Every organization, no matter the structure, nature of operations or size, is at risk of damage to its reputation. Many underlying risks can be significant in and of themselves, but the resulting reputation damage can be much worse.
A fire in a company’s only manufacturing facility can result in property damage, loss of inventory, employee injuries, lost revenues, etc., but if operations can’t be resumed quickly or outsourced to someone else, customers will lose confidence in the company’s ability to supply product and will go elsewhere.
If a popular restaurant is fined and publicly exposed for discriminatory hiring practices, not only will it have difficulty attracting new staff, it will have to try to repair its damaged reputation or risk losing its customers and going out of business.
A community charity only needs one report of alleged child abuse to make users and supports lose confidence and leave.
All organizations need to start to understand reputation risk and realize that it is one of their greatest risks. The following are starting points to consider in managing reputation risk using a hotel chain as an example.
1. Brainstorm with staff to determine the organization’s reputational attributes. For a hotel they may be:
a. Cleanliness
b. Friendly Service
c. Safety
2. For each attribute come up with possible scenarios that could lead to damaged public perception
a. Cleanliness: a television news exposé using hidden cameras to show bed bugs or maids cleaning drinking glasses with dirty towels from the room
b. Friendly Service: a significant spike in web chatter complaining about the service on popular hotel booking sites
c. Safety: public news reports about an assault that happened in a guest room
3. Educate all and motivate employees to understand that their actions affect public perceptions of the organization
a. Cleanliness: incentivize cleaning staff to strictly follow procedures, do spot checks and reward exceptional behaviors and penalize poor behaviors
b. Friendly Service: Train staff in how to deal with irate customers and give them the discretion to do whatever is necessary to satisfy the customer
c. Safety: Educate all staff on basic security and how to look out for threats
4. Understand the expectations of customers and stakeholders and listen to their feedback
a. Cleanliness: Monitor and analyze customer feedback and complaints
b. Friendly Service: Use Google alerts and monitor hotel blogs and rating sites to see what people are saying. There is an excellent book that deals extensively with online reputation called “The Groundswell” by Charlene Li and Josh Bernoff
c. Safety: Use post visit web-based questionnaires to get customer’s thoughts on how safe they felt and any particular areas where they saw room for improvement
5. Create response and contingency plans to deal with each potential scenario
a. Cleanliness: Have media trained staff and pre-drafted releases dealing with a number of different situations
b. Friendly Service: Don’t try to shut down online detractors or fight back. Instead use the opportunity to acknowledge that you can and will do better
c. Safety: Use every incident as an opportunity to examine current practices and take corrective action
Even if all reasonable efforts are taken, sometimes incidents happen that are outside of an organization’s control that can significantly affect its reputation. The book, “The Resilient Enterprise”, by Yosef Sheffi highlights the case of Ericson cell phones. A fire at a Philips micro chip plant thousands of miles from Ericson created a significant disruption to their supply chain which started a chain of events that resulted in Ericson having to be taken over by Sony. Nokia, Ericson’s biggest competitor at the time and also a Scandinavian company, used the same micro chip supplier but came out as a much more profitable company. They had better contingency plans in place and they dealt with the situation as a critical event that could significantly hurt their reputation.