How to Manage and Repair Reputational Damage By Cassandra Gabriel

History is littered with corporate scandals and ruined brand names. Companies such as Lonmin Platinum Mines at Marikana, Saambou, Steinhoff, Enron and Lieman Brothers, are examples of such companies who destroyed the trust their stakeholders had in them and ruined the company reputation. 

Some companies never recover after a reputational scandal or crisis, while others become stronger and more profitable afterwards. Companies such as Johnson & Johnson managed the crisis of the poisoned Tylenol tablets in pharmacies so well that their share price and profits rose afterwards. 

What did they do right in engaging with the public and their stakeholders in the face of a national crisis? They bravely followed the fundamental rules of crisis management and stakeholder management, described below:

1. Be honest, own up and take responsibility. 

Do not lie to your stakeholders. The truth will eventually surface, and covering up guilt will harm your company. Rather, be honest. Take the short-term pain by owning up, taking responsibility for any wrongdoing and taking strong action to repair the damage. In the long run, this will gain you respect and credibility among your stakeholders. Credibility is the most valuable asset any company or leader can build during a reputational crisis.

2. Lead the flow of information. 

Do not go silent and avoid communication with the media and your stakeholders! This breaks the trust your stakeholders, such as shareholders, have in the company. Rather set the information agenda by ensuring regular communication and updates on what the company is doing to understand the problem, and to implement solutions to fix the problem. Take control. Communicate when, where and how often the company will provide feedback.

3. Never speculate. 

In a crisis, there is a lot of panic, confusion and lack of information. It can be tempting to speculate, to provide answers being demanded by the media and different stakeholders. NEVER speculate. Spreading misinformation in the midst of a crisis will reduce your credibility. Rather be honest about not having the facts as yet. But ensure that you state what steps are being taken to get these answers and by when. 

4. Act fact. 

The media goes into a feeding frenzy over a juicy scandal. If your company is not communicating, someone else will fill the information void. Most likely it will be a detractor. Act fact to get accurate and clear information and ensure that you are communicating with the media. But do not rely only on the media to get your messages out. Communicate directly with your stakeholders as much as possible, to ensure your company messages are being heard… and being heard correctly.

5. Monitor and correct misinformation.

Speculation, rumour and misinformation spreads fast, especially in social media. Have a team monitoring all media coverage during and after a crisis. By ensuring that you correct the misinformation in the public domain, you can also become the respected source for factual information, which allows you to control the message.

6. Have a crisis management plan in place.

Every well managed company manages their risks, but many do not have a crisis management plan in place. A crisis management plan creates guidelines, protocols and spokespersons for every scenario. Employees are trained on the plan and everyone knows exactly how to respond in the case of a crisis. If you do not have such a proactive plan in place and your company faces a reputational crisis, immediately get professional help!

Companies with a commitment to proactive stakeholder engagement will always fare better in a reputational crisis. This is because they have already invested the effort in building and maintaining supportive and win-win relationships and partnerships with both external and internal stakeholders. No one likes the friend who only knows you when they want something from you! 

Research shows causal links between stakeholder engagement and brand value, customer satisfaction and company performance. These strong stakeholder relationships will serve a company well during a reputational crisis, while poor stakeholder relations will only add fuel to their funeral fire. 

*Cassandra Gabriel is Director of the Institute for Stakeholder Relations Southern Africa and

Managing Director of Gabriel and Associates