Reputation: Years to Build, Moments to Destroy

Your business‘ reputation is a valuable commodity. But as we’ve all witnessed with many companies, a single incident can damage in one moment that which has taken years to build.

A recent article in The Telegraph even stated that at least 28 per cent of a UK company's value is accounted for by reputation. In fact as a whole, the recruitment industry has come under attack too many times for alleged improper practices, which creates a negative impression the industry must then work tirelessly to dispel.

But what of individual companies within the industry? If your company came under public attack from specific employers or candidates and this became common knowledge, could your company easily rebound from this kind of damage? Could one of your employees even be using bad practices and putting you at risk without your knowledge?

The Reputation Institute carried out a survey that demonstrates a strong link between reputation and stakeholder support, as well as reputation and consumer recommendations. The report shows that 83 per cent of consumers would buy products from companies with an excellent reputation, whereas only 9 per cent would buy from a company with a weak reputation. This is fairly damning and worrying for companies with so much competition in the mix.

Recruitment is not an industry shy of competiveness or innumerable operators waiting to swoop in to succeed where others have failed.

What can reputational damage cost a business?

The exact impact of a reputational event can’t be measured until it happens, but some of the potential costs include:

• A drop in revenue
• Crisis management costs
• Loss of customers
• Share price decline
• Increased operating, capital and regulatory costs

Reputational Risk: how can you avoid damage?

By creating a reputation risk management plan your company will be able to monitor your business channels and help shape public opinion in your favour. The following guidance should help effectively manage your organisation’s reputation risk:

• Utilise an effective early warning system designed to monitor news about your company on websites, blogs and social media. Be sure to plan for how to handle crises or any issues uncovered by the system.
• By using social media and the Internet you can proactively shape your company’s reputation and your brand image.
• You’re only as strong as your weakest link; make sure those who represent your company connect well with both the shareholders and the public as well as embody your corporate goals and ideologies.
• Maintain a professional relationship with the media. This will allow you to better monitor how your brand is perceived.
• Ensure you remain informed on what trends are occurring in the business, economic, social and regulatory sectors, which have the potential to create new risks. This will mean you are better prepared and compliant.
• Maintain good working relationships with regulators, which can provide you with a more in-depth insight into current and upcoming regulations.
• If you work with an industry that can attract negative attention it is worth identifying potential special interest groups and work on fostering professional relationships with them. This can stop conflict before it occurs.

Although this is not an exhaustive list of practices that could benefit your company’s risk management plan, it might give you some ideas for a management team discussion on what you already do or what you could do to keep your reputation intact.

To find our more how Jelf, the REC’s preferred insurance broker, can help protect your business visit jelfgroup.com/REC

*Zywave - Managing Your Reputation Risk