How not to manage a crisis

FORD South Africa has suffered huge damage to its reputation thanks to its poor handling of the Kuga crisis.

There can be little doubt that the crisis has hurt the company’s reputation, and could even prove fatal to its South African operations.

Ford South Africa has clearly made some elementary mistakes.

Companies today recognise the importance of a strong corporate reputation as a critical strategic asset, which translates into a source of competitive advantage.

Proper crisis management is crucial for a company.

In fact crisis management is only effective if there’s already a reputation management process in place.

This should be done during the “good times”.

A member of the executive should have been assigned responsibility for the company’s reputation.

If this is done properly, managing a crisis is always easier as goodwill would already have been built over time.

Once a crisis hits, it is extremely important to act immediately:

ý The company must acknowledge the problem immediately;

ý It must engage empathetically with customers; and

ý It must answer questions from the media as honestly as possible.

It then needs to plan its next steps – in order of priority.

It seems as if some companies still think that they can keep facts away from the outside world.

In the old days, companies had the luxury to hide, but this was before the internet and social media arrived.

Reputations are built on trust.

But in recent years the business world has been shaken by economic disruption, unethical and fraudulent practices, bad publicity and cracks in capitalism’s foundations.

People have lost their trust in companies, so companies’ reputations come under attack more easily.

This is fuelled by the media, the internet, social media and pressure groups.

Customers are increasingly interested in the way large companies behave and have become more vocal in calling for transparency, accountability, and social and environmental responsiveness.

Companies’ reputations are built more on emotional factors like trust, pride, admiration, liking and a good feeling than on rational factors such as corporate performance or the quality of products and services.

Clients and customers are applying a whole new set of criteria before buying products and services.

These include ethics, values and stakeholder democracy.

Reputation isn’t formed just by a company’s PR and branding efforts.

Most people form their impressions based on limited information or others’ opinions.

Factual information is not enough for customers to form an opinion.

To acquire a favourable brand reputation companies should make sure that they pay attention to a range of dimensions. The most important is that they should try to build a strong emotional bond with their customers and other stakeholders.

They can do this by ensuring that the company is admired, trusted and respected, and that customers are proud to be associated with it.

Looking after the company’s more tangible issues also plays a role. Companies should pay attention to: ý Corporate social responsibility, including social engagement and being environmentally friendly;

ý A strong corporate performance. This includes strong and visionary leadership, sound financial decisions, strong financial performance and solid market leadership; ý Being a good employer; and ý Making sure that customers have a good service experience – both in physical and online spaces.

But given the scale of the anger and mistrust directed at Ford South Africa it’s clear that even if it had ticked all these boxes, its management of the current crisis has left a lot to be desired.

Its reputation is so badly damaged that even a massive PR campaign won’t help it much at this stage.

What is essential, even at this late stage, is direct, honest and authentic communication with customers as well as stakeholders such as dealers, employees, the media and the National Consumer Commission.

In particular, customers who have lost confidence in Ford and its products should be treated extremely well and be reassured.

The company needs to give people a reason to trust it again.