I took part in a discussion the other day about how companies should manage their reputation in times of crisis.

Here’s a summarised version of the three questions posed and my responses, which I hope will be useful to any business leader considering this subject.

1. How can a company mitigate its reputational risks?

When it comes to business crises, there are three phases of reputation management: preparation, response and recovery.

The adage that prevention is better than cure applies well to corporate reputation. But, in my experience, too few businesses prepare properly for potential crises – especially small and medium firms.

Only around 20% of companies approaching us for crisis advice are looking for help with preparation. Most cases are urgent requests for support to survive the heat of a crisis that’s either just erupted or is about to.

In ‘normal’ times, companies think bad things won’t happen to them. Unfortunately, business doesn’t work that way. In a study of 400 companies, a staggering 83% said they’d been hit by a reputational problem in the preceding year. Eleven per cent suffered as many as 10 to 20 such issues, and 6% suffered more than 20. Only 17% of firms had escaped unscathed.

Examples of the problems we find affecting companies are business setbacks, rogue employee actions, fraud, product failures, activist protests, staff disputes, construction disasters, financial irregularities and public safety issues (see some of our case studies here). No business is immune.

Clearly, you can’t prevent every negative event from occurring. But, through careful preparation, you can avoid it, reduce its severity or at least be ready to handle the consequences.

The best course of action is a crisis prevention exercise. This should start with a comprehensive review of the main risks that could impact your reputation. When you’ve prioritised these, identify the measures you can take to avoid them occurring or minimise their impact.

The crucial step after that is to prepare, if problems were to strike, how to manage them. This means deciding who should be in your crisis team. And, as well as actions to deal with the problems themselves, it should involve the creation of statements and communications plans, including the identification of relevant audiences for each scenario. You should also provide coaching to ensure your crisis team is able to react calmly and effectively under fire – with role play exercises invaluable here.

2. What should a company do when the worst happens?

When disaster strikes, it’s crucial to take decisive action – to address the problem itself, and to communicate and manage your reputation. The worst thing to do – which is all too common – is stick your head in the sand and hope it goes away.

And you need to act fast because, in today’s digital world, news travels quickly. When word gets out about a negative event, if you go quiet for any significant time, people will assume the worst and you’ll be facing an uphill battle when you do speak out.

I handled a case a little while ago that provides a vivid illustration of the need for swift action. A company had hit a problem which had found its way into the public domain thanks to an unhappy customer. The MD’s biggest mistake was not calling for support when he saw trouble looming: he waited until 24 hours after it had been exposed in the press and was spiralling out of control.

We did what we could to help. We managed to stop some further media stories and get others toned down. But, by that stage, it was too late: the company collapsed 48 hours later.

So, taking fast action is vital to be ready to handle a crisis. But that doesn’t necessarily mean actively telling the world about your problem that’s brewing. We typically help a company gear up to defend its position, while its management team works hard to avert the impending disaster. In many cases, the reputation management action isn’t ultimately needed. But the business is ready in case it is.

There are some other all-important principles for managing crisis PR alongside speed and decisiveness. At the top of my list: be clear; keep it simple; say enough – but not too much; take responsibility; say sorry.

Above all else: be human.

There are many instances where the reputational damage from the core problem was seriously exacerbated by how it was handled – with a failure to be human frequently to blame.

One of the worst such examples was Thomas Cook and the awful case of the two children killed by a gas leak on one of its holidays. It took CEO Peter Fankhauser an unbelievable nine years to apologise for the tragedy  – and only then after an inquest ruled his company had breached its duty of care.

The company’s mistake, it appears, stemmed from a fundamental error made by many firms – blindly following legal advice. Surely, if Thomas Cook’s board had been as focused on its behaviour as a decent company run by decent human beings as on its legal liabilities, it would have acted very differently.

This is a point Fankhauser ultimately acknowledged – albeit far too late and with massive understatement: “I don’t want to blame the lawyers. It’s ultimately my responsibility how we communicate. Obviously we could have done better.”

Don’t get me wrong: legal advice is necessary in some cases of corporate crisis. But it must never be followed in isolation. There are almost always ways of protecting your position and presenting a compassionate, human face.

The solution is to consult a lawyer who won’t unwaveringly insist your company says nothing at all, no matter what the circumstances. Find one who sees the bigger reputational picture and understands the importance of working alongside a crisis communications advisor.

3. What should a business do to recover after its reputation takes a hit?

Just as the preparatory phase of reputation management is often overlooked, so is the recovery phase.

Directors typically breathe a sigh of relief when a crisis calms down and they go back to business as usual. But they should be taking a hard look at the situation – to assess what they can learn from the disaster itself and the way they managed it, and to figure out what to do next.

There’s no one standard recovery strategy, of course. But, depending on the nature of the problem and the reputational damage incurred, there’s likely to be action needed to rebound.

In most cases, it’s about rebuilding trust – and doing that not just through words but through actions. And this often means a concerted effort over a sustained period.

Just as Warren Buffet said, “It takes 20 years to build a reputation and five minutes to ruin it,” so rebuilding a reputation that’s taken a battering is typically a long-haul task.


See more on our crisis communications services, and call Tariq on 07833 336 271 if we could help you manage a difficult business issue.