ITL #75 Organizations under attack: building reputations from the inside out
10 years, 6 months ago
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Protecting your organization’s most valuable and vulnerable asset means understanding that the walls that once separated internal from external comms have crumbled. By Heath Applebaum.
No matter where you look these days, the headlines are dominated by organizations under attack. In our hyper-connected 24/7 digital world, communication knows no boundaries, companies are facing unprecedented scrutiny from a myriad of stakeholders and CEO heads are rolling.
Ready or not, the age of transparency has not only arrived, it is undeniably entrenched. Any attempt to sweep serious issues under the proverbial carpet – from customer service blunders to product recalls or ethical lapses – are futile. Whether you work for a multinational company, a charity, governmental organization or a local business, reputations have never been more valuable and vulnerable.
Look no further than the automotive, airline, banking, fast food and telecommunications industries or your local politician for a menu of recent scandals and reputational damage. Some are organizations that have yet to realize the far reaching impact of social media – in Google we trust. Other companies are dangerously unprepared and understaffed. But, perhaps worst of all are those executives who still subscribe to a dangerously outdated paradigm which handcuffs their public relations department or agency.
You know what I mean, those innocuous three key message bullets approved by your legal department in a veiled attempt to stay on message, focus only on the positive and attempt to control the media, still under the illusion we are working in 1984 rather than 2014.
Having led communications strategies for a dozen multinational companies from the corporate, agency and now consulting side of the fence, I know first-hand that you can lead an executive to water and offer sparkling advice, but there is no assurance that they will drink it.
Nevertheless, the era of no comment or responding to an issue two days after it surfaces on Twitter, just won’t cut it, the damage has already been done; sometimes irreparably. While lawyers want to say less, we know sitting in silence waiting for the storm to pass is no longer a viable option. By then, public opinion has cemented and framed the issue in a far less flattering light. Rebuilding your reputation will be a far more costly and time consuming process that could take many years and millions of dollars to try resuscitate.
Today, silence is indistinguishable from guilt, and it’s a sure-fire way to insult the intelligence of reporters, bloggers and spark public outrage, the antithesis of what we as communicators are trying to accomplish.
Instead our role as communicators must focus more on carefully listening to our stakeholders, particularly employees, to facilitate conversations, because reputations are increasingly built from the inside out.
Six undeniable truths to protecting reputation:
1) Bad reputations affect your bottom line
As public relations professionals we know intuitively that bad reputations don’t just make headlines, they destroy trust and impact the bottom line. Customers abandon brands, market share drops and investors abandon ship. Reputational issues can spark costly litigation, community resistance and prompt difficult regulatory intervention as well.
Simply put, we know that stakeholders must trust a company before they are likely to purchase their products and services, invest hard earned money in stock, or consider working there.
While academics should continue to study, debate and try to better quantify the cause and effect relationship between reputation and profit, the empirical evidence over the past several decades is undeniable. Good corporate reputations and socially responsible organization enhance the market value of a company, reduce costs and deliver superior financial performance.
2) Reputations are built from the inside out
The walls that once separated internal from external communications have crumbled and reputation strategies must be developed with the understanding that organizations are increasingly transparent. It must be assumed that what is being shared with employees on the inside will be leaked outside, and messages that are conveyed externally must align with the employee reality. The wider the gap between these, the greater the reputational risk.
Unfortunately, as I have seen repeatedly over my 17-year career, when companies make short-sighted decisions to cut communications staff, it is a costly mistake, one that they must unfortunately learn the hard way. I know, because clients often call to retain my services when they are in the midst of a crisis and the ship has already hit the proverbial iceberg and is quickly taking on water.
Often this is when boards and executive decision makers finally realize the error of their ways, and invest in a reputation management strategy, a strong communications team and secure a capable reputation consultant on retainer so that the organization is prepared for next time.
Perhaps the most overlooked facet of reputation building, is that they are not built by producing good products, glitzy advertising or dare I say, savvy public relations efforts. Real and enduring reputations are built from the inside, by the employees who know what is really going on behind closed doors. As the expression goes, it is indeed what’s inside that counts.
3) Beware of employee assassins
Given the shocking employee disengagement statistics these days, business leaders must look beyond just quarterly earnings reports to realize that if 75 per cent of their employees are sleep walking through their days and then leaving the office at 5:01 pm, productivity and morale has a cost as well.
A recent study estimated that unhappy workers cost the North American business economy over $350 billion annually in lost productivity. Another interesting Canadian study showed that employees alone cost Canadian retailers $4 billion a year due to theft, accounting errors and damaged products. You may want to send a memo to your Chief Financial Officer and the head of human resources, because these are real costs.
A global 2014 Gallup study showed that only an alarming 13 percent of employees worldwide are highly engaged and twice that are so unhappy they admitted that they would actually sabotage their employer.
Similarly, a 2012 study by the Institute of Crisis Management reveals that 82 percent of crises that companies face in the United States are actually sparked from employees. Whether they were a result of white collar crime, mismanagement, workplace violence, labour disputes or a variety of employee ethical lapses, they were occurring from within.
Employees have the means (access to highly confidential information) and these days they have the motive too. Employees have been subjected to salary freezes, restructurings, budget cuts and pressured into doing the jobs of two for the price of one, if they were among the survivors that were spared the HR chopping block.
