A recent survey about what keeps general counsel “up at night” revealed that risk and crisis management are among their most pressing concerns. In fact, 63 percent reported that protecting their company’s business reputation is one of their top challenges.[caption id="attachment_21721" align="aligncenter" width="550"] Photo courtesy of Stocksnap.io[/caption]
The Importance of Your Reputation
The United States Federal Reserve defines reputational risk as “the potential that negative publicity regarding an institution’s business practices, whether true or not, will cause a decline in the customer base, costly litigation or revenue reductions.” While a positive reputation can be a valuable intangible asset, reputational harm can lead to a loss of trust with key stakeholders and significantly hurt your bottom line.
A recent example of a company that suffered significant reputational harm is Uber Technologies, Inc. Uber’s controversial CEO Travis Kalanick was recently forced to resign after his controversial business methods started doing more harm than good, including allegations of condoning sexual harassment in the workplace and berating one of Uber’s drivers.
Proactively Managing Reputational Risk
One of the biggest mistakes that businesses make is taking steps to protect their business reputations only after a crisis occurs. With the rise of the Internet and social media, managing reputational risk should be an ongoing initiative. While companies could once carefully shape the messages that the public received about their products and services, they have lost significant control in public forums created by the Internet Age. Through social media, anyone can post negative comments about a business (often anonymously) in real time.
The good news is that there are steps that companies can take to proactively manage their business reputations. Below are a few examples:
(1) Set the Tone at the Top: Mitigating reputational risk should begin with your company’s top executives and management staff. It is essential that the most visible members of your organization represent the core values of your company and take steps to avoid negative publicity. This includes carefully vetting not only the statements that top executives make to the media but also what they (professionally and personally) post to social media.
(2) Integrate Reputational Risk Assessment: When making key business decisions, it is important to assess the potential impact on your business reputation. To get a clear picture, gather feedback from all departments, including public relations, customer service, human resources, marketing, finance, and legal.
(3) Monitor Online Platforms: When it comes to protecting your company’s reputation, it is essential to act quickly. To be proactive, you must know what is being said about your business before it goes viral. Options for monitoring search engines and social media include assigning staff members to the task or using software programs to comb the Internet for you.
(4) Promote the Positive: In the words of Vince Lombardi, “The best defense is a good offense.” That means developing an online presence and using it to promote accurate and positive information about your company.
(5) Train Employees: Every company should have a social media policy for its employees. In addition, anyone who is authorized to speak on behalf of your company should be trained to manage reputational risk as well as to respond to potential threats. These skills are particularly important for anyone who engages with the public via social media, where statements are made in real-time and often can’t be edited once they are published.
(6) Plan for the Worst: Because it is impossible to control everything that is said about your company, it is imperative to have a crisis management plan in place. The plan should designate a staff member to assess the reputational risks of situations confronting the company, and, as well, to identify steps to manage reputational harm.
Do you have any questions? Would you like to discuss the matter further? If so, please contact me, Robert Marsico, at 201-806-3364.