Tuesday, 30 March 2010

Corporate Reputation and Crisis Management

We had a fantastic guest lecture on Corporate Reputation and Crisis Management by Eddie Bensilum from Regester Larkin, leading crisis and issues management consultancy as part of our corporate communication module.

Difference between an issue and a crisis

The first point Eddie raised was that as public relations practitioners we need to educate clients on the difference between an issue and a crisis. She mentioned that the difference can be understood on the basis of five parameters like speed, surfacing, scrutiny, structure and stance. A crisis happens quickly, suddenly and demands intense scrutiny whereas an issue develops gradually and generates sporadic interests from the audience. An organisation’s structure needs to be rigid during a crisis, on the other hand, in case of an issue, it should be fluid. The stance should be reactive in a crisis situation whereas in the case of an issue, an organisation should be proactive. Although this fundamental difference should be kept in mind by public relations practitioners before formulating crisis communications plan but I think they should also understand the relationship between the two. By this I mean that crisis and issues are not two different entities, rather they share a deep relationship. One can say that if an issue is not managed timely, it can result in a crisis.

Managing reputation

Eddie later highlighted why companies need to bother about managing reputation. She said that reputation is what people (who matter) think about the organisation and it is important because it affects their attitude and behaviour towards the organisation. She pointed that reputation is directly linked to trust which in turn is broken if there exists a gap between what the organisation say and do or if there is a gap between the audience expectations and the performance of the company. The book Exploring Public Relations define crisis as an event that disrupts normal operations of a company or organisation and if, badly managed, can ruin hard-won reputations in just days and even, in some cases, destroy companies. Thus, based on this definition we can say that managing reputation ensures sustainability for organisations.

The Andersen case study mentioned in Exploring Public Relations by Ralph Tench and Liz Yeomans builds upon the point that companies need to be not only careful about their reputation but they also need to be wary of the reputation of other businesses or partners they deal with. Andersen has been best known and respected auditing companies in the world. It was an established and trusted brand. The problem with the Enron energy company crisis (Enron executives had been mismanaging the business and falsifying its financial performance) had a direct impact on Andersen and it saw its business and client base rapidly and drastically reduced. Andersen was later implicated in an attempt to cover-up with reports of coded instructions to employees to ‘clean out’ Enron-related documents as US federal investigators prepared to launch an investigation. In this case study, Andersen was later implicated because of its involvement but what about situations where the partner or suppliers did not do anything wrong. They might still be affected by the crisis situation. Thus, in my opinion, it is imperative for organisations to build and maintain reputation and trust. For any crisis communication plan it is vital that is should have an effective leadership, a clearly defined structure, trained and competent professionals, an agreed process and intuitive and user friendly tools.

The new media age

Eddie rightly pointed out that social media has drastically changed the communication paradigm. As a result, people have access to more knowledge; they demand greater scrutiny and transparency and the trust levels of people on brands and companies has decreased. It has also led to the growth of anti-business activism and NGO proliferation. So, what has been the impact of all this on communication professionals? Well, for them this means that managing crisis is much more complex and therefore requires much more planning and resources.

Crisis is a blessing for PR

A very interesting point which was discussed during the class was that in case of a crisis, public relations or communications department suddenly becomes the centre of attention. The need and importance of public relations practitioners is realised the most in a crisis situation. I think this is quite true since communications play a very important part in managing crisis and public relations practitioners are equipped with skills and techniques of packaging and selling effective messages.

Image credit: http://www.thequietman.org/imagenes/chinese-crisis-2.jpg

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References: Exploring Public Relations by Ralph Tench and Liz Yeomans, chapter 19, Crisis public relations management


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