Preventing Reputational Damage

August 17, 2020 Jen Farthing

Whether it's a data breach, a bad customer experience, or the unauthorized use of customer data, any of these issues can lead to a severe damage to your business's reputation—around the world—in just a matter of minutes.


It's a fact that your company's reputation is its most valuable asset. It's irreplaceable. Weber Shandwick's The State of Corporate Reputation in 2020: Everything Matters Now, found that, on average, executives attribute 63% of their company's market value to the company's overall reputation.


Besides its strong positive impact on your bottom line, a good reputation provides a multitude of benefits including:


  • A higher level of customer loyalty and trust
  • More investors and better partners
  • Higher caliber job candidates
  • Expanded sales opportunities
  • Influence in the community and your industry


A good reputation is also a distinct competitive advantage. Customers often choose between you and a competitor based on positive word of mouth from customer reviews, social media, and recommendations from family and friends. So it's not surprising that reputation management always appears near the top of executives' priority lists. Of the top 10 corporate risks cited in Aon's 2019 Global Risk Management Survey, Damage to Reputation/Brand was ranked #2. While Chief Counsels chose Damage to Reputation/Brand as the #1 risk. So imagine, with today's fast and easy spread of information, watching all of the hard work that goes into building a trusted, well-respected brand go away—"Poof!"—overnight!


Additionally, as social responsibility climbs up the list of corporate agendas, public scrutiny on the reputation of corporate CEOs is on the rise. Managing CEO reputations now nearly equals the importance of overall business reputation management. According to the Axios Harris Poll 100, "companies are learning you live and die by the CEO; especially if she or he is 1. Highly visible, 2. Highly identifiable with the company, 3. Highly volatile or scandal-inducing."


The bottom line: the last thing your business wants is to have to move quickly from day-to-day Reputation Management to Crisis Management. Let's take a look at the best ways to prevent damage to your business's reputation.


Reputation Management Planning

Weber Shandwick's The State of Corporate Reputation in 2020: Everything Matters Now found that 76% of executives at firms that experienced a recent reputation crisis said the crisis was preventable. That means your next reputation crisis could be hiding in plain sight. Planning and preparation go a long way toward avoiding a crisis situation. Here are some guidelines to help you prevent and mitigate damage to your business's reputation:


Incorporate the company's values into every aspect of the company

A gap between a company's values and its actual behavior presents a big risk to your reputation. It's essential to live up to your word. Instead of just setting rules, a values-based culture inspires people to do what they should do. Companies that create richer, deeper, more loyal and enduring connections create sustainable advantage. In short: Walk the walk, talk the talk. Always strive to meet and exceed workforce and customer expectations.


Behave ethically

Your organization needs clear policies, including a company Code of Conduct to guide behavior. Encourage people to coalesce around some key principles like:

·      Lead by example

·      Diversity and inclusion

·      Harassment-free workplaces


And if your organization is growing globally, a one-size-fits-all approach isn't sufficient. Your business needs to recognize and adapt to local cultures.


Have a plan

A thoughtful, measured reputation management plan must include crisis management plans that enable your business to act quickly and effectively if and when a crisis event occurs. You need designated leaders to implement the plan, with expert legal and PR advice at the ready. An early warning system, including rigorous social media monitoring, is an essential part of the plan.


Protect against data breaches

Along with a Code of Conduct, you need to have effective data protection policies and procedures in place. With more and more data privacy regulations being proposed around the globe, your organization needs to understand current regulations, adjust internal policies to prepare for fast change, and ensure your workforce is well-trained on cybersecurity and data protection.


Emphasize the importance of customer service across the organization

To help avoid negative customer experiences that can end up going viral, empower your frontline workers to do the right thing and solve problems quickly and thoroughly. Effective customer service builds customer satisfaction and loyalty and has a positive impact on revenue. A Harvard Business School study found that a one-star increase in Yelp restaurant ratings led to a 5%-9% percent increase in revenue.



Focus on employee satisfaction

Staff who are treated and paid fairly are more satisfied and loyal to the company. A satisfied workforce in turn treats customers fairly. Disgruntled employees, on the other hand, are a breeding ground for negative publicity through social media and leaks which can severely harm a company's reputation.


Crisis Management

In the event a reputation crisis erupts, there are several steps you should take to restore trust in your corporate character:

  • Take responsibility: don't point fingers or make excuses. Own it.
    • Deal with the core issue head-on: Acknowledge what went wrong, explain why it went wrong, and assure that a similar mistake won't be repeated.
    • Apologize: don't be defensive or try to explain it all away. Be genuinely apologetic.
    • Be sincere.
    • Respond proportionately: Make sure all of the right people hear the apology.
  • Be Transparent
    • Don't try to cover your tracks – you'll end up creating more issues
    • Don't hide criticism, listen to it!
    • Communicate your follow-up/action plan publicly/ report on progress
    • Ask for feedback



Managing and protecting your business's reputation is challenging, but manageable. It starts with having strong ethical policies that are trusted by stakeholders, who in turn feel secure doing business with you.


If you'd like to discuss LRN's approach to preventing reputation damage, our expert Advisory team can help roadmap your E&C program for 2020 and beyond.








 [SV2]Is there a better way to say this so it doesn't sound unethical like bribery or lobbying? "A voice in the community"?

About the Author

Jen Farthing

Chief Learning Officer at LRN

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