When controversy strikes, public and investor trust is damaged, stock prices often drop, customers choose the competition, people donate elsewhere, market caps can take a hit and CEO heads roll.
A company’s next reputational setback or crisis can emerge from any number of places, often from within the organization. So, it is crucial that organizations identify and address smoldering issues before they become a raging inferno, engulfing the organization. Proactively conducting a 360-degree risk audit to assess your operations and evaluate the quality of your stakeholder relationships is vital. Otherwise, the organization is likely to be blindsided.
Simply put, you cannot manage what you don’t measure, and reputations must be measured over time because they are constantly fluctuating. It is also important to recognize that reputation is not only impacted by your organization’s own behavior, performance and communication, but can be negatively impacted by your competition, activist groups or changes in stakeholder expectations.
Reputation risks come in many varieties
There are many key factors that elevate or damage reputation, from the quality of products and services, to the integrity of leaders, the commitment to social responsibility, how employees are treated, and how transparent, authentic and responsive the organization is.
Unprepared organizations often learn the hard way, with devastating and very expensive consequences. Sadly, I am often called by organizations once the damage is already done and the board or executive realizes just how vulnerable their organization is to attack.