Situations and Reputations

Throughout these processes, there are red flags that you must react to. For such a response to be possible, all members of the organization should be alert to signs of a problem that is likely to worsen. Whenever pamphleteers, squatters, or anti-system protesters proliferate in a particular area, the multinational takes action because it understands that these developments can presage the occupation of its establishments as a show of protest against the capitalist system.

In times of crisis, we are continually in contact with all of our audiences. Communication allows us to manage, in real time, our efforts to listen, engage in dialogue, and tailor our messages as events unfold. During a crisis, the natural tendency of business managers is to assume that problems will subside on their own or to focus exclusively on the customers, neglecting other audiences such as government bodies, unions, the media, consumer associations, and even competitors. During a crisis, the natural tendency of business managers is to assume that problems will subside on their own or to focus exclusively on the customers.

Silence is not a good choice.

If something can be found out, it will be. Denial is only a valid option if everything is false. If a company or institution shows that it reacts to a crisis with empathy understanding its audiences , diligence solving the problem , and honesty taking responsibility , it can emerge stronger. With issues, however, ownership tends to be shared by multiple players. Who owns the problem of global warming?

Crises are usually solved from within, endogenously, whereas issues require a collaborative response involving public-private alliances across multiple sectors. Crises generate a reactive response, whereas issues require a more proactive approach. What should you do before a crisis hits? There is no single exact strategy, but there are various plans that can prevent such a situation: Crisis prevention, management, and resolution make it possible to address a potentially adverse situation more effectively.

This is known as a risk audit: The team should be composed of people with different backgrounds, including corporate players—especially lawyers and communications professionals—as well as technical specialists who are accustomed to dealing with crises of that particular sort and ready to deploy the necessary arguments.

When Reputation is at Stake — Managing Risk — Presented by Liberty Mutual

The team should also include someone who thinks about the market and the customers. All these angles can and should be represented on the crisis committee. In any case, executive management must absolutely be present, because the team needs to be able to make decisions. During a crisis involving consumer products, you have to get on television and talk to people on an emotional level, rather than using scientific arguments.

Companies need to identify risks in order to minimize them. This is especially true in the case of publicly traded companies. Investors want to know what the company will do in the event of a situation of financial, operational, strategic, or liability-related risk. The company I work for operates in 20 countries in different time zones.

5 Ways Your Company's Reputation Is at Risk

At least once a quarter, we find ourselves dealing with a coup, a currency devaluation, or an election—some source of uncertainty that affects us—somewhere in the world. Besides that sort of thing, each company or institution faces its own intrinsic difficulties—crises that are foreseeable, or at least occupy the realm of the possible personnel adjustments, mergers and acquisitions, problems with product quality, etc.

Given this reality, companies design contingency plans that are practically conceived in real time. How can we learn to manage bad news? Crisis management has to do with emotions, not facts. During a banking crisis, people expect to see the news in the financial newspapers.

In times of crisis, this dynamic works against brands. Once the plan is designed, it does no good for it to collect dust until the moment of truth. The plan should be rehearsed at least once a year. The more authentic the exercise is, the better. In many cases, the media will make or break a reputation under fire. This includes traditional media outlets, but also the blogosphere, Twitter feeds and social networking.

The key is providing access quickly and in such a way that provides actual content and insight to the situation at hand, rather than pat answers and spin. A contrived response is nearly as bad as no response at all. Bear in mind that the need for fresh content will be intense, especially during the first 48 hours of the crisis.

A rapidly evolving reputation environment

There should also be a continuing plan for media outreach strategies to carry through the first week and first month. Even after the initial media blitz, there will still be opportunities to contribute to the story and to help deliver a happy ending for it. It goes without saying that for many firms, having a friendly and open relationship with the media beforehand can be key in helping engage those same sources when it is needed most. Make the required sacrifices.

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Depending on the nature of the reputational crisis, doing what is needed to fix it — including purchasing media time and space — can be extremely costly, especially in the case of a product recall or product tampering situation or in a case where any kind of refund is involved. Be a leader first, and a manager second. Having executive leaders get out in front of the story and engage the public in a meaningful way is critical.

Make sure they are comfortable in front of a camera and under fire from an interviewer. History is replete with gun-shy chief executives who look uncomfortable on camera, which only makes the situation worse. Overall, there needs to be a genuine sense of contrition and a willingness to address the crisis: