www.theguardian.com/commentisfree/2017/s...al-damage?CMP=twt_gu
Worried about your reputation? Then don’t do bad things
The demise of PR agency Bell Pottinger has rung alarm bells in the boardroom – now the British Standards Institution has weighed in.
It is a sign of the times. What did we expect? Of course a multimillion-pound, international PR firm trusted by world leaders and corporate titans to keep their noses clean and their dark secrets out of the papers has collapsed … because it has lost its reputation. In a world turned upside down, this development must be seen as business as usual. We should have seen it coming. “Who will do PR for the PR people themselves?”, as the poet Juvenal might have said if he were still around.
But losing your reputation is no joke, especially if an entire business or organisation can collapse as a result. This is something business leaders are increasingly aware of. What are they doing about it?
Bell Pottinger goes into administration amid South Africa scandal
A new survey out today from the British Standards Institution (BSI) suggests corporate leaders are still failing to join the dots between the possibility of reputational damage and the probable causes of disaster. The BSI’s “organisational resilience index”, based on the responses of 1,250 international business leaders, found that 43% believed their organisation was “strongly susceptible to reputational risk”. This risk was seen as a greater priority or threat than their financial performance, their own leadership or the vision and purpose of the organisation.
Yet issues such as getting the organisational culture right, building alignment or simply thinking ahead to try to anticipate problems (“horizon scanning”) were seen as much less important. It’s as though leaders in the boardroom sense that somewhere out there a crisis is about to blow up, but it’s just a bit too hard to find out what it might be. So they hope for the best and brace themselves for an unpleasant surprise, which they fear could be coming. We could call this the “ignore the dripping tap” school of leadership.
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The dilemma, especially for leaders of listed companies, is that the expectations of investors seem to be pretty sharp and immediate, whereas with luck any crisis that finally erupts will do so only after the current leadership has moved on. So it is tempting not to open any organisational cans of worms while you are still in a position of responsibility. Let the next (unlucky) person sort it out.
This is, of course, bad. It is irresponsible. Good leaders worry about the future of the organisation and the condition it will be in when they hand it over. While crises may appear to blow up suddenly, they know they are usually years in the making.
As Anthony Fitzsimmons and Derek Atkins wrote in their book published earlier this year (Rethinking Reputational Risk): “Typically a crisis has multiple root causes, often systemic, that remain unrecognised and unmanaged but gradually accumulated over the years to make the organisation vulnerable to crises generally; and when a trigger materialised, to … one in particular.”
Recent events at Bell Pottinger seem to bear this description out. The subtitle to Fitzsimmons and Atkins’ book, by the way, is worth noting: “how to manage the risks that can ruin your business, your reputation and you”.
Here’s some free PR advice for business: don’t do bad things. They will probably be uncovered, eventually. Sometimes leaders know perfectly well that bad things are happening somewhere in the organisation, but short-term profitability seems to depend on that bribe being paid or health and safety corners being cut. And if a daunting hierarchy or intimidating leadership style means that bad news from the frontline is not wanted then leaders will remain ignorant, or at least maintain plausible deniability. Fitzsimmons and Atkins call this phenomenon the “risk glass ceiling”. Even though there are things leaders need to hear about they never will – until it is too late.
It is feared that new technology will destroy jobs, but in fact the always-on, high-speed world of online communications means that businesses and organisations really need to keep a constant watch on what is happening (and what is being said about them) around the world at any time. This ought to mean the creation of a lot of new jobs. That is my second piece of free advice.
The famous investor Warren Buffett once wrote in a letter to his top managers: “We can afford to lose money – even a lot of money. But we can’t afford to lose reputation – even a shred of reputation.” The “sage of Omaha”, as he is known, was right. You don’t know what you’ve got till it’s gone.
• Stefan Stern is a management writer and visiting professor at Cass Business School
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