Steps To Regaining Corporate Reputation

The term “corporate reputation” refers to how an organization is positively or negatively perceived by its key stakeholders. These stakeholders usually include employees, customers, the media, investors, NGOs, suppliers and financial analysts. Their perceptions are built from an organization’s past actions and it’s improvement on keeping promises that give progressive results. Thus, corporate reputation is built over years and can be painstakingly slow.

The relevance of corporate reputation has become evident following series of scandals that have razed multi-million and reputable companies to the ground with very little chance of recovery. Ernst and Young have pointed out that in the investment world for instance, it is believed that 30% to 50% of an organization’s value is intangible; most of this is based on reputation. However, corporate reputation does not only interest the investment world but affects the earning power, growth, profit margins and employability of any organisation. What makes corporate reputation quite remarkable is that as intangible as it is, the tangible actions of an organization is what makes or breaks its reputation.

Corporate reputation is in two part –sympathy (liking and emotional appeal of an organization to the public) and competence (quality of goods and services provided).  Consequently, corporate reputation is built through client experiences, word-of-mouth, the media and consumers. This means corporate reputation takes time to be built; but can be damaged instantly. Internet and media scrutiny allows seamless flow of information that has far reaching consequences but as devastating as it may be, losing face in the corporate world does not mean the end of a business. Gaines-Ross (2008) revealed that recovering corporate reputation is believed to be six times harder than building it. Research has proven that recovery takes an average of three and half years; with it taking 3.2 years in North America, 3.6 years in Europe and 3.5 years in Asia. She has developed a 12-step Reputation Recovery Model which has been grouped under four broad steps:

Stage 1: Rescue

The idea is to take the heat, starting with the leaders of the organization. The organization will have to admit their part in the destroyed reputation without excuses. There should also be continuous honest communication to stakeholders about the state of the business without qualm. Criticism will definitely flood in with unsympathetic reviews from all angles. Though there may  be no preparing for critics, there should be a mental note to never underestimate how much more damage these criticisms can do and how much competitors will take advantage of the downfall.  The final thing will be to re-set the organization’s clock and look back at what triggered the slide downhill.

Stage 2: Rewind

It would be relevant at this point to analyze all the things that went wrong and what had been done right in the past. The right and the wrongs must be torn apart and carefully measured repeatedly till every detail is covered.

Stage 3: Restore

Next, there must be a change in organizational culture. The right culture towards making things work should be adopted without hesitation. The organization will have to take charge and shift their dynamics. The media has to be faced bravely. The point is to let the public understand that you admit something(s) went wrong, but changes have been made to ensure it never happens again. Clear sustainable processes and steps should be communicated in order to regain trust.

Stage 4: Recover  

This step involves building a drumbeat of good news. There should be a gradual, consistent and transparent report of progress. The process is long and slow and so the organization should keep in mind that it would be a marathon and not a sprint. Finally, there should be conscious and deliberate efforts to minimise any form of risk.

The steps are not set in stone. They can be re-adjusted and personalised to suit each business but they have to be followed.