Wor­ried your rep­u­ta­tion is like Bell Pot­tinger’s? Then don’t do bad things

The Guardian Australia - - Opinion - Ste­fan Stern

It is a sign of the times. What did we ex­pect? Of course a mul­ti­mil­lion-pound, in­ter­na­tional PR firm trusted by world lead­ers and cor­po­rate ti­tans to keep their noses clean and their dark se­crets out of the pa­pers has col­lapsed … be­cause it has lost its rep­u­ta­tion. In a world turned up­side down, this de­vel­op­ment must be seen as busi­ness as usual. We should have seen it com­ing. “Who will do PR for the PR peo­ple them­selves?”, as the poet Ju­ve­nal might have said if he were still around.

But los­ing your rep­u­ta­tion is no joke, es­pe­cially if an en­tire busi­ness or or­gan­i­sa­tion can col­lapse as a re­sult. This is some­thing busi­ness lead­ers are in­creas­ingly aware of. What are they do­ing about it?

A new sur­vey out to­day from the Bri­tish Stan­dards In­sti­tu­tion (BSI) sug­gests cor­po­rate lead­ers are still fail­ing to join the dots be­tween the pos­si­bil­ity of rep­u­ta­tional dam­age and the prob­a­ble causes of dis­as­ter. The BSI’s “or­gan­i­sa­tional re­silience in­dex”, based on the responses of 1,250 in­ter­na­tional busi­ness lead­ers, found that 43% be­lieved their or­gan­i­sa­tion was “strongly sus­cep­ti­ble to rep­u­ta­tional risk”. This risk was seen as a greater pri­or­ity or threat than their fi­nan­cial per­for­mance, their own lead­er­ship or the vi­sion and pur­pose of the or­gan­i­sa­tion.

Yet is­sues such as get­ting the or­gan­i­sa­tional cul­ture right, build­ing align­ment or sim­ply think­ing ahead to try to an­tic­i­pate prob­lems (“hori­zon scan­ning”) were seen as much less im­por­tant. It’s as though lead­ers in the board­room sense that some­where out there a cri­sis is about to blow up, but it’s just a bit too hard to find out what it might be. So they hope for the best and brace them­selves for an un­pleas­ant sur­prise, which they fear could be com­ing. We could call this the “ig­nore the drip­ping tap” school of lead­er­ship.

The dilemma, es­pe­cially for lead­ers of listed com­pa­nies, is that the ex­pec­ta­tions of in­vestors seem to be pretty sharp and im­me­di­ate, whereas with luck any cri­sis that fi­nally erupts will do so only af­ter the cur­rent lead­er­ship has moved on. So it is tempt­ing not to open any or­gan­i­sa­tional cans of worms while you are still in a po­si­tion of re­spon­si­bil­ity. Let the next (un­lucky) per­son sort it out.

This is, of course, bad. It is ir­re­spon­si­ble. Good lead­ers worry about the fu­ture of the or­gan­i­sa­tion and the con­di­tion it will be in when they hand it over. While crises may ap­pear to blow up sud­denly, they know they are usu­ally years in the mak­ing.

As An­thony Fitzsim­mons and Derek Atkins wrote in their book pub­lished ear­lier this year (Re­think­ing Rep­u­ta­tional Risk): “Typ­i­cally a cri­sis has mul­ti­ple root causes, of­ten sys­temic, that re­main un­recog­nised and un­man­aged but grad­u­ally ac­cu­mu­lated over the years to make the or­gan­i­sa­tion vul­ner­a­ble to crises gen­er­ally; and when a trig­ger ma­te­ri­alised, to … one in par­tic­u­lar.”

Re­cent events at Bell Pot­tinger seem to bear this de­scrip­tion out. The sub­ti­tle to Fitzsim­mons and Atkins’ book, by the way, is worth not­ing: “how to man­age the risks that can ruin your busi­ness, your rep­u­ta­tion and you”.

Here’s some free PR ad­vice for busi­ness: don’t do bad things. They will prob­a­bly be un­cov­ered, even­tu­ally. Some­times lead­ers know per­fectly well that bad things are hap­pen­ing some­where in the or­gan­i­sa­tion, but short-term prof­itabil­ity seems to de­pend on that bribe be­ing paid or health and safety cor­ners be­ing cut. And if a daunt­ing hi­er­ar­chy or in­tim­i­dat­ing lead­er­ship style means that bad news from the front­line is not wanted then lead­ers will re­main ig­no­rant, or at least main­tain plau­si­ble de­ni­a­bil­ity. Fitzsim­mons and Atkins call this phe­nom­e­non the “risk glass ceil­ing”. Even though there are things lead­ers need to hear about they never will – un­til it is too late.

It is feared that new tech­nol­ogy will de­stroy jobs, but in fact the al­ways-on, high-speed world of on­line com­mu­ni­ca­tions means that busi­nesses and or­gan­i­sa­tions re­ally need to keep a con­stant watch on what is hap­pen­ing (and what is be­ing said about them) around the world at any time. This ought to mean the cre­ation of a lot of new jobs. That is my sec­ond piece of free ad­vice.

The fa­mous in­vestor War­ren Buf­fett once wrote in a let­ter to his top man­agers: “We can af­ford to lose money – even a lot of money. But we can’t af­ford to lose rep­u­ta­tion – even a shred of rep­u­ta­tion.” The “sage of Omaha”, as he is known, was right. You don’t know what you’ve got till it’s gone.

• Ste­fan Stern is a man­age­ment writer and vis­it­ing pro­fes­sor at Cass Busi­ness School

Pho­to­graph: Toby Melville/Reuters

‘The col­lapse of Bell Pot­tinger must be seen as busi­ness as usual.’

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