Reputation Management Problems Companies Face and Their Appropriate Response
A company’s business today is invariably linked to its reputation. A company facing reputation problems is likely to draw an adverse response from legislators, regulators, and the public.
Several recent surveys have revealed that the public’s trust in business and their commitment to free markets have come down continuously. This has prodded senior executives to take reputational challenge seriously.
Factors behind reputational challenge
The speed, severity and unexpectedness of economic events impact the reputational challenge of business organizations. The growing importance of web-based participatory media and the declining trust in advertising are also factors that need to be taken into consideration while dealing with reputational challenges.
Strong action, not spin need of the hour
Managers need to take strong action and not spin to build strong reputations. They need to keep tabs on emerging issues and reinvigorate their understanding of critical stakeholders. They also have to build a network of supporters who can influence key constituencies. This requires enhancing the sophistication and the internal coordination of reputation building efforts.
Companies can effectively use advanced attitudinal-segmentation techniques to get better insights into the minds of stakeholders. They may also deploy cross-functional teams to gather intelligence and respond quickly to the challenges that crop up, which may put their reputation in peril. Having a sound strategy enables companies to demonstrate their credibility to stakeholders. These days, when capitalism is attracting a lot of flak, CEOs must feel incumbent upon themselves to bolster the reputation of their companies.
Risks from reputational issues
Before the advent of online media, companies were more concerned about operations risks that resulted from failed or inadequate processes, people, or systems. Risks from reputational issues, however, may exceed the costs of those of original missteps. For instance, in the finance sector, reputational fallout has been more concerning than monetary losses for companies.
Companies need to collect information about reputational threats across their organizational framework, use sophisticated processes to analyze this information, and take steps to address these problems. They may have to develop an alliance with new partners and coordinate the responses from various stakeholders. This requires significant coordination and quick action on the part of management.
Right approach to reputation management
Large companies would generally depend on their corporate affairs department for reputation management. Smaller companies prefer to follow the ‘cross the bridge when it comes’ policy. However, these approaches are less likely to work against diverse reputational threats. Traditional PR (public relations) and SEO (search engine optimization) don’t address several concerns such as customized reputation management strategy and two-way conversation. Bringing in trained reputation management professionals helps in tracking, quantifying, and addressing reputational risk.
Professionals ensure a better and a more integrated response. Trained minds are quick in identifying reputational problems and they devise innovative ideas for solving them. They know how they are to use various types of media to strengthen the reputation of their companies. They can do things efficiently in the prescribed budget and step up engagement with stakeholders.
Potential frequency and the cost of reputational threats have a bearing on the business prospects of a company. Stakeholders may lash out in an atmosphere, which is less congenial for a business. Businesses must therefore determine their priorities, focus on actions that matter the most, and attempt to influence stakeholders through techniques that emphasize on a two-way dialog.