy would go far in encouraging meet ups and spreading news and information to the committed. I have just the right document for him too....our research on social CEOs. Perhaps the Church could get some lessons from President Obama's social media machine.

6. Get PR support. Interesting since that's the business I am in. Keller rightfully states: "Its stock response to criticism from without or dissent from within has been to been to drop into a defensive crouch, stonewall or go negative. That can come across as bullying and arrogant -- in other words, not very Christian." Media training and message development would definitely be high on the list here.

What would I add to this list..

7. Build a solid crisis plan that raises red flags when early warning signs show up and design rapid response mechanisms. Figure out how to stop the leaks and understand how it happened in the first place so it does not happen again.

8. Measure the Church's reputation now when it is at its most challenged so that the Church could mark progress as a new Pope begins and reform makes it to the agenda in the year(s) ahead.

9. Commit to a strategic internal communiations plan that engages its customers and followers. Get everyone on the same page. Start by going on a listening tour and asking what needs to change and what can stay the same. Feed back that information and describe how the Church will tackle its greatest problems and improve on its strengths.

10. Build a reputation advisory council that can help restore the Church's reputation for the long-term. This is serious business.

A Downward American Reputation

Last night I could not help but wonder how the huge decline in the Dow of 500+ points was a reflection on the perceived reputation of the U.S. government as well as the country itself. I was not at all surprised to see a poll today that expressed basically the same thing. Here is what I knew to be true as I turned in last night: almost three-quarters of the American public believe that the congressional debate over the debt ceiling agreement has harmed the worldwide image of the United States . And a whopping 82% say that the debate was all about political advantage, not what is best for the country. The reputation of the US has been severely bruised in the eyes of its own citizens and certainly around the world. We have plenty of reputation repair to do if distrust of government becomes the new normal. Whereas most companies and their leaders recognize that reputation is essential to their success today, our dueling political parties have yet to truly acknowledge how all the rancor and incivility is a vote from the daily majority about their behavior and decision-making. For more on civility in America, please click here for Weber Shandwick's recent poll.

As I looked into people's somber faces last night as I subwayed home, I could not stop thinking about how the American public had given the reputation of the US a solid "thumbs down" on confidence in this country's future. You don't even need a poll to tell you what we already learned from the Dow. Reputation rules whether it's related to a company, a brand, an individual, an organization or a country. We cannot afford more reputation erosion on our country's reputation. In addition to a bipartisan committee on how to reduce the debt, I think that we should be calling for a task force on restoring our reputation for the long-term.  As more people tune out of government, as we learned in our survey, the harder it will be to build back America's reputation for getting things done.

Reputation Repair in a Jiffy

As a follower of reputation and builder (I like to think) of the importance of reputation in the world of business, I come across new sites on the topic all the time. A site called Reputation Repair Services caught my eye.  If it were only this simple.  This company promises it can help with finding you an Internet lawyer, cease and desist notices, copyright and trademark infringement notices and domain dispute lawyers.  It can protect your reputation by improving search engine suggestions, create positive blogs, good reviews and more. [This company says that they have been around for many years and the alert below is from their site.] Don't Pay Any Reputation Company

 There are various packages ranging from $500 per month and upwards. For $500/month, you get site evaluation, keyword research, five promotional pages and content that are optimized by the online company, full site optimization, inclusion in reciprocal linking systems and search engine submissions. You can move up from this minimum service fee (with an 8 month committment) to $750 per month service. The additional fee provides you with a shared techie “live” and at your service who is devoted to your reputation until the negative information no longer appears on page one of Google. And onward and upward.

 I have no doubt that there are people who want negative information about themselves or their company deeply buried or removed from the Internet.  I am not sure however that this takes care of the hard work of reputation building which almost always involves creating high quality products and services, engaging in corporate citizenship, ethical behavior, financial soundness, innovation and leadership development.

Oops. If you are also worried about your CEO’s reputation, they can help you too.  Any CEO missteps can be wiped off the face of the earth. As Reputation Repair reminds us, “A CEO’s reputation is directly linked to the reputation of the company. The CEO is the face of the company and a leader who provides direction and inspiration.” These words sound familiar since I have written about this topic for years.

I often wonder if these online reputation repair and protection sites can help you build reputation faster by damaging your competitor’s reputation instead. If I wanted to do some harm, maybe I should just spread rumors about my toughest competitor and get that on page one of Google. Could I find someone to do that? I doubt that it is easy to find companies willing to compromise themselves but this has crossed my mind. Might be less expensive.

All this is to say that online reputation management is important but if this is all that is done to build enduring reputations, this is a short-lived proposition. True reputation management deserves more consideration, planning, depth and years of hard work.

