Reputation resilience: A leadership imperative for the post-Covid world
A better reputation means better business. Here's how companies should inculcate reputation management—which is different from crisis management—into their strategy and business plans, to invest in cultivating long-term public trust
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A reputation takes years to build and no time to be ruined. In an age of all-pervasive media and when everyone's a broadcaster, reputation has become more precious than ever.
The Economist termed reputation the 'risk of risks' in 2007. This played out in the years to come: The 2008 economic recession impacting the financial sector; Google’s China exit; Toyota’s product recall in 2010 and BP’s record oil spill, all highlighted this concern. KPMG’s 2017 Global CEO Outlook Survey listed reputational and brand risk as a top concern. World Economic Forum’s Global Risk Report 2020 points to the complexity of various risks, underscoring the importance of understanding the systemic nature of reputation risk.
There is a direct link between media diffusion and reputation impact. While a minor impact could merit only local media coverage, a catastrophic one could lead to global negative coverage, long-term. No wonder it gets Warren Buffet to feel, “If you lose dollars for the firm, I will be understanding. If you lose reputation, I will be ruthless.” SoftBank’s Masayoshi Son couldn’t agree more.
Organisations need to have a robust early warning system for spotting reputational risks. This requires companies to develop an ‘outside-in’ perspective.
Think about these instances that have eroded market value in recent memory: United Airline's passenger removal incident; Samsung’s Galaxy Note 7 exploding batteries; Johnson & Johnson’s Tylenol case; Facebook’s data breach; H&M’s ‘coolest monkey in the jungle’ campaign; Gillette’s #MeToo campaign, and so on. Closer home, ICICI’s Chanda Kochhar controversy; Maggi noodles' lead content, and the embarrassing Paytm CEO office scandal can be counted. Organisational resiliency is tested in a truly world-class response to a high-profile crisis.
Getting ‘cancelled’ is becoming an important reputation risk. The New York Times talked about teens “cancelling out” celebs using their combined social media influence, while Reason, the online magazine, termed 2019 the year that the cancel culture became all-pervasive.
Monitoring reputational cyber risk can be done through a simple Google alert. Many online reputation monitoring services exist in the market; companies such as Burrelles provide dedicated media-monitoring services. Reputation risk underscores a growing need to manage cyber-risks.
Risk experts and communication teams need to work in close collaboration. Social media is one of the most important weapons in a company’s arsenal. Online reputation management becomes very crucial in the event of a crisis.
It has an appreciable impact on market value. Smart companies realise this and undertake proactive measures to do so. Hyper-focussing on multiple drivers as many factors contribute to reputation, helps. Developing and measuring individual metrics enables quantitative measurement of reputation. Strong marketing and communications to targeted stakeholders is a good strategy. Building visible senior leadership helps. Better reputation means better business.
In an age of fake news and rising societal norms and public expectations, corporates have a tight rope to walk what with news spreading in nanoseconds.
Reputational risk needs to be understood not only as a 'risk of risks' but as a standalone risk in its own right. Reputation at a certain level is like a social licence to operate. Public trust matters. Reputation is fragile.
The writer is an Executive-in-Residence at the Indian School of Business (ISB) besides being a global CEO coach