How important reputation to corporation?
Reputation is one of the significant factors in companies, when reputational damage happened it not only can bring major economic damage but also impact in corporate image.
For many companies, the most valuable property is not how much fund they have, nor in how many staff of the workforce, whereas rather in its reputation. However, reputation can be a brittle thing. Consider Coca-Cola, which became the largest cola manufacturer through its reputation for reliability and value but has suffered as incident of food poisoning in Belgium, 1999. This has contributed to a direct financial loss more than 60 million dollars.
Another example is British Petroleum (BP), because of the oil spill in the Gulf of Mexico, BP spent for years built in its trustworthy and going green and environmental protection image and sunburst logo, its reputation quickly fell down in the midst of tragedy: its image value was reduced by 100 billion dollars. Therefore reputation is a significant property in organisations. It may let organisations suffered great loss.
How to recover reputation damage?
Finding methods to repair reputational damage can divide into two pathways: one is controlling distrust another is demonstrating trustworthiness again.
According to Dietz and Gillespie (2012), organisations trust repair has four stages:
- find reasons
- take actions
- evaluation of progress
How to prevent reputational damage?
First of all is evaluations of crisis has happened, is because after solving the reputational damage, organisations can find the experiences by evaluate the crisis to prevent such setbacks. Generally, after reputational damage should evaluation cause and effect, weather methods to solving problems are useful by released companies report.
In addition, the choice to establish contingency plans is due to the fact that contingency plans can become reputation insurance and fast deal with emergency incident. Many companies take contingency plans such as establish CSR as a significant role in organisations’ rest-management strategy. The trend that many companies set up contingency plans is because it is an effective strategy and can help organisations take actions quickly when emergency incident happened. Not only it can help organisations deal with crisis, but also can give public confidence that companies plans as reputation insurance play an important role in organisations’ rest-management strategy.
With the increasing of social media, organisations should pay more attention to use social media to improving interaction with customers and controlling negative dissemination of information. Firstly, the fact that social media such as Facebook, Twitter and YouTobe is increasing popularity in many organisations is due to it spread fast and wide. In addition, the trend that companies spend an increasing amount of time is because using social media can allow companies accomplish interchange information quickly and help enterprises connect with their customers more effective. However, plenty of information on social media is to boots sales and hits, therefore organisations should pay more attention to control social media, which cover many negative stories.
Dietz, G. Gillespie, N. (2012) The Recovery of Trust: Case studies of organisational failures and trust repair, 1st ed. London: Institute of Business Ethics.