Is reputation management the same as corporate social responsibility? Should our company send press releases for good news but close ranks when it's bad news?
Myths about reputation management are rarely made as explicit as these questions, but misunderstandings such as these create a disconnect. A global survey by Deloitte ranks reputation as executives' top strategic risk, but the study found most reputation management programs don't support their business strategy very well.
Consumers have greater impact than ever in determining a company's reputation. With the press of a "like" or a negative review in the "comment" corner, consumers are empowered to drive a firm's reputation up or down the flag pole.
Companies in industrial sectors typically have the most developed approaches to reputation management because they have been forged through real crises where human health and safety is at risk. But now, perceived risk can threaten a company's reputation just as much as actual threats to health and human safety.
The safety of food, beverages, drugs, chemicals, and other consumer products used to be the sole purview of scientific laboratories and scientific study. That important work continues as sound science, thankfully, grounds most of our regulatory decisions. But these processes face pressure from conversations about perceived safety, which is an activity best described as BYOF: bring your own facts.
Consumers can impose decisive retaliations across the food and beverage industry, in particular, when companies' supply chains do not align with consumer opinion. For example, even the largest restaurant chains have been pressured into using cage-free eggs, but not because of scientific evidence. An exhaustive 5-year study by the Coalition for Sustainable Egg Supply concludes cage-free worsens -- in as many ways as it improves -- safety and the treatment of animals. Rubbing salt in the industry's wound, extensive research even shows consumers are unable to correctly describe what cage-free means!
This raises the practical question of how companies successfully defend their brands when facing allegations their products are unsafe.
The most succinct advice comes not from a CEO or a PhD, but what the lyrics of country music star Tracy Lawrence say about a truck going off the road: "Find out who your friends are." Effective stakeholder engagement when facing allegations and consumer uncertainty is about reaching out to both friends and critics with personalized messages.
Friendly stakeholders -- other companies in the value chain, trade associations, and consumers pre-disposed to being supportive -- who are kept informed and given a few tools can become public advocates through troubling times. Friendly stakeholders who are not courted quickly disappear to the apathetic middle or, worse yet, become critics.
Critics are legitimate stakeholders who need to be engaged as such. Acknowledging opponent's benign claims gets the public's attention. Reinforcing congruence with trusted bodies such as government regulators builds one's own trust. Good product defense does not stop the public from getting outraged but it does stop public outrage from becoming catastrophic to the company.
In contrast, purposefully avoiding critics builds unnecessary mistrust. It is perceived at best as disrespectful and at worst as deceitful. Due to online social and web search, like-minded consumer activists can easily find others in the herd who share their criticisms. Consumers may be lined up around the block buying your product today, but it takes only a few buttons and a good breeze for consumers to line up boycotts.
Threats to reputation cut across the senior decision-making team. Around the table will be legal, finance, marketing, investor relations, and the list goes on. But when something affects the reputation of the company, the one person who is really needed at the table is someone who cannot: the CEO 20 years from now. For consumer companies facing reputational threats, today's critics need to be tomorrow's customers -- a task made immeasurably more difficult if they were ignored during the troubling times.
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