Posts Tagged ‘reputation recovery’

You've heard this statement before. "What you spend years building, someone can  destroy overnight." I have probably written this several times on this blog when talking about crisis and reputation risk and I certainly wrote something very close in my book on reputation recovery. Well today it was cited in an article about GM's former CEO Rick Wagoner. The article was about his graduation speech made at Virginia Commonwealth University. A short 12 minute speech about "taking risks and accepting defeat gracefully."  He has been silent for over three years. Talk about grace.  But in his closing lines, he made the statement about building and losing reputation which Mother Teresa apparently said (I did not know and am glad to have learned the origin of this statement). And he added his own two cents at the end to this famous piece of advice about reputation. He said "Build anyway." A good reminder to those who wonder if being CEO is worth it or leading a country, I might add.

I met Howard Schultz at a luncheon years ago when I was at Fortune. His company was pretty much in its infancy and we talked about Brooklyn.  Needless to say, he's a great one to follow when it comes to reputation-building, engagement and reputation recovery. In an article I read about him recently where he was named businessperson of the year, Bill Bradley, the senator, basketball star and board member of the coffee company, noted how reputation was central to their success. Bradley said, "You don't get millions to support your social networks just by selling coffee. People have to admire the company." 

I have been pretty enamored by Schultz's political action where you can buy an American-made Indivisible wristband in the stores as a thank you when you donate to the Create Jobs for USA Fund. Last week I bought one in our local Starbucks because if my $5 can make a difference for even one person, I'm in. 

As I may have mentioned before, I also met the head of Starbuck's Ethics & Compliance several months ago at a meeting and was impressed by his thoughtfulness and mission. And a young woman I have mentored for many years and is now working her way through college works at a Starbucks in midtown. She adores it and it has introduced her a decent job that has influenced her interest in majoring in business.

There have been many touchpoints with the brand over the years and they all seem to add up.  Just like the wristband says, reputation is indivisible. The whole is greater than the parts but the parts, the touchpoints, can all add up to a halo-like shield that makes a company's reputation harder to destroy and easier to admire. That's reputation at its best. It takes years to build and many bumps along the way. But when it gels, it is a wondrous thing to admire.

23 Tips on Bed Bug Eradication, Cleansing and Reputation Recovery. I thought it was a mistake. I could not figure out what reputation recovery had to do with bed bugs. In fact, it gave me the creeps. I figured it was one of those online snafus where words get mixed up with lots of symbols #)@++&&& or something like that. I was wrong.  In fact, it was an article on eradicating bed bugs and the site was referencing some wisdom from my book.  Here is a snippet from it below. I never thought I gave out buggy advice but maybe I was wrong.

Did you know it can take up to 3 years to gain back the trust of your customers? Below are some thoughts offered from the book Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation. “The best steps to beginning the reputation recovery process range from having the CEO announce specific actions the company will take to respond to the problem, tireless communications through a wide variety of external and internal channels and a comprehensive re-examination of company culture and its commitment to corporate responsibility. A recovery strategy that continues to grow in importance…is the use of the corporate website to relay information, progress and updates about company actions.” There’s more but I’m sure you get the idea. The GM for the hotel must step forward and take full responsibility for the issue and communicate, communicate, communicate. As you can see, bed bugs are a nuisance that cannot be ignored. If you walk away with anything from this series, it should be the knowledge that regular proactive inspections are imperative. As I always state at the end of my articles, addressing the subjects I discuss will increase your revenue, improve your scores or decrease expenses. Being proactive in your bed bug management will in the long run benefit all three areas.  Good luck and let me know how you do.

Took me a few days but finally found a chance to read a fascinating review in the Financial Times of the impact of the insider trading scandal at management consultant McKinsey & Company and its impact on their reputation. Andrew Hill did a fine job providing a historical review of McKinsey's ups and downs over the many years of its storied existence and finding former partners and employees to offer their perspectives. As you already know from the trial of Raj Rajaratnam of Galleon Group, the hedge fund CEO is accused of insider trading using tips from former McKinsey partners' Anil Kumar and Rajat Gupta, global managing partner who left after several terms in 2003.  What intrigued me of course was how McKinsey was recovering from this reputation catastrophe and how it fit with the best practices in my book on reputation recovery. This is not just a bruise but a serious injury to McKinsey's reputation. Here is what they did so far:

