Reputational Risk Lessons From Dhaka
Primark says it will pay compensation and offer emergency food aid to victims of the Bangladesh factory collapse who worked for its supplier (Headline).
A
BBC news article published at
the end of April revealed that Primark – an Irish clothing company operating around
200 stores in Austria,
Belgium, Germany, Ireland (as Penneys),
Portugal, Spain, the Netherlands and the United Kingdom. Whilst Primark’s main headquarters are in
Dublin, they are a subsidiary of British food processing company Associated
British Foods (ABF).
So far, we
have a tragic story involving some 1,000 deaths, 3,000 injuries and one
survival story little short of miraculous.
The Rana Plaza building which collapsed was apparently home to a number
of factories which employed approximately 5,000 people. Other well-known names which allegedly sourced garments
from factories in the building include the Benetton
Group, Joe
Fresh, The Children's Place, Primark, Monsoon, and DressBarn.
A browse of Wikipedia shows that in 2008, Primark
had been indirectly exposed by the charity War
on Want revealing that conditions at Bangladeshi supplier factories hadn’t improved
over two years. The same article states
that in 2009, a supplier to Primark was apparently obliged to remove their brand
from Primark after media investigation alleged use of illegal immigrant labour
which was paid less than the UK legal minimum wage. This entry, whether true, false or poorly
researched is available to anyone.
Primark clearly
felt the need to do something. Whether
management had noticed a fall in sales following the Bangladesh tragedy isn’t
clear, but being associated with a situation where little attention was paid to
workers’ rights as a matter of course was clearly not acceptable to a European
customer base.
“Trial by media” is becoming more
prevalent. It takes little for anyone to
become a “reporter” – all they need is a smartphone with camera and an internet
connection. The proliferation of email,
social websites and other networking sites means that news of any sort (whether
true or false) can now be spread in, literally, the blink of an eye.
Large organisations such as Starbucks
and Google have found themselves targets of media attention as it was revealed
that they paid minimal corporation tax due to using perfectly legal tools to
minimise exposure. The problem here was
that, in a time of global belt-tightening, austerity and job losses, people
felt that it was morally wrong that a
few greedy bosses and shareholders should benefit from the exploitation of “tax
dodges” (which weren’t). Result? The G7 has now agreed to crack down as a
group on tax avoidance and will press the international community at large to
join in. Starbucks has agreed to pay
more tax. No doubt, countries that refuse
to join will be vilified and their reputation will suffer.
Conclusion: reputational risk is more
of a danger than ever before, and you need:
·
A strategy to build
and manage reputation;
·
To manage potential
fallout from negative media and/or public attention;
·
To think about third
parties with whom you deal and assess whether they might expose you to
unwelcome attention;
·
To have a “contingency
plan” that can be put into action immediately if a “PR disaster” strikes.
Don’t wait for things to go
wrong before you think about this.
I have spent more than half my life delivering change in different world markets from the most developed to “emerging” economies. With more than 20 years in the world financial services industry running different service, operations and lending businesses, I started my own Performance Management Consultancy to offer solutions for improving performance, productivity and risk management. I work with individuals, small businesses, charities, quoted companies and academic institutions across the world. An international speaker, trainer, author and fund-raiser, I can be contacted by email . My website provides a full picture of my portfolio of services. For strategic questions that you should be asking yourself, follow me at @wkm610.
Labels: Crisis Management, Customer Care, Financial, Risk, Selling, Social, Strategy
posted by William Martin @ 15:49
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