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How to Prepare for a Reputational Crisis

Posted by The Brain on May 26, 2021 8:19:12 AM

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Scandals in the halls of power shake voter confidence in leaders. A reputational crisis has the same effect for your clients and their customers. In fact, reputational loss can have catastrophic effects for your clients. 

MKT-584 - Partner Newsletter Graphic - 26 May 2021-01


What are the long-term effects of a reputational crisis?

Australia has recently been rocked by a scandal in Parliament, consisting of allegations of workplace harassment, abuse, assault, and other unsafe working practices. Though your clients won’t be as high profile as the federal legislature, any reputational crisis has the potential to become a heavily mediatised event, especially in this age of social media. The impacts can be severe, even for lower-profile organisations.

Some of the effects include:

  • Loss of current or future customers, which leads to lost revenue and/or increased customer acquisition costs
  • Loss of top talent, which increases recruitment costs and/or lowers workplace productivity
  • Loss of current or future business partners, which can lower efficiency and raise costs
  • Increased cost of capital funding via credit or equity markets
  • Increased regulation, including fines or penalties for infractions

Three steps to prepare for a reputational crisis

With the risk so stark, what can your clients do to stay ahead of the reputational crisis threat? We suggest coaching your clients to make every department cognisant of their role as reputational stewards.

What else? Clients likely don’t prioritise reputation management as a key competency within the larger crisis management and business continuity management capability, as they do with cybersecurity, severe weather, or unplanned outages.

Clients need to make the strategic shift. How, exactly? Here are a few suggestions:

  1. Figure out what drives their reputation. Effectively managing reputation involves proactively identifying exposures, perils, and hazards to a company’s reputation, assessing them in terms of likelihood and severity, and then finally exercising risk controls. But to do so, your clients will need to know what’s driving their reputation in the first place. Once they’ve figured that out, clients should enshrine those findings as cultural values, disseminated across the entire organisation.
  2. Apply social monitoring capabilities. If your clients have a formal crisis management and business continuity function, those teams need social media monitoring tools (even simple data feeds), to better understand the threat environment on social media and monitor reputational impact during a crisis (purely reputational or otherwise). Too often, those capabilities are limited to the PR and Marketing function.  
  3. Plan out the response and practice, practice, practice. When a reputational crisis does occur, everyone needs to be ready. Achieving this level of preparedness should be part of the broader crisis management and crisis communication plan and process – that process should also allow for regular plan testing. Clients should have pre-scripted responses (which they can modify) to share on their social channels and some means of monitoring the effectiveness of their responses (on social channels) and recalibrating accordingly.  

Your clients need to identify and control the reputational risk they incur in this social media world. And the best way for them to do so is to get serious about reputational resilience as an organisation-wide priority.

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Topics: Noggin Partners, Partner Newsletter

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