Managing Reputational Risk
In this day and
age, you need to understand that:
• Competitive barriers of the past have
been eroded;
• Areas of strength have been commoditised;
• Industry boundaries have been dissolved;
• Anyone with a smartphone can access information.
In
other words, customers have become more empowered
whilst suppliers have to play harder to keep their business. In this environment, your reputation can make
or break you.
Managing
reputational risk requires three elements:
• The right strategy;
• The right discipline;
• The right culture.
Strategy:
Your
reputational management strategy must
tie into your corporate strategy. In other
words, what is/are your products and
services? What’s your target market? Who are your customers? How do you manage your business? What does your brand stand for? How will you build and manage your reputation
based on all these? What will you do to
counteract “negative press” (whether deserved or not)?
Discipline:
So
now you’ve worked out how reputation ties into your strategy. Now what will you actually do?
The discipline part consists of developing a plan for developing,
maintaining, improving and protecting reputation. How do you create in peoples’ minds what
you’re about? It’s not just a case of
paying for a few flashy advertisements.
How do you measure whether
you’re succeeding in your efforts? How
do you inform others in the
organisation of what’s going on so that they can either redouble their efforts
at doing what’s right or take action to correct what’s going badly? Finally, how do you get people to keep doing
it again and again when they’re under pressure to produce results?
Culture:
This
is the part that requires you to make reputational management as natural as
breathing in your organisation. In other
words, instilling the behaviours and thought processes that mean that your team
eat, think and breath reputational awareness.
It means that they may naturally take actions which, although
unprofitable, mean that your long-term reputation is maintained or even
enhanced. A prime example of getting it
wrong is in the way that many western banks are now being sued for mis-selling
products or services and behaving unethically. The employees (from the top down), either forgot or ignored the fact that they had a fiduciary duty to their
customers. Instead, in the name of
increasing “shareholder value”, they plunged lemming-like headlong over the
cliff of increasing market share and profitability. The culture became one of dollars and cents
rather than looking after customers’ interests.
Those
who fail to manage reputation often get the strategy/discipline/culture mix above
wrong, as well as ignoring the fact that people are saying things about them.
They fail to understand that reputation essentially means how people perceive them. A bad reputation
can result in:
·
Reduced revenues;
·
Reduced profitability;
·
Increased costs;
·
Increased customer "churn".
Other
effects may include:
·
Dfficulty in obtaining resources (parts, people, services) from other
suppliers;
·
Stricter credit terms;
·
Refusal to deal with you;
·
Increased regulatory oversight (look at the banks).
I
have seen all the above. The recent "boycott" of Starbucks when
it was announced that they weren't paying their "fair share" of tax
shows what happens when businesses fail to manage perceptions.
In some cases, this may not matter, for example if you are the sole
provider of a particular product or service (governments are a prime example
with, e.g. issuance of driving licences). However, people will still look
for alternatives and as soon as something acceptable appears, they will desert
in droves.
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, Strategy
posted by William Martin @ 08:20
0 Comments:
Post a Comment
Subscribe to Post Comments [Atom]
<< Home