The Road to Recovery

September 26, 2006

The Road to Recovery


I was invited to write a monthly column for Ethical Corporation’s publication. Here is my first column. Exciting opportunity.


The Road to Recovery
It seems that reputation problems have been with us for centuries, if not since the beginning of humankind.

The Parmalat and Enron crises, the WorldCom debacle, and the Royal Ahold scandal all amount to modern day “Scarlet A’s.”However, carefully run and well-led companies do not need to be forever tainted.The good news is that companies can eradicate the stain of corporate sin, but first they need to know where to begin.Here are some rules of the road leading to reputation recovery.

Take the long view
Companies that emerge from a crisis or damaged reputation should expect it to take nearly four years (on average) to recover and build back stakeholder confidence.CEO Anne Mulcahy said that Xerox turned the corner on its recovery – after nearly a four-year effort. Building back public trust is a continuous process.

Face the crisis head-on…and don’t deny it happened
Some companies believe if they communicate as little as possible, it will lessen the crisis’ impact or make it simply disappear.Executives need to demonstrate that they are serious about repairing their reputation by making approved crisis information immediately available on their corporate Web site.Online disclosure is one way to reduce business uncertainty as the company begins to right itself.If managed well, Web-site visitors can quickly glean timely information from the site, and companies can put to rest unfounded rumors that they are closing ranks or concealing information.BP’s quick response on dedicated Web sites to the Texas City Refinery explosion and Alaska Pipeline corrosion are positive examples of decisive and transparent Web responses.

Break into easy pieces
The recovery process is long and arduous. Company leaders should organize the rebuilding plan around 90-day segments, and evaluate and communicate status to employees at each segment.This strategy provides the organization with a sense of security, achievement and momentum.

Don’t underestimate your critics
CEOs in crisis repeatedly remark how organized their critics can be during the recovery phase.For example, as a company announces a recall, class-action litigators are organizing meetings and creating a plan that can deliver a damaging backlash to the company.Although political campaigns are expected to include vocal and boisterous criticism, companies are still surprised by the nimbleness of pressure groups to mobilize into action.

Act responsibly
Corporate responsibility is increasingly critical in helping companies reevaluate their values, point their moral compasses in the right direction and move on from a crisis.Citigroup turned to good works to reclaim its reputation after troubles emerged several years ago.The banking giant announced a comprehensive 10-year, $200 million commitment to support financial education programs worldwide and opened a corporate Office of Financial Education.A company’s future does not need to be permanently sealed by a reputation crisis.By carefully following a recovery plan that quickly, directly and strategically responds to the crisis, leaders can steer their companies, and all who have made it successful, toward even higher levels of prosperity.

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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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