Reputation Et Al

July 25, 2008

Reputation Et Al

I recently read in Financial Week that only about three percent of S&P 500 companies have stand-along risk committees as part of their boards of directors. Found this particularly interesting considering that risk has become a major issue these days. Of course some of the most well known recent corporate failures had board risk committees such as Bear Stearns and Northern Rock. Therefore, having risk awareness at the tippy top it is not a sure fire solution to avoiding crisis. It does say something, however, about a company’s commitment to reputational issues. All in all, it is a good thing.
Another piece of information that caught my attention recently was something from Barbara Reynolds of the U.S. CDC (Center for Disease Control). She was quoted as saying that a whopping 90 percent of a crisis response is communications. There is a lot of truth in that. The irony of her statement according to Robert Alvey, a Hurricane Katrina crisis communicator who wrote the article, is that “businesses and agencies allocate on average one percent of their overall budget to crisis and risk communication. If they do have a plan and exercise it, only nine percent of that drill tests communications.” Again, a frightening truth. In this age of “gotcha” media, more resources and crisis simulations are imperative. Sometimes I wonder what companies are thinking.

I was interviewed this week by Leo Hickman of The Guardian about a crisis at Primark, the successful fashion retailer in the UK. The BBC  Panorama show exposed child labor issues in Primark’s production among three suppliers in southern India. The CEO of the parent company, ABF, George Weston responded quickly and forcefully. I went to the Primark web site and liked what I saw. Their actions and statements are quite visible on the web site and there is no attempt to push the crisis deep into the web site. They mentioned how they had dealt with a different supplier in the past who had committed wrongdoing, reported their investigation into these suppliers over the past 18 months and their apparent deceit, and reinforced their ethical standards and code of conduct. Primark provides a good Q&A as well as videos on how their clothes are made and an interview with a key director who is visibly outraged at the suppliers for harming their reputation and misleading them.

As I was quoted in the Guardian article, this is a “smudge” on their reputation but their quick and forthcoming response helped keep their reputation capital steady. However, they are now in the spotlight and cannot afford any other ethical questions to be raised

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Leslie Gaines-Ross
Leslie Gaines-Ross

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 corporate and CEO reputations.

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