How a Company Can Survive a Reputation Crisis

January 21, 2022

A reputation crisis is an ensemble of situations that can damage a company’s reputation. A reputation crisis is likely to occur when a company has human, communication, and technological failures. It also happens when a company fails to meet the expectations of customers, investors, employees, investors, or regulatory bodies.

A reputation crisis can have detrimental effects on your overall sales. It can deter existing and prospective customers and put off investors, suppliers, shareholders, and potential employees. Prevention is better than cure. Here is a guide on how to navigate and survive a reputation crisis.

The Causes of a Crisis

A strong and positive reputation attracts better people. A good reputation can attract more loyal customers and help you deliver sustainable earnings, and boost growth. However, reputation risks can happen unpredictably.

When business units fail to make proper decisions due to poor coordination, a crisis is likely to occur. Your company reputation can also suffer when a group sets expectations that another group fails to meet. Poor internal coordination inhibits your company’s ability to identify changing expectations and beliefs.

Failure to assign roles among your team can cause potential reputation risk. As a leader, when you are responsible for everything, coordination suffers.

Stakeholders’ expectations can change dramatically, making it hard to determine acceptable norms. Attitudes and concerns about products can also affect how customers view your brand. Change in consumer behaviors or change of policies by leading companies can also cause a shift in stakeholder expectation, putting your reputation at risk.

You need to identify your weaknesses and vulnerabilities to help you come up with a crisis prevention and management plan. Anticipate and prepare for the worst-case scenarios and point out what might come out as unacceptable and insensitive, and implement business branding best practices to safeguard your company’s public image.

Understanding your audience and conveying the right message can help you maintain public perceptions about your brand. You can also seek guidance from reputable branding agencies to help with strategic branding to avoid reputation crises.

Damage Control

When a reputation crisis occurs, stay in contact with your audience. Be honest in your communications because communication can help you manage real-time conversations, efforts in listening and engaging in dialogue, and tailor your messages to suit the situation at hand.

Failing to manage your mistakes effectively can lead to negative publicity and other unwanted consequences. Admitting your mistakes during reputation crisis management can help improve professional relationships. Approach errors with positivity and seek a mutually fair and acceptable solution by explaining what you are doing to prevent similar mistakes in the future.

React to reputation crisis with empathy. No matter how bad the situation is, it’s best when people hear it from you. Don’t deny unless everything is false. Shifting responsibility will not work either. Your brand can still emerge stronger if you react to the crisis with empathy, diligence, and honesty.

Every company is vulnerable to experiencing a crisis. A crisis can cause confusion, stress and compromise stakeholder relationships. However, your willingness to change can have a long-lasting impact on your business. Effective communication can move your business forward with purpose and clarity, sustain stakeholder trust and loyalty as well as preserve your brand.

Set Up for Success

Crisis prevention, management, and crisis resolution can address potentially adverse situations more effectively. However, don’t wait till a crisis happens to take action. There might be no specific strategy to guide you on what to do before a crisis strikes. However, various steps can help prevent a crisis from happening.

Drafting a crisis management manual, conducting a risk audit, having a well-trained crisis management team, and monitoring issues that affect your business sector can prevent a reputation crisis from happening. Make sure the team tasked with addressing the crisis on behalf of the company comprises people from different professional backgrounds like lawyers and communication specialists.

If your crisis involves consumer products, consider using the mainstream media such as television to talk to people emotionally. Transmit a straightforward message and remain truthful because, in every crisis, everything comes out eventually.

Your damage control strategy will be effective if you work with crisis-ready leaders, show authenticity, transparency, and consistency, and keep information factual and straightforward. Consider meeting your stakeholders whenever they are and shift your focus to recovering your image. Despite the situation, demonstrate gratitude and appreciation.

The Most Valuable Asset

Your company’s reputation is one of the most valuable intangible assets. Corporate reputation can determine your level of trustworthiness and credibility. It has nothing to do with the nature of your business because what determines your reputation is what stakeholders think of your business.

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