Rebuilding Reputation at UBS

    UBS' CEO Oswald Grubel issued this statement to all employees on Tuesday September 8th. It appeared in the Wall Street Journal. As Grubel works hard to repair UBS' reputation after the many challenges facing the bank, he provided this communications update on the positive signs ahead.  As I bolded below, Grubel candidly points to the bank's damaged reputation and the fact that it will only be restored when when the organization accomplishs what it sets out to do. He smartly remarks that no aggressive media headlines nor advertising campaign is going to change perceptions overnight. What will make the difference, according to Grubel,  is trained people at every level, a focus on the business and a commitment to doing the right thing. Grubel's assessment is right -- it takes hard work and relentless effort to restore reputation and it takes more time than anyone imagines. According to Weber Shandwick's recovery research, it takes approximately 3.5 years to recover from reputation loss. Unfortunately, most CEOs are on their way out of office when the reputation recovery process is nearly complete. I thought it was helpful for the CEO to point out to employees that internal reality on achievements are not readily seen from the outside. External stakeholder perceptions take time to catch up with reality. This single factor is one of the more frustrating elements about recovering reputation, particulalry for CEOs. Too often CEOs take the lack of acknowledgement about turnaround signs as a personal affront when in fact, rebuilding trust takes many many incremental steps to regain that trust.

From the looks of Grubel 's letter, he appears to get it.

Dear colleagues,

Since I last wrote you, we have accomplished a great deal and have had several positive things to report.

In the second quarter, we reported an operating profit for the first time in eight quarters. In addition, we have strengthened our capital position and further reduced our risks. The market too has shown more confidence in us.

We have also consolidated the initiatives determining our firm's new positioning in a turnaround program, and we are on track with the program to increase overall efficiency. The unpleasant side of it, the job cuts, is almost complete, and most of the employees have been informed.

The creation of a comprehensive Corporate Center is well advanced. The teams in the areas of Finance, Risk and Communications & Branding have been brought together, and the remaining functions will take this step in the next quarter.

In connection with the summons of the US tax authorities, a settlement agreement acceptable to all parties was reached. What's crucial about it is that the agreed solution lies within the framework of the existing Swiss legal system. Implementing the settlement will continue to occupy the bank for some time yet, but the fog of uncertainty that the summons created has lifted.

Finally, the Swiss government sold its stake in UBS through a placement with institutional investors and realized a healthy profit from it. This closed another important chapter in our recent history.

How should we assess these events? Our transformation is proceeding according to plan. But we must recognize that none of these steps free us overnight from all the challenges we face. We must change and keep changing in an ongoing, sustainable way.

To do so, we need to get the basics right. We must abide by all laws everywhere and have clear responsibilities. You are the key here. You are the specialist in your field, the one who knows best what has to be changed. But most of all you are the point of contact with our clients. Right now, at the point when we've put some of our biggest problems behind us, is the time for us to serve our clients even more attentively.

One thing must be clear: our results have indeed improved and certain progress has been recognized, but our reputation is still damaged. Primarily the situation with the US has left our clients with a bitter taste in their mouths, and it is now up to us to show them that we are a trustworthy bank with trustworthy employees. There is nothing more important, and I count on your active engagement in winning their trust back step by step.

It is important that we do not point fingers at each other, but that we grow closer together across divisional and national boundaries. Only then will UBS be a truly integrated organization that can achieve its fullest potential. This integration cannot only be centrally designed; it must be truly lived everywhere we are operating. Our regional CEOs are responsible for making the total expertise of UBS available to our clients, and we must do everything possible to support them.

Returning the group to profitability will only be the beginning. The recovery of our reputation will require hard work and relentless effort. But I am confident that we have the fundamentals and the right people in place. Essentially, it's about one thing: we must do everything better than our competitors.

To do that, we will support you with the "UBS Business University" currently being developed. I am confident that the success of a bank in the future will be, more than ever, dependent on having the most competent people at all levels. At UBS, we want to be diligent in pursuing this goal. I am excited about our new university, which will help us put our strategy into practice.

To conclude, I want to again touch on the topic of communications and the media. Along the path to success, we will have to deal with a skeptical public. Achievements will be apparent to us in the bank long before they will be recognized by the outside world. We will not be able to accelerate this process through advertising campaigns, public promises and aggressive media work. Our clients have read enough headlines about us. If we want to convince the public, we must, first and foremost, provide evidence of our accomplishments again and again, and this takes time.

I would like to thank you again for your replies and encourage you to use the recently launched TurnAround Platform to comment on UBS's most recent developments.


Oswald J. Grübel