KEY POINTS:
Fraud, factory explosions, unethical practice, human rights violations, sustainability, chemical spills, genetic modification, privacy breaches, drought - issues in the news or potential crises for your business?
How you answer this question will be more telling than you realise.
The world we live in has considerably fewer boundaries,
particularly in the business realm. Information is immediate and vastly more accessible, with the "three screens" (computers, televisions, mobile phones) empowering individuals, non-governmental organisations and lobby groups to disseminate information around the globe instantly.
When something goes wrong, everyone knows, straight away - whether or not the information is accurate or balanced.
Therefore, it makes business sense to keep an eye on the issues of the day. What it comes down to is reputation management - a concept that has become integral to corporate strategy.
So what is reputation management?
A company's success may be determined largely by financial results or outputs, but these things actually depend on what is known as "reputation".
Reputation management is hard to define and even harder to value - but it's universally agreed that it's a crucial part of business.
Last year, Senate Communications and TNS Global released a report finding that 50 per cent of New Zealand senior managers and CEOs believed reputation management was their most valuable asset, yet six out of 10 thought not enough was known about it at the boardroom level.
In its purest sense, reputation management is about everything an organisation does, how it does it, how its customers think, feel and act as a result - and ensuring it takes consistent actions that improve these attitudes to its benefit.
Good reputations are built over time, but can quickly be destroyed.
In my experience, organisations are not actively managing their reputations as well as they need to.
They may have crisis management plans in place but most of them tend to be managed in an irregular, haphazard way. Many also attempt to manage an issue too late, meaning their actions are reactionary and sometimes extreme. Quite often, they claim they are the "victims" and the immediate focus is the impact on the business, rather than the impact on their customers and stakeholders.
Understanding the difference between crisis management and issues management is crucial to business success. Quite simply, it's a case of cause and effect.
Issues are what companies deal with the most - on a day-to-day/monthly/annual basis. They exist in the background within the organisation's overall environment. But if not dealt with correctly or controlled, these issues may lead to a crisis - a special and distinct event.
Take, for example, the scandal over the vitamin C content of GlaxoSmithKline's ready-to-drink Ribena. This was caused by poor issues management.
Companies need to totally rethink how they manage their reputations.
To start with, they must realise that reputation is the sum of many parts - a reputation management process should integrate crisis management, issues management and social responsibility.
We need to acknowledge the value of reputation through learning from the mistakes of others: the Mercury Energies, GlaxoSmithKlines, Hawkes Bay District Health Boards and Bridgecorps.
We need to acknowledge that, from time to time, corporate incidents and/or accidents do happen - and plan accordingly. If your board or management team hasn't thought through how your organisation will handle a crisis and then planned (and practised) for it, you're likely to make colossal mistakes, which then have a direct impact on your bottom line.
Without sounding pessimistic, you need to be prepared for the worst. We're in the 21st century - your crisis management needs to reflect this. Look ahead, anticipate and prepare for the crises of the future. Organisations that value their reputation plan for possible crises in order to minimise their potential impact.
People, not procedures, manage crises. Just look at the Ribena case for the results of lack of leadership in a crisis. After being found guilty of false advertising on its ready-to-drink Ribena products, GlaxoSmithKline was ordered to place corrective advertising.
This would have been an ideal vehicle for making a public apology, but the final wording agreed by GlaxoSmithKline and the Commerce Commission (apparently after fierce debate) focused more on GlaxoSmithKline's desire to prove its point ("our syrup concentrate has always been and continues to be a rich source of Vitamin C"), rather than the fact that it had broken the trust consumers had in its brand.
Senate Communications conducted research into the Ribena crisis last year and found consumers and retailers have been less than forgiving of the global giant's mistake, with the issue firmly in the public eye months after the court case.
Of the 50 shoppers surveyed, 48 had positive feelings toward Ribena prior to the case going public, but less than a third said they would now buy the ready-to-drink products, stating that "[GlaxoSmithKline] lied to us" and "[our] view of Ribena and GlaxoSmithKline has been tarnished".
Retailers, while somewhat more circumspect about their impressions, also acknowledged failings in GlaxoSmithKline's response, with 70 per cent stating they would have liked the general manager to have made an apology at the time.
In my opinion, GlaxoSmithKline effectively destroyed 70 years' worth of consumer trust in its Ribena product overnight.
Given the chances the company had to rectify the issue and the lengthy time frame involved, it seems reasonable to assume that a lack of process, training and decision-making were significant contributors to the crisis.
Reputation management is achievable through gaining control of issues, crises and stakeholder relations. Enter the reputation revolution and take control.
Neil Green is managing partner of Senate Communication Counsel, a national company specialising in reputation and issues management, and strategic advice.
