It's never too early to say you're sorry

12 February 2017 - 02:00 By Zipho Sikhakhane

All organisations and individuals have to manage their reputations, because a good one can be what gives you the edge over the competition.

Look at what happened with Ford recently after its improper management of the recall of the Kuga, which had a propensity for bursting into flames.

This defect had been an issue for years, yet Ford's public apology came only after the company's reputation had suffered major damage.

As one of the oldest players in the industry, and no stranger to recalls, it really ought to have managed the situation differently.

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Unfortunately, mismanagement of a company's reputation, especially during times of crisis, is not unique to Ford.

Organisations and individuals often default to the same behaviour of taking measures to address the issues that affect reputation only once the market forces us to do so - regardless of the fact that the issue could have been addressed long before it became a scandal.

It is vital that we reconsider our approach to the management of reputation risk and take remedial action as soon as possible - it is the right thing to do. At first, it will be embarrassing to admit fault before anyone actually points a finger, but it helps in gaining respect in the long term.

Organisations are typically slow to act because the product defects experienced by a few customers usually do not justify the cost of remedying the problem for everyone who could be affected.

This is effectively gross mismanagement as you continue to inconvenience customers, hoping that the issue will not become an international scandal.

However, we live in an interconnected world of instant communication - there is no way a company's reputation can survive unscathed.

The outdated approach of waiting until things get really bad before acting causes irreparable damage that goes beyond customer confidence - other stakeholders are affected, long before the bulk of customers are affected.

In many recalls, employees know about the defects long before consumers do and feel under obligation not to make this knowledge public - despite the risks their silence poses to customers.

While the company remains content because the majority of its customers have not been affected, its more ethically-minded employees resign in silent protest.

Can you imagine the calibre of those who stay? Or agree to join the company despite the feedback from their peers on the employer?

Eventually, you have an organisation with a staff complement that might not have the best ethical profile.

The same is true for other stakeholders that the business interacts with, such as suppliers, investors and shareholders.

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What we perceive as reputation risk management needs to go beyond customers to include all stakeholders across the chain.

Often - especially during the toughest of times - organisations are quick to ignore the effect on all stakeholders, operating under the illusion that a company's reputation is most deeply affected by the customer.

Again, we live in world of interconnected networks - every stakeholder matters.

Put the customer aside for a second and consider what is entailed in the timeous delivery of a product. Clearly, the success of the customer's experience relies on everyone involved in the process.

The unfortunate reality is that big businesses can cut corners and often have enough funds to turn around a tarnished reputation when the occasion demands.

As matters stand, not everyone who owns a Ford will be getting rid of their car tomorrow.

But small organisations still establishing their market presence do not have this luxury. One move detrimental to reputation with any stakeholder could result in the company failing. So it is even more critical that small-business owners start viewing reputation risk management more broadly and put in place strategies to proactively manage their reputation.

Hopefully this approach will become part of what is taught in business management 101 - andthe next generation applies the lesson.

zipho@ziphosikhakhane.com

Sikhakhane is an international speaker and an executive at Circle Food Group, with a business honours degree from the University of Cape Town and an MBA from Stanford