Reputation Management: Mind the Gap

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you'll do things differently.” (Warren Buffet).

With that wise counsel in mind you would be forgiven for believing that corporations have this covered . And yet, major, reputation-scarring scandals pop up in our news feeds all too frequently. In recent years we’ve seen VW plunged into crisis when it was found to have cheated on emissions standards, Wells Fargo Bank fined $3 billion after employees were caught creating fraudulent bank accounts on behalf of their customers and BAT agreed to pay more than $629 million to resolve bank fraud and sanctions violations charges with U.S. authorities, arising out of a scheme to do business in North Korea. To name but a few.

Why, if scandals are so harmful and corporations care about their reputations, do they persist? Is it because corporations are thinking too narrowly and overemphasizing managing the brand on social media and crisis management? Certainly, those are necessary and important reactive capabilities. But past scandals tell us that often misalignment between the values that a corporation espouses and the reality of corporate actions is where scandals are born and corporate reputations are trashed. The challenge for corporations keen to avoid falling into this gap is both cultural and organizational.

Setting the right cultural tone requires a crystal clear position statement at the highest level - essentially, that reputation is viewed as one of the corporation's most valuable assets and that to protect that reputation everyone must live up to its values. Critically, the leadership has to walk the talk on this and be seen to be doing so.

The organizational component includes structures and accountabilities to ensure that the organization lives its values everyday. Because corporations behave through multiple daily individual or group decisions, often across multiple time zones, a cross functional approach to preventing misalignment is recommended. Allocating this responsibility to a single function could be less effective, not least because it may unintentionally exclude other functions and leaders with a vital role to play. This team should be accountable for a comprehensive and diligently executed cross organizational plan which engenders a sense of employee investment in the corporation's reputation.

In short, as London Underground announcers remind us: “mind the gap”.