Protecting company reputation and stakeholders during a crisis

Breaking news ‘ CEO of Deep Fresh Beverages Ltd, a listed company is accused of fraud on national TV’ How does the Board protect the company’s reputation and stakeholders?

Any company, whether listed or not has to manage its reputation. Customers buy brands and their promises. If you don’t deliver what you promise to deliver, it impacts the corporate reputation. If one is buying a soft drink, one looks at the brand manufacturer. If you want to know the power of the brand, get for example a mineral water bottle, remove the covering of the brand name and then give the uncovered or unbranded bottle to anybody and see if they can drink it. Immediately you unwrap the branding, it looks like any other bottle picked from the rubbish bin. No one is willing to drink it even for free. That is the power of the brand. Consistently delivering what you promise improves your brand reputation with increases its brand value and equity.

People have expectations that when a certain company has packaged a product, it has a certain promise based on the consistent behaviour of demonstration of the same over a very long time. The longer the brand has been in the market creating promises and delivering on them, the more the strength of its brand value. Brands like Pepsi Cola, Coca Cola, KFC, Rwenzori Mineral water or any other brand that might come to your mind have created value in the market. When choosing a telecom company, a user is asking if the company has many people complaining about the quality of the services. If they are several complaints, no one will choose them. Brands have a value which is sensitive to reputational risk. Nowadays, as you plan your holiday or business trip, you read the reviews of the hotel on booking or any travel review site to see the experience of other travellers. Great reviews mean a high reputation.

 What is brand value?

A brand value is the estimated monetary worth of the brand if it were to be sold. Just like your personal brand, the brand value affects your social standing, and respect from peers and the community at large. When they say the name Mr Strategy Mustapha Mugisa, what comes to mind? Is this a man of integrity, and moral values, who stands by his words and delivers? Is he a man you can rely on even when you are not there? What is the image that your name brings to people’s minds? Brands are very important. They must be deliberately built and protected. This is where the board comes in.

Shareholder value protection and equity growth  

You can not grow the company unless you are deliberately creating a value system and delivering on it. Certain things must come to mind when the brand is mentioned. Who do you say you are? What is your intent? What is your vision? What are your values? What is your purpose? This creates a brand promise. What do you do? If what you say you are is different from what you do, there’s a brand gap. The more your actions do not speak to what you promise, the more you begin losing people. Your reputation becomes doubtful. To manage this, leading organizations put in place a brand strategy and crisis management strategy.

a) Crisis management strategy

The crisis management strategy provides for crisis avoidance. You must deliberately have policies and procedures that guide how to respond to a crisis. This is in terms of what are your values, how you demonstrate living them, what kind of products and services you offer, and how you deliver them. That way, you make sure that what you promise is consistently in line with what you do to create a strong brand. If a restaurant promises a very good meal, on the first bite a customer finds say a stone in the rice meal, their appetite is lost. however, quality control helps to prevent any element of a brand threat.

As part of risk avoidance, the company must establish effective value systems. In a typical Human resources policy and procedures, the company defines a certain class of hotels for particular leaders to stay in when they travel. This is a way of helping them stay away from crises.

b) Speed of response

The crisis has befallen the company despite all the controls to prevent it. How do you quickly respond to the crisis in terms of coming to issue a statement that provides clarity on the issues? Most of the time, a crisis comes and people are fed with wrong information. Wrong information tends to move very fast. It is important to have clear leadership during a crisis. You must be organized internally.

For example, when social media was full of all sorts of information about Patrick Bitature, he was able to make a statement. This provided a common source of facts about the issue. We have seen leaders who shy away from the camera during a crisis. Even if you are in the wrong, come out and acknowledge it. That way, people do not start filling the gap of your silence with their own stories affecting your brand.

Speed of response is critical. The board must come out strongly to explain the issue, how it arose, and most importantly what’s been done to address it. This provides clarity and settles the crisis. Even better, provide a single point of contact for the correct information about the issue.

c) Decisive decision making

Make decisions very fast and do not change them. If a company car God forbid is involved in an accident, and the victim is seriously injured, the company should come out very first. ‘’We are sorry. Our car was involved in an accident. We responded to the crime scene immediately. We took the victim to the hospital for treatment. We have reported the matter to the police. The company will meet all the hospital bills. We shall work with the family to ensure they recover from the incident.’’ This shows leadership.

d) Message consistency

You do not want the Chair’s message to be different from the Communications department and that of the CEO. it is recommended in a crisis, begin internally. Let all staff know what is happening. You do not want your staff to begin hearing about the issue from third parties while the leadership is still confused and running up and down.

Once the issue comes, get all the internal stakeholders to know. The board must be communicated to since they are the overall responsible organ for brand reputation and protection.

Agree on the common contact point. If the media asks for any information about the crisis, let everybody in the organization know which person to refer to. Circulate the phone number and emails of the contact person. It is very hurting to have a major media outlet reaching out to the organization to get the full story only to find out that the person responsible for his or her phone is switched off. The journalist writes a story in their own words. Imagine having wrong facts fueling fire only to begin receiving apologies.

If the CEO of Deep Fresh Beverages is accused of fraud on national television, the company must come out with their policy on fraud providing clarity on how they have called for an investigation to dig deep into the accusation. The board will review the report and accordingly handle the matters at hand either through court or disciplinary hearings. They will see through anybody punished because that is the company policy for wrongdoing. Everybody gets to know the consequences if they are involved in any fraud.


Copyright Mustapha B Mugisa, Mr Strategy 2022. All rights reserved.

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