Firestone, Ford, Snow Brand, Mitsubishi, Gap, Nike: research from Oxford University shows corporate social responsibility affects a company’s ability to bounce back after a crisis. Here, Mike Regester, a specialist in corporate crisis management, highlights the role of the community affairs manager.
Research shows that corporate crises are viewed by the majority of business leaders as being as inevitable as paying taxes or death! So why is it that some businesses emerge from crisis situations with their reputations intact and others suffer severe financial and reputational loss?
The reason is that some companies view their reputation with stakeholders as their most important asset – and others ignore it completely.
Two key factors come into play when a crisis occurs. Firstly, what is the prevailing perception among stakeholders of the organisation when the crisis strikes? If the organisation has a long line of “credit” in its Reputation Bank, it can draw on that credit to help it through the crisis. But if its reputation credit is at zero, or worse, in the red when the crisis strikes, it will receive little or no support at a time when it most needs it.
This is why Railtrack was vilified by the media in the aftermath of the Paddington crash and why, today, few people remember the names of the train operators whose trains crashed into each other. For a long list of reasons – not least the perception that it “put profits before people” – Railtrack possessed no line of credit in its reputation bank when the tragedy occurred and therefore bore the full onslaught of media and public anger.
Secondly, a combination of the actions seen to be taken by the organisation in the immediate aftermath of a crisis together with the words spoken by key spokespeople will help to minimise damage to reputation.
When a crisis occurs everyone is shocked that it has happened – yet none of us expect to live in a totally risk free society. If there is a strong line of credit in the reputation bank and the company is seen to take the appropriate action and to express the appropriate sentiments, people’s response is contained at the shock level. Media interest quickly dissipates and life gets back to normal.
If, however, any of these ingredients are missing, the initial shock response rapidly escalates into one of anger. And it is people’s anger which causes lasting damage to the organisation’s reputation and financial bottom-line. It can lead to:
- A boycott of the products or services on which the company depends for its success;
- Expensive new regulation being imposed upon an entire industry because one company in that industry mishandles stakeholder perception of what has happened and tarnishes the reputation of the entire industry;
- Collapse of the share price which can make the company the subject of a predator takeover bid;
The role and importance of community affairs will vary according to the nature of the business and the type of crisis which occurred. In many instances it has a major role to play. I understood the importance of the role when handling the communication aspects of the first crisis with which I was involved.
I was working as public affairs manager for Gulf Oil Corporation when an ocean-going tanker blew up at our crude oil storage depot at Bantry Bay in south-west Ireland – killing 50 people.
For the first few days, the hundreds of reporters who turned up in Bantry focussed on the accident itself. Later, in a bid to keep the “story going”, they toured the local community asking for people’s feelings towards Gulf Oil. Surely the community wanted the company thrown out for good?
Thanks to the corporate citizenship programme we had been running for years prior to the tragedy, reporters encountered only support for the company – in spite of local families having been tragically bereaved. Fortunately, we had sufficient credit in our reputation bank to help overcome this potential additional source of reputation-bashing publicity.
Today, the role of community affairs in managing reputation is even more important than it was then. Research tells us that people do not know who to trust anymore. Government, politicians, big business and scientists are no longer believed or trusted. Those of us working in communication therefore have to work harder in ensuring that we listen to and acknowledge the concerns (whether real or perceived) of our various stakeholders. We also have to work harder at communicating what we are doing to minimise the risks on which those concerns are based – while communicating the benefits provided by the organisations we represent.
Every organisation needs a reputation risk radar screen to monitor, and therefore be able to manage, reactions of the local community to activities taking place at local sites. Awareness of the views and perceptions of the local community is vital because of its ability to influence the views and actions of other important stakeholders such as the Environment Agency, local council, media and members of parliament.
Crisis communications procedures must clearly identify local audiences, who will be responsible for communicating with them and the channels of communication to be used. A toolkit of communications materials should be prepared in advance of a crisis based on the most likely risks the local operation might face. This should include all or some of the following:
- A comprehensive question and answer document for reference/use in response to enquiries from the local community;
- Succinct/easy-to-read literature incorporating question-and-answer style explanations about processes/products;
- Facts and figures to put in context and demonstrate the importance of the particular activity engaged in at the site;
- Third-party support for the process/product;
- A series of fact sheets relating to: the safety and security of the site; safety track record of the company/technology; external controls and regulations imposed upon the organisation;
- Simple diagrams explaining the process and demonstrating the number of safety checks/monitoring processes in place;
- A series of contingency template news releases for distribution to the local media/placing on website;
- A key message aide memoire for quick reference prior to local media interviews;
- Telephone hotline to respond to concerns of local community members.
Managers responsible for community affairs have a crucial role to play in minimising damage to reputation in the event of a crisis. Their role needs to be clearly specified in crisis communications procedures and rehearsed as part of operational exercise simulations when they take place.
Michael Regester is a director of London-based reputation risk management specialists, Regester Larkin.
He has spent the past twenty years advising companies in a number of industries on how to manage reputation around risk issues and in times of crisis.
His book,”Risk issues and Crisis Management,” co-authored with Judy Larkin, was published last year by Kogan Page.
Corporate Citizenship Briefing, issue no: 54 – October, 2000