Rebuilding reputation
WHEN A BRAND or corporate reputation gets stained, a number of studies have shown that it takes a lot more than traditional public relations strategies to regain public trust.
In 2009, multinational management consulting firm McKinsey & Company ( McKinsey) conducted a study about rebuilding corporate reputation — given the previous year’s financial crisis that left several companies incurring the wrath of legislators, regulators, and the public.
This was confirmed when McKinsey surveyed senior executives across the globe, and 85% and 72% of them, respectively, said that public trust in business and commitment to free markets had indeed deteriorated.
Meanwhile, a separate survey — the 2009 Edelman Trust Barometer — proved that the executives read the public mind correctly: 62% of the Edelman respondents across 20 countries said that they trust corporations less then (at the time of the survey) than they did a year ago.
According to McKinsey, the breadth of the reputational challenge at that time was a consequence not only of the speed, severity, and unexpectedness of prior economic events, but also of “underlying shifts” in the reputation environment. These shifts involved the increasing importance of Web-based media participation, the growing significance of non-government organizations and other third parties, and declining trust in advertising.
“Together, these forces are promoting wider, faster scrutiny of companies and rendering traditional public-relations tools less effective in addressing reputational challenges. Now more than ever, it will be action — not spin — that builds strong reputations,” the authors wrote in the 2009 report.
In a separate interview with The McKinsey Quarterly, political strategist Stanley Greenberg and former Hill & Knowlton Chairman and Chief Executive Officer (CEO) Howard Paster discussed some steps that tainted companies can take to rebuild trust.
“Responsibility is critical. I don’t mean assigning responsibility, but people in positions of responsibility assuming responsibility. There is probably nothing more important to get right than conveying that the leaders of companies recognize this is a special moment,” said Mr. Greenberg. “I also think this is uniquely a time when the answer to the reputation problem lies less in what you are doing externally and more in what kind of company you run — the way you deal with your employees and consumers, the behavior, and compensation of leaders. I don’t think you address this problem by doing more work in food banks or in neighborhoods; I think this is really about business practices.”
Mr. Paster, on the other hand, said that the first thing the company has to do, especially those in financial services, is to separate itself from the problem.
“Explain to people that you weren’t part of the problem, assuming you weren’t. You need to come up with specific ways to put distance between you and the bad guys. For example, the public face of a company is a big deal. Companies in trouble are wise to change their chief executives.”
Leslie Gaines- Ross, author of Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation, thinks the same.
“About half of the company’s reputation is attributed to the CEO. He’s the face of the company. He’s the person who really sets the value. He’s the voice of the company. The second you have a crisis, everyone is saying, ‘ Where is the CEO? What is he or she saying about it?’,” Ms. Gaines-Ross said in a 2008 interview with Forbes.com. “If he or she stumbles, it hurts the reputation of the company.”
Ultimately, when a company is in trouble, Mr. Paster explained that bringing in people whose reputation is such that he or she, by virtue of being an independent auditor or an independent investigator, can become part of the “cleansing process” and identify problems, be believed by the media, and authenticate changed behavior.