There are generally three types of reputational crises which businesses face – a crisis of circumstance, competency or culture.
Whilst by their nature no crisis is easy to deal with, arguably the crisis of culture –defined as inappropriate behaviours in (and out of) the workplace or ethical lapses– can be the most challenging to handle, with often the most senior person in the business, and at times whole leadership teams, finding themselves under intense pressure and scrutiny.
Research by Strategy&, the strategy consulting arm of PwC, reveals that in 2018 more CEOs were removed from their position for ethical lapses than for poor financial performance or struggles with their board.
Thirty-nine percent of the 89 forced CEO departures in 2018 were due to ethical misconduct.
So when employee, customer and stakeholder expectations of businesses are higher than ever and transparency is demanded, leadership teams and Boards need to consider how they would respond to this business and reputational threat:
Embed values: Don’t wait for a crisis to happen before getting your house in order.
Businesses that have values embedded across their business (and lead by these values), are more likely to recover from a crisis of culture.
It is important to recognise that a business’ culture can still sometimes be seen as something which the HR team own but it is crucial to all aspects of the business – be that legal, operations or comms.
Furthermore, being able to show evidence of your values can help manage the reputational aspect of the crisis
Be prepared: Whilst it is a given that most businesses have crisis plans in place, in our experience, these plans don’t often address these ‘newer’ reputational threats. This means that businesses can find themselves in unchartered territory, making vital decisions under intense pressure.
Act decisively: Don’t hope it will go away. It won’t and importantly, if handled badly can easily and quickly lead to questions about the integrity of the whole business, not just those involved. Remember, the way a crisis is handled can impact reputation as much as the crisis itself.
Consider all your stakeholders: Whilst your priority is likely to be internal, it is also important to remember your external audiences and consider the implications should the crisis go public.
For example, partners will want to be reassured that you are in control of the crisis and responding responsibly – they will be concerned that their reputation may be impacted by association.
Whilst it is understandable that conversations about “what if?” can feel uncomfortable when it comes to discussing a business’ culture (and behaviours), it is something that, in today’s environment, leadership teams and Boards can’t afford to ignore.
As is well known, the key to effective crisis response is effective planning – this applies whatever the crisis.
Judith Moore, Partner & EMEA Crisis Lead
This article is part of the latest CMS Advising the Board report on HR Crisis Risk.
To learn more about the full report or if you would like a copy of this report and/or to subscribe to the whole series of Advising the Board reports, feel free to email [email protected]
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November 20, 2023
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