2021 has proved that online reputation has become one of your business’s greatest assets. Experts believe that the trend will continue this 2022. When it comes to reputational damage, there are two things that you need to keep in mind. The first thing is that it can happen unpredictably, and in the worst situation, it will ruin the business you’ve built for years. Next, you can manage this effectively and prevent a catastrophe from happening.
What is Reputational Damage?
Reputational damage to a company can happen when the business fails to meet its audience’s expectations. Thus, they will be negatively perceived by their target market. It has a detrimental impact on the industry regardless of its size. All of us are at risk, and most of the time, it could be significant. Understand that your reputation is the biggest asset of your company. It is what your customer finds endearing. Moreover, it is the reason why your customers remain loyal to your company.
Think about it this way, a fire accident that can happen in your factory may lead to injuries, property damage, and revenue loss. However, if you can immediately resume your business operation, the loss can be mitigated. On the contrary, once your reputation has been damaged, even if you double or triple the amount of your production, it will be difficult for you to attract and retain customers. Consequently, it will be challenging to attract talents to your company.
What Are the Possible Causes of Reputational Risks?
It pays to understand the possible causes of reputational damage. It helps you create a comprehensive plan that will avert the damaging effect of this crisis. Moreover, you can also develop a preventive method. Understand that it is always better to prevent this scenario than to look for a solution.
Poor Conduct and Operations
The actions of all the company members, from the regular employee to the supervisors, and any third-party service providers, can directly impact your company’s reputation. For instance, your CEO or founder needs to have positive behavior. Improper work attitude can lead to poor media coverage and terrible consequences. It is essential to devise a solid company policy that will instruct your people on how to act ethically. Understand that every action of your people will reflect how you do your business.
Substandard Service or Product Quality
Any shortcomings in your processes, products, and system will affect your company’s reputation. For instance, if you are in the manufacturing industry, recalling a product in the market may encourage the people and stakeholders to lose their trust in you. For those in financial institutions, a breach of your customers’ sensitive data will cause a massive crisis. Therefore, there should also be a guide on how your people should manage the customer’s information. All products need to go through strict quality control. There should also be a strict protocol for AB testing. These are just some ways on how to deal with reputational damage.
Inflexible
Based on the study of Harvard Business Review, one of the causes of reputational damage will happen if the company fails to adapt to the ever-changing needs of its customers and stakeholders. Understand that the expectations of your audience can change unpredictably; therefore, you should always be in touch with them. The needs may also differ according to their age, location, demographics, and other essential metrics. Try to remain up-to-date with the expectation and the regulation of the industry. It will help you be flexible to any changes that will occur.
News Coverage
Some people may not pay attention too much to this; however, news coverage can significantly affect your company’s reputation. A news article that focuses too much on the lapses of your company can affect how the public perceives your company. It can also have a damaging impact on your relationship with your customers. It is crucial for your PR team to stay on top of all the news and articles posted online or offline. Make sure to handle all information and repair the company’s image before the situation goes out of control.
Social Media Visibility
Your unmanageable presence on social media can have an adverse effect on your reputation. While companies often use social media to cultivate a relationship with their customers and nurture leads, it can also lead to reputational damage to a company if you don’t properly use or implement it. For instance, if you don’t have a solid social media policy, your marketers can share posts that do not reflect the company’s values and goals. It is not uncommon that we’ve heard social media managers failing to log out of the company handle and posting their personal information about sensitive matters such as politics and religion.
Business Models
The poor structure of the business model can lead to reputational damage. Customer service problems and financial shortcomings can impair your image in the eye of the public. You need to address all issues related to business models to guarantee that you will keep a positive impression on the people.
Tips to Avoid Reputational Damage
Situations concerning reputational risks are complex. You will have to deal with them completely. Every minute you wait will lead to significant damage. There may be instances that the situation will become irreparable. Here are some of our tips.
- Stay Transparent- One critical part of building your reputation is transparency. It would be best to remain honest with your audience, prompting others to see you as trustworthy. Your customers will admire your honesty. In this industry, looking for a business that will be open to its policy and process is complicated.
- Create a Thorough Planning and Strategy- It is essential to acknowledge the possible impacts and causes of reputational damage and identify the related elements in your organization. Identify the warnings and indicators for each component to know the proper action to take. For instance, if there is an increasing complaint on cleanliness, you need to improve your standard before your company becomes notorious for being unsafe.
- Standardize Your Control Process- Procedures, technology, and policies will reduce the probability that it will lead to a severe incident. Learning how to deal with reputational damage will require delivering outstanding services or products consistently. With this, it will be less likely to create a mistake that will damage the company.
- Action Equates to Public Perception- You should understand the importance of comprehensive reputational management. Know that the positive action you are willing to take will be equivalent to improving public perception.
Tips to Mitigate the Effects of Reputational Damage
We’ve mentioned the tips that will help you prevent a crisis from happening. However, there are unforeseen situations when a disaster is inevitable. Now that we reminded you about the painful ramifications of poor reputational management let us help you on how you can control the possible damage that it can cause.
A Strict Board Oversight
Regarding managing reputational damages, it must start with the company’s key employees. Suppose you have a diligent and active oversight of the board members and relate it to the development strategy and the execution. In that case, you will be able to control the severe effect of a disastrous incident. The association of the key employees on the enforcement of your reputational management policies should be mandatory.
Integrate Reputational Risk Management to Business Planning Strategy
Business planning and proposal will often include the structure of the company, the key employees, goals, business strategy, etc. However, we often forget to discuss how we plan to deal with crises such as reputational damage. It should be treated as an integral component of your business plan. It creates a strategic view and insights that will help you handle things should a crisis happen. With this, your people do not have to wait for your approval since they will know what to do if a particular reputational problem happens.
Brand Building
As long as you have solid company branding, then it will not easily damage the image of your company. It will give you enough time to repair the problems before they spread; thus controlling its effect on the company’s bottom line. Your branding should also include effective communication with the target customers. If your customers can reach out directly to your customer support and your customer representatives can provide them with a satisfying answer, you can be in control of the reputational damage.
Compliance
There should be thorough compliance in your business, most especially on matters associated with ethics and culture. As we mentioned above, the compliance will start from the CEO down to the regular employees. Your company culture would be your policies, escalation process, and procedure. It will help you gauge the situation and provide a fitting solution to a crisis. The critical people of the company should always lead by example.
Competitive Model
Suppose you want to improve your presence and authority to the point that it will serve as your shield against the possible reputational damage to a company. In that case, you need to devise a competitive business model. If you can’t remain competitive in a heavily congested market, the capacity of your people to provide outstanding service will be questioned. In addition, your reputation will take a massive hit every time you receive a negative review. How the company responds to the crisis will leave a profound impact on your reputation.
As we’ve mentioned in all our previous articles, a poor reputation can be damaging to your company’s image, marketing, and revenue. The customers and potential employees can lose their confidence in your company. With the high stakes, you will need to learn how to deal with reputational damage efficiently.