• Communicated regularly with employees and former employees
• Initiated an independent inquiry with the help of a law firm
• Improved processes over protecting confidential client information
• Reviewed its ethics policies and standards
• Redefined what constitutes "material non-public informtion"
• Built a formal "stop-list" of client stocks that no McKinsey person can trade (not just those assigned to the account)
• Added new training procedures
• Strengthened governance

True to its highly analytical way of attacking corporate challenges (they work for 90 of the top 100 companies in the world, among others), they looked back at how they handled prior problems. Coincidentally, the article points out that they had been putting together a comprehensive internal history of the firm which luckily offered them insights on how they have historically dealt with challenges to their reputation and livelihood. The latter best practice is one I highly recommend to others. In my book, I talk about the importance of the Rewind period where companies study their mistakes to from the past to create a better future. Lord John Browne of BP did so after the refinery fire in Texas City and asked the question of how they did not see the pattern of errors that turned deadly sooner. Looking in the rearview mirror may take time that leaders do not think they have but critical warning signs are often present. Retromining is a critical piece of recovering reputation. As the new McKinsey global managing director, Dominic Barton, also did, he studied other thriving cultures that failed. As Barton said in the article, he had been “thinking what happened with the suppression of the Jesuits in the 1700s. This may seem strange, but [it was] an organisation that was thriving and doing well and all of a sudden was severely challenged.”

Another stat to add to the many on how long it takes to recover reputation. Actually I should say...to add to the few. There really are not that many besides the one we did some research on that shows it takes about three to four years after a crisis. However, I found this one from the Ponemon Institute and Experian that says that nearly 850 executives say that it takes about one year to restore an organization's reputation after a data breach.  It also found, depending on the type of breach, that the average loss ranges from $184 million to over $330 million. Or put another way-- the minimum brand damage is a 12% loss which could increase to 25% of the brand value if the breach was horrific. Just as disturbing is the lack of data breach preparedness according to the research. A fairly large 43% had no plan in place to deal with a breach of confidential leak or theft of customer data.  Perhaps this is why there seem to be so many. Most companies are unprepared and do not think of a data breach in the same way they do another type of crisis that is more common. Either way, it is critical to be prepared since if you really want to make your customers mad, a data breach is a surefire way to make that happen.

Reed Hastings, CEO of Netflix, in response to recovering their reputation after several recent missteps:

"The focus is on bringing back our reputation and brand strength, but it won't happen through grand gestures."

 

  The trading scandal at UBS brings to mind the long journey that companies undertake to recover and restore reputations. UBS is now back at square one as they deal with the recently revealed $2.3 billion rogue trading. This reputation disaster brought me back to the days of the Societe Generale SA rogue-trading incident three years ago. If you recall, Jerome Kerviel managed to lose $7.2 billion on his derivatives scheme. The reputation drag on SocGen's reputation today and on UBS tomorrow is quite real. The SocGen scandal has not entirely faded in the past three years. In fact, everytime one reads about what happened last week at UBS, the SocGen scandal gets replayed. This is unfortunate for those who go down the path of reputation recovery like SocGen. SocGen's recovery program was quite extensive when you look at it from a three year vantage point -- they dismissed Kerviel's bosses, demanded that the bank move slower as new security systems were put into place and launched an internal controls program called "Fighting Back."  In addition, other measures were set forth such as spending on new IT security, starting a newly independent accounting group, beginning a SAFE (Security and Anti-Fraud Expertise) program to oversee financial operations and training 7,800 employees about fraud. Ultimately the CEO and chairman stepped down one year later.  All these remedies for recovering reputation came from an article in yesterday's WSJ and I was glad to be able to list these steps for other companies contemplating what to do when faced with sky rocket type scandals. Yesterday morning started off with an email to me from Netflix's CEO Reed Hastings. I immediately went to the Netflix's CEO apology on the blog.   What confused me however was the tone of the video. Although I am a loyal customer and fierce advocate of what Netflix has done for delivering movies to my home, I thought that the video apology was abit too cheery (outdoors in sunny California. albeit a parking lot) and efficient.  Maybe too rehearsed is the right word. I did not get the sense that this was a very repentent CEO who had seen his stock value decline 52% since the change in pricing occurred. But what really threw me was that he did not share the stage alone. In the video, CEO Reed Hastings had the new head of the DVD spinoff, Qwikster, Andy Rendich, joining him.  I always say that CEOs get all the credit when things go right but all the blame when things go wrong. Why did Hastings deflect some of that blame on this poor soul. I cannot remember the last time (if ever) I witnessed a CEO apology tied to the announcement of a new spinoff. I sincerely doubt that was a good launch plan for Qwikster. My sense is that there's more apologizing to come. This poor guy Andy looked like he too was somehow responsible for the communciations debacle. Despite these ramblings, the article on the Netflix problem in today's New York Times made me smile. The authors wrote, "But in the short term, the risk to corporate reputations is palpable."  It is not often that I even see the words "corporate reputation" in a top tier publication. Usually it is referred to as brand health or brand reputation or positioning.  It is fairly rare to see corporate reputation used as a commonly understood concept.  My two cents is that short term feels like long term these days when you are in the spotlight. As someone said to me, it's like a nuclear assault whether it is 6 days, 6 weeks or 6 months. Ultimately, Netflix will be forgiven but like the SocGen example above, reputation damage takes its toll and lingers longer than most CEOs care to imagine.

