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.
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