Investing in protecting and enhancing corporate reputation is the smart thing to do.
In a world where news travels fast, everyone has become a stakeholder and big brother is everywhere; no brand can hide from scrutiny. Reputation is not only a prime asset, it is the brand currency of the future. All stakeholder groups – customers, their family and friends, online activists, investors, legislators, etc. – have more visibility of brands than ever before. They can rebuke, criticize, propagate rumors, influence one another and either help build or damage goodwill for any brand. Stakeholders are kings and queens nowadays.
No brand can survive the onslaught of stakeholder wrath when this starts to snowball.
Some recent examples
MTN paid a huge price when it chose to ignore the law and several warnings in Nigeria. Senior managers lost their jobs, share value was hit hard and trust capital was massively lost when it became public that conduct (that could have been changed when there was time to do so) was not changed.
Ford South Africa also lost a lot of goodwill and credibility when it failed to embrace the family of a customer who had died in a Ford Kuga that caught fire in the Wilderness. Had Ford South Africa been a more caring and reputation-conscious brand, it would have acknowledged possible responsibility and worked with the family of its client to ensure that they were taken care of and assisted when they went through a testing time, after the loss of their lost one. Had they done this, instead of denying responsibility, blaming the victim and refusing to acknowledge that the problem was more widespread than met the eye, the price they paid in the end would have been much less.
KPMG also erred when it allowed its South African operations to get too involved with a client that was undergoing scrutiny for possible wrongdoing, including suspicions of fraud. All indications are that KPMG lost sight of the reputational capital it had built over many years in exchange for immediate financial gains. The result of this has been the loss of key clients, coming under investigation by law enforcement, and having questions asked of it that would have never been asked in the past. Observers of the ongoing developments around ‘state capture’ in South Africa no longer think of KPMG as an auditing brand that can be trusted to do right in the future. It is going to be a steep mountain for this brand to climb again in order to restore credibility.
Bell Pottinger also made a big mistake when it accepted a brief that, in the end, seemed more political than corporate in South Africa, when it got itself involved in a dirty political war. When it came out that this agency led the process to develop a campaign that would result in the opening up of racial wounds that were in the process of healing, its reputational bona fides came crashing down. It has since been investigated by its professional body, the Public Relations & Communications Association (PRCA) in the UK, ditched by a number of key clients, and told by many bodies fighting corruption in South Africa that it is no longer welcomed in the country. It was found to have contravened ethical standards in the PR industry; but it might also be investigated for criminal pursuit in South Africa, with a demand for reparations. This too will be a steep reputational mountain for Bell Pottinger to climb.
For as long as there remain unanswered questions, many of them of a possible legal nature or about Gupta businesses in South Africa, these businesses will struggle to gain public and investor goodwill and trust, irrespective of whatever front might be used to try and shield them from the toxic reputational impact of the Guptas.
As currently positioned, these businesses rely heavily on government patronage because of close connections with powerful, influential politicians. But this state of affairs is likely to change in a matter of months or, certainly, in less than two years when there will be fresh general elections and a likely change in political leadership. When this happens, new political leaders are unlikely to be as kind to them as current ones have been to date. Investors and other independent evaluators are also unlikely to place much reputational capital in them.
While there seems to be an increase in the number of big brands that do not seem to value reputation, there are also many others, fortunately, who invest in annual reputational risk assessment and invest serious resources to make sure they’re never found wanting.
Corporate reputation is important. Brands ignore investing in protecting and enhancing it at huge cost.
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