21 November 2018

Managing reputation crises in a global society: do’s and don’ts

We have shifted from transparency to hyper-transparency in a global society where anything and everything can now be easily checked. Controlling a company’s narrative and safeguard it in public opinion and for all its stakeholders is becoming increasingly difficult, and must be done in real time, which is what sets the pace in a digitalized world.

Interestingly, this reality forces all organizations to be more proactive in their communication, making transparency management their great challenge. Its importance becomes even more evident from the responsibility it shares for a firm’s reputation, with the perception of trust. Consequently, transparency is now seen as a strategic asset in business management. Moreover, companies that are transparent in their everyday business will be rewarded in handling a reputational crisis by public opinion and its stakeholders, since they will start from a position of greater trust and better relationships.

The conclusion is that being transparent and responding with swift, efficient action is fundamental in crisis management and an essential asset for protecting both the brand and the business: it is the trump card of all organizations at times of crisis.

Characteristics of the risk scenario in current times

Companies now have 24/7/365 exposure to public opinion and any crisis spreads at the speed of light. Businesses, brands, CEOs and executives must be ready for rapid and agile response at any time, (the so-called “Golden hour” no longer exists) and with a target impact that has no boundaries. This socio-digital context has led us to hyper-connectivity and hyper-vulnerability. A world in permanent connectivity that allows fluent communication and immediate feedback. Hyper-connectivity develops in cyberspace and we live in totally dynamic environments and circumstances, where many crises first come to light in the social networks. These in turn make us much more vulnerable.

On the one hand, citizens are empowered by the ease with which they can spread and make viral any type of content, in a life where the lines of where “online and life” begin and end are rather blurred. As José Antonio Llorente, founding partner and chairman of LLORENTE & CUENCA, explains in the magazine UNO 31 “Hyper connected and hyper-vulnerable”, we are witnessing the birth of a cyborg society, in which the use of smartphones is converting everyone into a risk vector: “citizens (many of whom have become cyborgs by virtue of their mobile extensions) not only spread information to all corners of the planet in a matter of seconds, but sometimes do so with even greater enthusiasm when the information is false, as recently shown by MIT research”. This not only stimulates the growth of social activism, where the users of services/products and other people come together in social networks and forums to assert and pursue their interests, but also opens the door for the formation of misinformation bubbles.

On the other hand, this transparency requirement is imposed by different stakeholders: citizens, users, customers, consumers, partners, associations, the media, institutions … There are no differences: all stakeholders demand transparency to a greater or lesser degree of companies, organizations and governments on a daily basis. In our relations with the media, this forces us to be more proactive, open and honest. We must also take account of cyber threats, which make the future rather uncertain through breaches in data protection, and cyber crime, with all sorts of digital crimes. Both these phenomena are growing in importance as they become more widespread and potentially more disruptive, as mentioned in the latest Global Risks Report 2018 of the World Economic Forum.

It is worth noting that among the top 5 global risks by probability this year, cyberattacks rank third and data theft or fraud, fourth, both having a direct impact on companies’ transparency levels. The rapid growth of misinformation, fake news and rumors forces us to monitor news constantly and make sure we are able to react swiftly to any lies, biased information or half-truths. “We have access to such a large volume of information that we are unable to digest the details when thousands of fresh news items replace those the networks just provided. It is this same hyper-connection that has made society hyper-vulnerable to misinformation, hoaxes, rumors and all kinds of cyber attacks”, point out Ivan Pino, Partner and senior manager of the Digital Area, and Luis Serrano, Global manager of the Crisis and Risks Area, at LLORENTE & CUENCA, in their article: “The new paradigm for crisis and risk communications”, in the magazine UNO 31.

In short, companies must see transparency as a strategic element, rather than an enemy to be given a wide berth, although in order to incorporate it in their everyday activities, organizations need to reformulate or transform their corporative culture and how they work. Transparency is essential to build and protect a company’s reputation and will be the backbone of its management of any crisis.

authors:
Eva Pedrol
Director of the Corporate Communications and Crisis Areas at LLORENTE & CUENCA in Barcelona
Pedrol has more than 10 years of experience in communication and reputation consultancy for different companies in Spain and around the world, helping to strengthen and protect their business and market positioning. She has specialized in helping international companies from sectors such as retail, aviation, technology, or the sharing economy “land” in Catalonia. Pedrol is vastly experienced in Spanish and international media and communications as she worked at the EFE News agency, both in Barcelona and as a foreign correspondent in Panama. She has also provided her communications expertise to UNICEF’s Latin America and Caribbean Regional Office. Pedrol has a degree in Journalism from Universidad Autónoma de Barcelona (UAB) and a master’s degree in Communication Management from Universidad Pompeu Fabra (UPF).
Natalia Sara
Crisis Manager at LLORENTE & CUENCA Madrid
Specializing in managing and safeguarding reputation in the digital environment, Natalia has 17 years of experience in strategic corporate consultancy for national and international companies, having been an account manager at agencies such as ACP and Ketchum. She is highly skilled in risk prevention, crisis management, preparing communication plans and Crisis Manuals tailored to different sectors, and in training managers and spokespersons to face crisis situations. She was previously a journalist for such national media outlets as Expansión and Actualidad Económica. Sara holds a degree in communication sciences from the University of Navarra, a postgraduate degree in communication for leadership and people management and a master’s degree in marketing, Internet and new technologies from ESIC Business & Marketing School.
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