How companies can avoid lasting reputational damage Viewpoint careers advice blog

How companies can avoid lasting reputational damage Facing reputational damage is not a new challenge, but can businesses minimise harm through culture and collaboration? In the latest Hays Journal, we looked at how they can protect themselves and their staff. When an organisation faces a crisis and its reputation is under fire, it can affect more than just the bottom line. Employees may question company culture, potential future hires may change their view of an employer brand and questions will be raised as to how the situation could have been avoided in the first place. But the incident that has caused a crisis is only part of the challenge. How an organisation responds can have just as serious an impact. “A crisis can harm an organisation’s reputation among all its stakeholders, including customers and employees,” says Iain Anderson, CEO of full-service communications agency Cicero Group. “If you manage a crisis wrongly externally, you are probably getting things wrong internally too.” Anderson is a former journalist and an expert in global crisis communications and reputation management. He says the HR and communication functions must work hand in hand to develop a crisis management strategy and to devise a plan for when reputational problems arise. “If HR tries to own reputation management, the dial can get moved too far towards the internal audience, rather than looking at the impact externally on reputational damage. They can forget the fire storm that might be raging outside in the media.” Align HR and communications The United Airlines PR disaster on 7 April last year sticks in Anderson’s mind as an example of why HR and communications must be aligned when it comes to managing reputation. Kentucky doctor David Dao was dragged off a flight after refusing to give up his seat to employees of a partner airline. A video of his forced removal went viral and the airline’s reputation went south very quickly. “There was a crisis of communication following the incident. Then there was a crisis of morale among the staff, as the company’s reputation as a good place to work took a hit,” Anderson says. If you manage a crisis wrongly externally, you are probably getting things wrong internally too. According to data from reputation insights business BrandWatch, days before the incident more than 91 per cent of all sentiment-categorised mentions registered on social media about United Airlines were positive. By 10 April, the day after the story hit the world’s media, 69 per cent of mentions were negative and the company’s value dropped by around $1 billion. Employees and customers alike need to believe that an organisation cares when something has gone wrong and has taken action to ensure a problem does not happen again. They expect to see authenticity. This may mean demonstrating real and sincere regret about what has happened, explaining why it occurred and then offering firm examples of what has been done to remedy the situation. Respond to criticism proportionately However, companies can also tackle these setbacks in other ways. Earlier this year, KFC’s chicken delivery crisis was a perfect example. A change in its distribution network resulted in a shortage of chicken for many of its restaurants in the UK. While this was certainly an operational disaster, PR damage was limited. The brand apologised, accepted its customers were unhappy and kept to the facts about why things had gone wrong. The level of media coverage, coupled with the fact so many people were unhappy, emphasised the power of the KFC brand. It won over virtually all its critics, however, by publishing full-page tongue-in-cheek advertisements, swapping its initials to read FCK. Ultimately, this response comes down to whether or not customers and employees alike trust the brand during a time of difficulty. If a company can retain trust, then reputational damage can be limited, as KFC demonstrated. When faced with an issue that was likely to be a one-off, the company offered a measured response. Confident that its previous consistent service would protect it from a short-term challenge, KFC faced up to it, apologised, and avoided being too defensive. This trust, however, must be built ahead of a crisis occurring. Culture can protect you It’s worth noting that smaller incidents can also cause reputational problems. Employees can damage a company’s image on social media even without realising it. They might share confidential information, breach customer privacy or post comments that could be regarded as bullying. But while staff may sometimes be the cause of damage, they can also act as a robust suit of armour when their employer’s reputation is under threat. If company culture is strong, employees can be the most trusted source of information when it comes to protecting and enhancing an organisation’s reputation. They can be great ambassadors in a crisis because they are often perceived as more credible than the leadership. Employees can help to spread the word via social media and word of mouth that action is being taken to solve a problem. It is important the leadership effectively communicates internally what is happening. This could be through open meetings or electronic media. Of course, staff can be ambassadors at other times too. Claire Jones, Associate Director of Employee Engagement at global PR firm Weber Shandwick, says that a strong employer brand that staff can get behind can offer protection. “Back in 2015, a journalist’s exposé of Amazon revealed the organisation to have an aggressive, insensitive and bullying working environment. However, it was an Amazonian’s post on LinkedIn the following day, published without coercion of any kind, that went viral and helped to redeem the company as a great place to work,” she says. She warns businesses not to simply expect employees to show their support when a crisis happens. “Organisations need to build up trust and loyalty over the long term to help its people become the brand advocates it will need them to be when things do go wrong.” Jones says HR, communications, marketing and operations must work in unity to review the current employee experience to discover how staff view the brand. Managers should have an open-door policy to hear staff worries before, during and after a crisis and they need to feel confident enough to post positive stories on social media. She says the easiest way to review your employee experience is to ask people what they think. “We work with clients using a mix of qualitative and quantitative research, inviting employees to share their views through traditional surveys, which would provide the themes to explore further in smaller focus groups and online discussion forums,” says Jones. “We would usually complement this data with additional in-depth interviews with a select group of colleagues, including members of the leadership team and other key stakeholders.” Leadership must be ready to respond Kirsty Bashforth is CEO of culture consultancy QuayFive and she agrees. If the leadership style, employer values, diversity, decision-making and ambitions are weak, an organisation will have a poor reputation as a place to work. Today people will post negative opinions on social media and on review websites such as Glassdoor. “When leaders have a reputation issue, they quickly realise that it’s often the culture which is to blame,” she says. “Companies must create an ethos where people do not fear speaking out.” Bashforth, who spent 24 years at energy giant BP, including a role as Group Head of Organisational Effectiveness, says that strong culture can also protect businesses from the outset. However, she warns that if an organisation finds that its culture is not right, nothing can improve unless the CEO and wider leadership team is committed to change. “To protect your reputation you need to remember that culture is never ‘done’. It is an asset to maintain, like owning a car. You need to be able to spot any warning signs that could cause a bigger problem.” She cites work by John Lewis and First Direct as examples of where culture is part of the business model and strategy. It is central to how they run the company every day rather than something they address now and again. “This comes through in customer satisfaction and trust scores,” says Bashforth. “One of First Direct’s values is Right First Time, so staff are incentivised and rewarded to work that way.” She has some practical advice for other companies. This includes ensuring senior management seek feedback on culture; applying core values at every stage of the employee life cycle, including recruitment; regular performance management; and staff development and celebrating the culture through annual awards. As with many challenges, immediate and longer-term action is key. A crisis management plan must be in place, as well as a clear social media policy. When the media is banging on your door demanding answers, and employees and customers are concerned about the future and morale is low, it can be easy to act with haste, yet sometimes a considered response by leaders is the best approach. The communications team should issue an initial holding statement, but HR must work with the wider organisation to step back and work out exactly what problems need fixing and, if it wants to avoid long-term reputational damage, the best way to demonstrate this to customers and employees alike. If you enjoyed reading this Hays Journal article, here are some other blogs that might be of interest to you: Seven ways to keep your team motivated when times get tough Leaders, don’t just expect to be followed How can you hire people who mirror your brand values?