Reputations won and lost
Times are tough, tempers are short but memories are long. How can businesses preserve their good reputations? Andrew Patterson reports.
There’s an old saying “when times are tough you discover who your true friends are.”
The same might be said of business relationships.
As businesses fight for survival there’s one friend many of them would like to have right now: their landlord.
But hold that thought for now.
Former Prime Minister Sir John Key raised the issue of managing relationships in a crisis situation last week in a video presentation to the Trans-Tasman Business Circle.
Key pointed out that companies needed to remember that crisis times had the potential to seriously impact reputations.
“There is tremendous public scrutiny and anxiety levels are high, so you don't want to add to that, and you also need to anticipate how the moves you make today will play out publicly.”
A rule of thumb for firms would be applying the “front page of the paper” test to the decisions they were making. Otherwise they could come out looking, in classic Key parlance, “a bit rough.”
Key said the crisis was also an opportunity for businesses to show they cared about the people working for them.
“They may be stretched thin and need to rely on a wage subsidy scheme, but it is still an opportunity to do the right thing.”
Reminding his audience that businesses would also learn a lot more about their organisation during crises than during good times no doubt brought back memories of managing the country through the 2008/09 global financial crisis.
But Key’s line that you need to anticipate how the moves you make today will play out publicly should be uppermost in the minds of CEOs, who, in the case of landlords, hold the future livelihood of many of their tenants in their hands.
Many stories coming into Newsroom are not encouraging, and suggest this message isn’t being heeded. They indicate there are plenty of landlords, including sizeable ones, simply acting in their own best interests.
In a recent story, Newsroom highlighted several examples of landlords, including major listed companies such as Kiwi Property Group, sending tenants generic letters reminding them of their obligation to pay rent - and other usual charges continue throughout this period unless the lease expressly stated otherwise.
No words or offers of support, no encouragement, no empathy whatsoever.
So much for heeding Prime Minister Jacinda Ardern’s message to be kind to one another.
Which brings us to corporate reputation.
While all businesses measure their profitability, very few ever pay attention to measuring or understanding their reputation – until something goes wrong.
Colmar Brunton, who for the past five years have compiled the annual NZ Corporate Reputation Index know a lot about how reputations can grow, and equally how quickly they can be undone.
Sarah Bolger, Colmar Brunton’s managing director, says that at times like this everything you do as a businesses is being done under an intense media glare.
“There are two key influences on people’s perception of reputation. One is the media, and the other is experience. If they are seeing you in the media, how are you coming across and is it with a human lens rather than a consumer lens? Remember that old rule, if you can’t be genuine, it's better to be silent.”
Bolger says when it comes to reputation, there are four important pillars to keep in mind.
“First, what is your style of leadership and how does that reflect the national mood? Second is fairness: how are you coming across and what decisions are you making that are deemed to be fair and are these based on what you think or what you know? There’s an important distinction. Third is trust, and the importance of asking yourself if it feels like the right thing to do. And the final pillar is responsibility. In what relevant way are you helping people through this crisis, particularly at a time when we know people have heightened levels of anxiety?”
But for businesses, Bolger says there’s another important distinction to make from a reputational perspective.
“Are you listening or are you telling? Staying close to your customers and having a genuine customer-centric lens based on their needs is the most important test.”
Brian Spisak, a senior lecturer at the University of Otago’s School of Management says another way to think about corporate reputation is by applying what he terms the three Rs of co-operation with stakeholders: Reciprocity, Reputation and Retribution.
“Businesses must ask themselves are they oriented towards the interests of their stakeholders or their shareholders and whose interests are being put first? If you establish a reputation as a reciprocator beyond the pure economic factors then you don’t have to worry about the third R, that of retribution where customers perceive your behaviour to be selfish and they intentionally avoid your products or services as a result.”
Spisak says you can still be shareholder-oriented provided you have a long-term vision and sometimes taking a short-term profit hit for long term sustainability is clearly going to be a more effective strategy for businesses to consider.
Benjamin Franklin, one of America’s founding fathers, summed reputation up the best “It takes many good deeds to build a good reputation, and only one bad one to lose it.”
Perhaps, in the end, John Key’s newspaper test is still the simplest and most effective measure of deciding if your approach is going to enhance or detract from your reputation.
If more business leaders adopt this approach we might yet successfully navigate our way through this crisis with more reputations intact.
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