A Reputation Recovery

The title of the article says it all, "Sailing through a scandal." Rupert Murdoch and his empire have turned the corner on reputation recovery. As you recall, News Corp was engulfed in scandal over the phone-hacking of a murdered schoolgirl's voicemails. According to The Economist where I found this fascinating article, the Murdoch family has recouped more than double their wealth since the controversy. And Murdoch's sons who are running the now split businesses of entertainment and newspaper publishing are doing just fine. 

What hit home was the article's truthful statement that "a loss can turn into an unexpected win." That is so true in reputation recovery. I've researched and studied the reputation recovery phenomenon for a long time now and if there is one clear thread, it is that crisis morphs into opportunity. There is nothing like a scandal or reputation disaster to make a company even better than it once was. Better leaders are put in place, tough decisions are made, humility returns to the C-suite, and less risky business behavior takes hold. No one wants any further embarrassment to harm the reputational equity of the firm.

The articles says, "The Murdochs’ happy ending is a reminder of how forgiving the corporate world can be if bosses at the centre of a crisis act swiftly and adopt shareholder-friendly policies." True. How a company responds to crisis is the ultimate test and like they say, first impressions matter. But as the article also points out, if Rupert had been a hired hand at an ordinary company, he would have been shown the door.

The Economist ends the article by saying, "Being enriched by scandal may occasionally happen once, but rarely twice." As it happens, that is not entirely true. Many companies stumble after a major crisis because of all the distractions that ensue. It is even more likely, not less likely, that a company will re-dent their reputation after a major crisis. Additionally, media scrutiny is more intense afterwards and journalists and pundits will pounce on any missteps. Granted, the stumble may not be as devastating as the first one but doubt gets raised and before you blink, there are no more do-overs.

Employees to the rescue










I found this interesting example of how reputation can be managed simply by building a strong and prideful culture for employees. It is a lesson to us all. The article was written by the editor of American Banker and reveals her interesting perspective:

"In terms of how employee experience influences media coverage, I offer the example of two prominent retail brands that I used to cover for a major metro newspaper. One had a disgruntled employee base that was great for leaks that led to juicy stories. From the other, I never got anything aside from the official company line. Even when the second company hit a rough patch, no one called the local paper to complain. Here, a healthy culture offset the impact of an unhealthy stock price: these employees were rallying around their CEO. They cared about their brand and were motivated to contribute to its revival."

Employees in the second company rallied behind the company and kept its reputational equity stable. They were not roaming the Internet spreading discontent and doubt and catching the eye of some journalist covering the beat. This is how it should work.

Recovering Reputation One Cup at a Time

I had heard alittle about some reputation problems (tax avoidance) that Starbucks had encountered in the U.K. over the past couple of months and just read this story about how they are working to counter their dip in reputational equity with a little frothy promotional offering. Now until mid-February, they are discounting coffees on Mondays to earn back customers' trust and show that they are sorry. I was particularly enamored of this advertising campaign which is fun, clever, positive and should definitely help. It qualifies as a reputation recovery uplift.