Last night I could not help but wonder how the huge decline in the Dow of 500+ points was a reflection on the perceived reputation of the U.S. government as well as the country itself. I was not at all surprised to see a poll today that expressed basically the same thing. Here is what I knew to be true as I turned in last night: almost three-quarters of the American public believe that the congressional debate over the debt ceiling agreement has harmed the worldwide image of the United States . And a whopping 82% say that the debate was all about political advantage, not what is best for the country. The reputation of the US has been severely bruised in the eyes of its own citizens and certainly around the world. We have plenty of reputation repair to do if distrust of government becomes the new normal. Whereas most companies and their leaders recognize that reputation is essential to their success today, our dueling political parties have yet to truly acknowledge how all the rancor and incivility is a vote from the daily majority about their behavior and decision-making. For more on civility in America, please click here for Weber Shandwick's recent poll. As I looked into people's somber faces last night as I subwayed home, I could not stop thinking about how the American public had given the reputation of the US a solid "thumbs down" on confidence in this country's future. You don't even need a poll to tell you what we already learned from the Dow. Reputation rules whether it's related to a company, a brand, an individual, an organization or a country. We cannot afford more reputation erosion on our country's reputation. In addition to a bipartisan committee on how to reduce the debt, I think that we should be calling for a task force on restoring our reputation for the long-term.  As more people tune out of government, as we learned in our survey, the harder it will be to build back America's reputation for getting things done.

CEO Richard Branson of Virgin Atlantic on Reputation Recovery below. Definitely a reputation quote to keep. Branson was asked here about reputation in response to the phone-hacking scandal:

"Your reputation is all you have in life – your personal reputation and the reputation of your brand. And if you do anything that damages that reputation, you can destroy your company," Richard Branson said. "...and it's going to be very difficult for that brand to ever recover."

"Misbehaving in front of others can ruin your reputation even if you are a fish, according to an international study that has shown for the first time an audience can influence levels of cooperation in non-human animals. Scientists from The University of Queensland (UQ), University of Cambridge, and the University of Neuchatel have found that cleaner fish that remove parasites from larger ‘client' fish – providing a type of cleaning service – are less likely to bite their client if they have an audience of other fish (eavesdropping bystanders). These cleaner fish sometimes get greedy and bite clients rather than sticking to parasites. This bad behaviour brings mealtimes to an abrupt end as the disgruntled larger fish swims off. The study, which was published in Current Biology today, showed that other large reef fish that observe this behavior avoid the cleaner fish that have a reputation for biting. Study co-author, UQ's Dr Lexa Grutter, said the group's research has demonstrated for the first time that having an audience can influence levels of cooperation in a non-human animal. “Having an audience makes cleaner fish work to improve their reputation by behaving more cooperatively,” Dr Grutter said. “The fish in the audience – what we call ‘eavesdropping bystanders' - used image scoring to decide which cleaner fish to avoid.” Future research will investigate whether cleaner fish care about their reputation more if the bystanders are more valuable clients. The paper ‘Cleaner wrasses Labroides dimidiatus are more cooperative in the presence of an audience' is available online. The bluestreak cleaner wrasse (Labroides dimidiatus) is one of several species of cleaner wrasse found on coral reefs in much of the Pacific Ocean and the Indian Ocean, as well as many seas, including the Red Sea and those around Southeast Asia. Like other cleaner wrasses, it eats parasites and dead tissue off the surface of larger fish in a mutualistic relationship that provides food and protection from predation for the wrasse, and considerable health benefits for the other fish."