How to Destroy Your Reputation in 7 Easy Steps

by Charles T. Wilson on July 12, 2010

There has been lots of talk about ‘Reputational Risk’ recently, and many role models to show how to handle – or not – a business crisis.  Arrogance, greed, secrecy and easy shortcuts seem to characterize financial institutions and coal mines, Toyota, and now BP.  We are witnessing some terrific learning moments for risk management.

Business reputations are almost always an organization’s most important asset.  A simple definition might be:  “trustworthy and high-quality people, products and services.”  We all know reputations are carefully built everyday; since they can be lost with one false step, it makes sense to review what NOT to do!

The Road to Ruin ~

  1. Ignore very low probability or remote problems – like earthquakes, lawsuits and oil well blow-outs – because there’s nothing you can really do about them anyway.
  2. Don’t annoy your customers, suppliers or employees with risk-related questions, best practices or concerns – that might take their focus off growth.
  3. Don’t worry about devastating risks – they probably won’t happen to you; you might just download a generic crisis plan, like others have done, and put it on the shelf.
  4. Contingency or disaster-recovery plans can be time consuming, and they’ll be vague anyway – you can probably wing it if something goes wrong.
  5. Don’t bother to train employees or improve their crisis management or decision-making skills – they’ll do fine with your leadership.  And what if they quit?  You’ll have wasted all the training time and money.
  6. Let your cost-center managers – responsible for maximizing profit – take care of risk assessments and any needed plans.  They probably know best, and what’s a minor conflict of interest in the long run?
  7. Cross your fingers and believe your insurance protects intangible assets like your reputation; that you can ‘buy’ your way out of any problems that may arise.

Avoid the heartache ~

Seriously, I recommend you take some simple steps and repeat this recipe regularly to preserve all you’ve built:

  • Raise the big, thorny issues in your business, and discuss the consequences with all employees – they need to know you care and how they should act in the best interests of the firm, your customers, and their employment.
  • Keep ears open to complaints – think carefully with an open mind, then answer them quickly and personally; don’t fight with upset customers – fix the problem and thank them for their valuable input.
  • Don’t cut corners on quality and safety – get the best advice and do your best to implement recommendations promptly.  If something ‘costs too much’ to fix, stop doing it immediately.
  • Create one or two simple, but real, contingency or mitigation plans (see Tip 28) and role-play a practice scenario at least once a year.

Add your thoughts and suggestions below, or call me for a no-obligation, high-level discussion about your issues or concerns.

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5 comments on “How to Destroy Your Reputation in 7 Easy Steps

  1. Corri F. DiBagno on said:

    Charles:

    Another excellent RiskSmart Tip. To support a prior “blogger” (Jan Richards) a complaint is an opportunity to turn an “objection” into a “sale”. If the customer is unhappy with a product/service, listen closely for their concerns, restate the concern for the customer and then proceed to handle the objection. In this regard, you have built a “bond of empathy” as well as attacking an issue. A well constructed insurance portfolio will assist you in better understanding any “risk management issue” that affects customer service.

  2. Charles T. Wilson on said:

    Thanks, Marla for adding depth to the recommendations. While complaints are usually understood to have potential value, they are not often handled with a positive attitude and a pro-active, repeatable process. Scenario planning and practice are a risk manager’s secret weapons!

  3. Excellent advice on several very important things, Charles.

    I agree with your four recommendations. I’d add that customer complaints can be a gold-mine of great feedback, if companies learn to look beyond the initial dissatisfaction customers are expressing. Complaints, and trends in them, can be a leading indicator of problems other customers are experiencing, but saying nothing about, as they take their business away from your company and to a competitor.

    Scenario planning and role-playing, as you note, can make risky circumstances seem more real, but also much less threatening as a company works out and practices effective responses.

  4. Thanks for the well organized tips Charles. Well stated.
    Best,
    Marla

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