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Home > Business Strategy Best Practice > Managing Your Reputation through Crisis: Opportunity or Threat?

Business Strategy Best Practice

Managing Your Reputation through Crisis: Opportunity or Threat?

by Magnus Carter

This Chapter Covers

  • Definitions of risk issues and crisis.

  • How risk issues can escalate into crisis.

  • How to prevent escalation.

  • Why some crises threaten your reputation more than others.

  • How to safeguard your reputation in a crisis.

  • What to say and what to do.

  • The important role of the media, including social media.

Introduction

We know that no organization is immune from crisis. The one thing that is predictable about crises is that they will happen, and a good crisis management plan is essential best practice. Yet my experience as a crisis communications consultant tells me that many organizations, including some substantial ones, do not have such a plan. And of those that do have a plan, surprisingly many consider only the direct threat of disaster, catastrophe, and physical emergency, and how to prevent such events from interrupting business.

My argument in this chapter has the following three fundamentals.

  • That the greatest threat to organizations in crisis is often the damage caused to their reputation. You may be able to recover your ability to deliver product, for example, but if no one trusts your product any longer, the exercise is pointless.

  • That reputation is most adversely affected where crises arise from risk issues that might have been foreseen and better managed. However, even disasters in which you may initially be seen as the “victim” have a nasty habit of throwing up challenges to your reputation, depending on how you manage the event.

  • Managing your organization’s reputation needs to be at the center of crisis management and recovery. It is not something you can “bolt on.” Being seen and heard to manage risk issues and crises well can enhance your reputation and limit or mitigate damage from the event. So dealing with the media, including online sources, is not optional—it is essential.

Crisis and Reputation

The key to understanding how much of a threat to your reputation a crisis is likely to create and where that threat is likely to arise is to consider the following question: What is within your control, and what is beyond it?

Figure 1 illustrates the point. It was devised by Samuel Passow, a Harvard-educated journalist, author, and accredited mediator who is the head of consultancy services and executive training at the Conflict Analysis Research Centre at the University of Kent. The types of crisis that appear toward the left-hand end of the spectrum are the most likely to dent your reputation. In those toward the right, the early assumption is likely to be that you are the “victim.” It is vital that crisis management plans do not focus entirely on the right-hand end of the spectrum. Always allow for mismanagement. And do not listen to the argument that such and such will never happen.

Of course, how you manage a crisis is always under your control, so a crisis that begins at the right-hand end of the spectrum can move to the left if you are perceived to be mismanaging the situation, or if it is suspected that better management might have prevented or mitigated the crisis.

For example, in the Japanese earthquake and tsunami of 2011, sympathy for the plight of the nation and those affected was universal, as was admiration for the stoicism and robustness of individual and official responses. However, that did not prevent important questions being raised about Japan’s nuclear safety policy in the light of what happened at Fukushima—questions that had serious repercussions for the reputation of the nuclear industry worldwide, as shown by Germany’s almost instant decision to announce the ending of its nuclear energy program.

The Fukushima Daiichi plant was badly damaged by the 9.0 earthquake that struck on March 11, 2011. The Tokyo Electric Power Company, which owns the plant, had previously carried out geologic and sonic surveys to assess the power station’s resistance to such events. They had put in place a number of additional precautions as a result of learning from a fire at another plant in the northwest of the country when it was hit by a magnitude 6.6 earthquake in 2007.

But Japan’s Nuclear and Industrial Safety Agency said that, despite the surveys, it appeared that officials at Fukushima had not considered the scenario that a tsunami might hit the power plant at a time when they would need to use the diesel backup generators intended to provide emergency power to the reactor cooling systems. Fuel tanks for the generators, positioned at ground level just yards from the seafront, were among the first parts of the facility to be destroyed by the huge tsunami wave that swept inland following the earthquake.

Dr John H. Large, a United Kingdom-based independent nuclear engineer and nuclear safety expert, told the Daily Telegraph: “These plants should be designed to be resistant to tsunamis, but it appears they did not consider that a tsunami would hit the plant when they were using the back-up generators. The buildings will have been built to withstand a tsunami, but it appears the back-up generators were not.” (Gray and Fitzpatrick, 2011).

This highlights an important aspect of crisis planning: the law of unfortunate coincidence, which says that whenever one thing goes wrong, so will another.

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Further reading

Books:

  • Anthonissen, Peter F. (ed). Crisis Communication: Practical PR Strategies for Reputation Management and Company Survival. London, UK: Kogan Page, 2008.
  • Carson, Rachel. Silent Spring. Boston MA: Houghton Mifflin, 1962.
  • Coombs, W. Timothy. Ongoing Crisis Communication: Planning, Managing, and Responding. 3rd ed. Thousand Oaks, CA: Sage Publications, 2011.
  • Fearn-Banks, Kathleen. Crisis Communications: A Casebook Approach. 4th ed. New York: Routledge, 2010.
  • Griffin, Andrew. New Strategies for Reputation Management: Gaining Control of Issues, Crises & Corporate Social Responsibility. London, UK: Kogan Page, 2009.
  • Holmes, Anthony. Managing Through Turbulent Times: The 7 Rules of Crisis Management. Petersfield, UK: Harriman House, 2009.
  • Nader, Ralph. Unsafe at Any Speed: The Designed-In Dangers of the American Automobile. New York: Grossman, 1965.
  • Parkinson, C. Northcote. The Law of Delay: Interviews and Outerviews. Boston, MA: Houghton Mifflin, 1971.
  • Regester, Michael, and Judy Larkin. Risk Issues and Crisis Management in Public Relations: A Casebook of Best Practice. 4th ed. London, UK: Kogan Page, 2008.
  • Seymour, Mike, and Simon Moore. Effective Crisis Management: Worldwide Principles and Practice. London, UK: Cassell, 2000.
  • Smith, Denis, and Dominic Elliott (eds). Key Readings in Crisis Management: Systems and Structures for Prevention and Recovery. New York: Routledge, 2006.
  • Ulmer, Robert R., Timothy L. Sellnow, and Matthew W. Seeger. Effective Crisis Communication: Moving from Crisis to Opportunity. 2nd ed. Thousand Oaks, CA: Sage Publications, 2011.

Article:

  • Gray, Richard, and Michael Fitzpatrick. “Japan nuclear crisis: Tsunami study showed Fukushima plant was at risk.” Daily Telegraph (March 19, 2011). Online at: tinyurl.com/43f27ue

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