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REPUTATION RECOVERY

REPUTATION RECOVERY

Het Financieele Dagblad, a national newspaper in the Netherlands, shared Ahold's legal counsel's tips to for surviving an accounting scandal:

April 11, 2008

Forbes interviewed Leslie Gaines-Ross, Chief Reputation Strategist for Weber Shandwick and the author of Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation. Click here for the interview and slide show. The 12 Steps are:

  1. Take the Heat. Leader First
  2. Communicate Tirelessly
  3. Don't Underestimate Your Critics and Competitors
  4. Reset the Company Clock
  5. Analyze What Went Wrong and Right
  6. Measure, Measure and Measure Again
  7. Right the Culture
  8. Seize the Shift
  9. Brave the Media
  10. Build a Drumbeat of Good News
  11. Commit to a Marathon, Not a Sprint
  12. Minimize Reputation Risk


A new book written by Dr. Leslie Gaines-Ross identifies compelling reputation recovery strategies. Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation (John Wiley & Sons) is a practical guide for leaders interested in the long road back to reputational health after experiencing reputation damage. The book provides a 12-step model based on research and best practices that any company can customize and apply to rebuilding and restoring its good name—and prevent it from being tarnished in the first place. Dr. Gaines-Ross is Chief Reputation Strategist at Weber Shandwick.

Shell Oil hosted a small group discussion with Virginia influencers in effort to help repair their poor reputation. The oil industry took a major reputation hit when gas prices skyrocketed after Hurricane Katrina in 2005. Acknowledging that the oil industry has the lowest favorability rating of 21 major industries, Shell Oil made it a priority to engage both supporters and adversaries on the prospects of opening a drilling area 50 miles off of Virginia’s southern coast. Executives led 90 minute small group discussions with Virginians, answering their energy-related questions and explaining Shell’s position on the future of energy and their expansion plans. USA Today reports that the event “won plaudits from many attendees for reaching out to the public.”

Fortune reports that when Frank Blake took over as Home Depot’s CEO, he called upon Home Depot’s founders for advice. Arthur Blank and Bernie Marcus act as advisors, walking the stores and providing input on pricing, merchandising and dealing with Wall Street. According to Fortune, experts say that it is rare for CEOs to recognize the value of consulting with retired leaders. (Fortune, June 11, 2007)

The road to reputation recovery is not an easy one, as Dr. Leslie Gaines-Ross outlines in her column for Ethical Corporation. Dr. Gaines-Ross explains that there are several “rules of the road” when repairing a tarnished reputation:

  1. Take the long view – on average, companies should expect that recovery will take about 4 years to successfully rebuild a damaged reputation
  2. Face the crisis head-on – the company and its chief executive needs to be publicly forthcoming about what they are doing to resolve the crisis
  3. Break into easy pieces – the path to recovery should ideally be broken into short segments (around 90 days each)
  4. Don’t underestimate your critics – avoid being caught off guard by organized (and disorganized) criticism in the recovery process
  5. Act responsibly – the value of corporate responsibility should not be overlooked

The bottom line is that a crisis does not need to permanently damage a reputation – with responsible and organized action, companies can turn what is a negative event into an opportunity for change and positive growth.

What are companies to do if the CEO – who is so closely intertwined with the brand – experiences a reputation crisis? This question is addressed by http://knowledge.wharton.upenn.edu/signup.cfm?CFID=1591517&CFTOKEN=13319510, where they point out that creating a celebrity executive can be very beneficial from a marketing perspective, if the proper safeguards are in place. When a company successfully builds a relationship with a person who personifies the company, “brand personification can tap into the human desire to belong to a community.” But the downside is that if the person becomes involved in a scandal or reputation crisis, then the “degree to which the product is tied to the person can make or break a company.” Martha Stewart is a prime example. The best approach is one of balance – building a strong identity for the brand that is not tied exclusively to the individual.

Someone usually has to pay the price when a company's reputation is in crisis. HP's ouster of chairwoman Patricia Dunn is a case in point. Recent research (Wall Street Journal Online/Harris Interactive Personal-Finance Poll, 2006)found that nearly one-half of American citizens believe that the board is most responsible for corporate governance, an increase since the survey was conducted in 2005. About twenty percent choose the CEO as most responsible and the remainder select senior management as the culprits when governance goes astray. Clearly, the American public now understands that board members are not just window dressing and are as liable if not more liable than CEOs when companies do wrong. Over one-third of Americans even say that poor governance has led them to reduce or divest holdings in a company. In comparison, Weber Shandwick's research found that global business executives assign a majority of the blame to the CEO.

The weight of a company’s reputation on a CEO has been documented time and time again. And especially when CEOs inherit a crisis-ridden company, the pressure is even stronger. As noted by Debby Young in Repairing a Damaged Reputation, these CEOs “face an uphill battle.” The key is taking a practiced, deliberate approach:

In the end, “[f]or any reputation-rebuilding initiative to succeed, the CEO needs to enlist all the stakeholders: not just employees but also suppliers, dealers, customers and investors.”

Stefan Stern in the Financial Times points out that “[o]f all the tangible assets that a business might want to quantify and enter on to its balance sheet, reputation is at once the most valuable, most delicate and hardest to pin down.” Stern explains that when managing a crisis, the midst of one is not the time to create a new approach to managing a company’s reputation. Instead, companies who are adept at managing crisis situations are ones that view reputation management as an on-going issue. Put more starkly, “[y]ou will have no one else to blame if your corporate reputation suffers.”

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