Then of course there are the former employees who were loyal workers for many years and then subjected to the humiliation of being walked to the door with little more than a cardboard box and a taxi chit to show for a decade of blood, sweat and tears for a company. So, how your organization treats people on the way out the door, may be more important than how you onboard them.
In fact, the Journal of Marketing recently cited that while nine percent of customers are typically lured away by competition, 68 per cent are lured away by bad customer service. So it is essential that reputations are built from the inside out.
The reality is that your employees can either be your most enthusiastic ambassadors or your most lethal assassins, because just like consumers, they have access to social media and are just as likely to share and recommend or slay a company and its products to others. If a current or former employee is bashing the place they work, then word will travel fast and employers must be prepared.
4) Social media amplifies internal issues
The proliferation of social media has empowered a new generation of employees and customers with the platforms to share just about anything, anywhere and nearly instantaneously to massive audiences. Treat employees like crap and the world now hears about it, causing a ripple effect.
While smart companies are proactively engaging their customers online, far fewer are focusing on the audience that ultimately makes or breaks their reputation: employees.
There are now countless websites such as glassdoor.com that enable employees to anonymously and very publically share their candid insider views and rate what it really feels like to work there. A nasty tweet, incriminating Facebook post or YouTube video from an employee can inflict more damage with the click of a mouse or smartphone than a national newspaper these days.
The reputational impact of negative employee and customer reviews is proving to have tangible financial impacts, given that we Google products, companies and people online long before we contemplate making a purchase or applying for a job.
The consequence of this transparency and the blinding speed of social media is that organizations must adapt faster than in the past. It is imposing a dramatic shift that is redefining how organizations must operate, organize themselves and communicate both internally and externally.
While these cyber-attacks on reputation are often deliberate attacks by angry consumers, activist groups or your competition, it’s actually your own disengaged employees that companies should be far more worried about.
5) Monitor what is being said
You can’t manage what you don’t measure and monitor, so invest in a technology solution that will give you the information you need to make informed decisions. There are many robust media intelligence solutions available, so it depends upon your needs and your budget.
Bottom line is, if you don’t know what negative sentiments are swirling in the media and you don’t understand how your priority stakeholders feel about your organization, products and services, it is difficult to prepare your leaders and craft credible messaging to intelligently protect your reputation.
It’s not a question of if your organization will face a reputation damaging issue in 2014, but rather when. So we need to be focused on fire prevention and not just firefighting, once a smoldering issue has already become a burning inferno. So let’s proactively prepare our clients and organizations by conducting risk assessments, thoroughly understanding the business, the competition, emerging industry trends and anticipating problems so you can respond effectively with greater precision.
It doesn’t matter what a company claims, it matters how customers rank and share their experiences with the world and what people find when they Google you. So increasingly reputation is about ensuring that your organization responds quickly to social media posts, misinformation and continuously posts fresh, compelling content to suppress negativity and influence what surfaces through search engines.
6) Adopt a 360° perspective to break down silos
As professional communicators it is paramount that we work with executives across our organizations to break down silos and collaborate cross-functionally so that operational business decisions and reputational risks are part of the same conversation. Far too often these conversations are not happening.
Our profession, more than ever, has to collaborate cross-functionally and geographically to create a clear and consistent narrative. Reputation is about aligning words and actions to manage and deliver on the expectations of stakeholders.
As the primary guardians of reputation we must provide 360-degree surveillance in order to respond swiftly with appropriate approvals, to damaging issues and rumours before they spiral out of control.
The vast majority of crises emerge from internal issues that are not identified and resolved, so it is essential that communicators engage with marketing, human resources, operations, legal, I.T., sales, customer relations and other related departments to ensure everyone is on the same page and serve as a radar for detecting potential risks.
Who you are as a company now matters more than what you sell. So those that protect their good name will enjoy a true competitive advantage. Also, when reputational issues surface in the future, your will be far more resilient.
The most successful companies are learning that the most powerful and authentic way to build their reputation is from the inside out. That’s because by investing in their own people, they are enlisting their greatest potential ambassadors. Employees are the ones driving the conversation these days, both online, at dinner parties and at your kid’s neighbourhood playground.
The irreverent billionaire investor Warren Buffet said it best; "It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you´ll do things differently." So encourage your leaders to do things differently, because, sparkling reputations are indeed built from the inside out.
Author’s details:
Heath Applebaum, ABC, MCM is the owner of Echo Communications Inc. a leading reputation management consulting firm based in Toronto, Canada that has been helping clients from start-ups to multinational companies since 2000. Heath has led reputation strategies for a dozen multinational companies and has spent the past 17 years protecting and building some of the biggest brands in the world. Heath is a global award-winning thought leader that has spoken at more than 40 industry conferences and is a graduate public relations professor. Heath holds a Master’s Degree in Communications Management from the DeGroote School of Business at McMaster University.
The Author
Heath Applebaum
Heath Applebaum, ABC, MCM is the owner of Echo Communications Inc. a leading reputation management consulting firm based in Toronto, Canada that has been helping clients from start-ups to multinational companies since 2000.
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