Crisis tips when reputation is on fire

August 09, 2014

Crisis tips when reputation is on fire

Two perennial crisis-related questions look like they have some answers. How long does it take for a reputation to recover and when in crisis, should companies lay low or communicate aggressively and engage like mad?  

Answer to #1: In research by CoreBrand and Brunswick, it took four years for 16 crisis-stricken Fortune 500 companies to restore their reputations. CoreBrand has an extensive database that has been in existence for 24 years and looks at over 1,000 companies across 54 industries. The four year mark matches with executives’ perceptions of recovery time in research we have done at Weber Shandwick. Interestingly, their research added two additional dimensions:

  • It took nearly two years to rebuild perceptions of investment potential ( 🙁 says the stock market)
  • Average time to return to pre-crisis brand equity was somewhat over one year ( 🙁 says CMOs)

Answer to #2: Super fascinating to me. When they looked at the 16 companies, 7 began engaging and communicating with stakeholders soon after the crisis erupted. Yet, the other 9 kept a low profile and stayed out of the news, presumably to deprive “the crisis of additional oxygen” until it subsided. So what does the research reveal about the best route to recovery? Not what you may have guessed off the bat. Here’s what they learned. “The low flyer (quiet pattern) companies actually suffered slightly fewer hits to their favorability and overall reputation. And perceptions of management took only half the hit that they took among the engaged ones (classic pattern). At first blush – and ethical considerations aside – it appears that flying low is a stronger strategy. But, there’s a catch. The low flyers appear to suffer a longer downturn in their brand equity. The brand strength of those hunkering down, as measured by CoreBrand, took longer to bounce back. Whereas the engaged group actually began to repair their brand after one year, the disengaged group were still stuck in negative territory with losses in brand equity as a percentage of market cap. The “fly low” strategy has other potential drawbacks. There are greater threats of government intervention as stakeholders demand more accountability, and there are the quiet and negative impacts of corporate silence on internal morale. Even in the age of transparency, disengagement may be a valid short-term survival strategy, but it appears to pose greater challenges to the health of the brand. Silence is not always golden.”

These are invaluable lessons to be learned on how to communicate after a crisis. The natural instinct is to hope it blows over, to engage as little as possible and to go radio silent. But these findings show that over the long-term, heightened communications is the best way to go. Perhaps the fact that the news is so transient today and a crisis lingers for only so long before it is displaced by someone else’s crisis, the best approach is to go on the record as having spoken up, defended your side of the story and shown that you can be trusted to do the right thing. People will remember that you were not silent and could be counted on when it matters. 

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Leslie Gaines-Ross
Leslie Gaines-Ross
lesliegainesross@gmail.com

As Weber Shandwick’s Chief Reputation Strategist, I focus on the ever changing world of reputation. For the past 25 years, I have relentlessly observed, researched and commented on the rise and fall of reputations.

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