Monday, June 30, 2008

Why Corporate Reputation Crises Are Years in the Making

For many years – from my own experience as a public relations counselor (and that of friends in this field), I know that when the issue of proactive crisis planning for the management and prevention of potential threats to companies’ reputations, senior executives often would listen, nod, then stare silently into the distance. In contrast, any discussion of sales and profits engaged them immediately, eliciting an enthusiastic response.

These days, at least, leadership is likelier to say: “Advance planning would be a good thing to do.” Yet, as I watch their eyes, it’s clear that that they still view planning as pie-in-the sky … an intriguing idea, but down fairly low on their list of communications priorities. It’s pretty clear that most have no immediate plans to spend any dollars today on possibly life-saving planning for tomorrow.

However, the minute an oil field has to be shut down, a product has to be recalled, there is a security problem at the airport or an unethical act by a key member of a company — only then does corporate reputation rise to the top of the board’s agenda.

Obviously, the middle of a crisis is not a good time to be doing crisis planning, as it is strategy formulation under pressure. Management then publicly displays anxiety when they should be conveying calm. Far too often it’s in the midst of a crisis when the conversation begins for many companies … and that’s why so many fail to come out with their reputations intact.

It was not the fact that there were weather delays that ultimately cost David Neeleman, the founder and former CEO of JetBlue Airways, his job. He described the problem as one of faulty communication.

“We had so many people in the company who wanted to help who weren't trained to help," Neeleman said. "We had an emergency control center full of people who didn't know what to do. I had flight attendants sitting in hotel rooms for three days who couldn't get a hold of us. I had pilots mailing me saying, 'I'm available, what do I do?'"

This is a problem that could have been avoided by advance planning.

In truth, most “sudden” crises are predictable. Could the famous Tylenol tampering case have been predicted? Could the “Wendy’s thumb in the chili” scam have been predicted? Could the defects in the batteries used in Dell notebooks have been predicted? A good “potential crisis” discussion at any one of these companies with smart, creative public relations professionals most likely would have yielded these and many other risk-oriented scenarios.

Indeed, the reality is that all of these “sudden crises” were predictable with optimal planning. That is the point: very little happens suddenly. Most disasters are years in the making — be they managerial, product oriented or even natural disasters.

Certainly there are exceptions to the rule, but we often do not hear of these because the crises are avoided or minimized. Any solid reputation manager needs to employ a “Risk Vulnerability Test” with top management at least monthly. This is where potentially sensitive issues for a particular company are reviewed, possible scenarios are visited, and it is determined “how we would address them if…” A priority ranking system of red light, green light, yellow light could help establish which issues require immediate action.

Obviously, a strong reputation is the key to survival. It wins allies, encourages endorsements, expands business and attracts employees. Today most CEOs realize that and many work hard at building reputation. However, many fall short in the crisis planning dimension of the task. They have only themselves to blame if a crisis tarnishes what they’ve labored for years to build.



Technorati Tags: reputation, corporate reputation crisis, public relations counselor, proactive crisis planning, David Neeleman, JetBlue Airways, Risk Vulnerability Test, strong reputation, business, communications, public relations

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