Listening to Stakeholders Doesn’t Just Build Trust – It Protects Reputation
By Shahar Silbershatz for PRNews
How much damage can a corporate crisis do? Quite a lot, it turns out. In 2018, The Economist looked at eight of the most notable crises from this century and found that the companies involved were worth, on average, 30% less today than they would have been had the crisis in question never occurred. Indeed, while most businesses will survive a scandal in the short-term, their financial value—and reputation—may take years to recover.
This makes it all the more surprising that many businesses use crisis communications only in reaction to a reputational risk and opt for mitigation rather than prevention. This passivity is apparent in how many companies feel about their ability to respond to a crisis. A recent survey found that while 59% of businesses have experienced a crisis, only 54% have a plan to deal with them.
At the same time, corporate crises are becoming increasingly common. They’re also getting more costly. In 2010, U.S. corporations paid $11 billion in penalties for regulatory infractions. Six years later, they paid $59 billion. Throw in the reputational cost—and its impact on the stock price and on retaining and attracting customers, suppliers and employees—and you can see why reputational risks give corporate decision-makers sleepless nights.
But the reputational impact of a crisis can be reduced, largely by embarking on a journey of rebuilding trust, engaging with all stakeholders, keeping employees motivated and bringing about deep-seated internal change, if need be.
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