WeWork. Enron. Volkswagen. Wells Fargo. Uber. What comes to mind when you read this list of (in)famous company names? Scandal. The reasons these highly-successful brands went from best-in-class to tabloid headline may seem varied, but ultimately, they had the same root cause: These companies didn’t place a priority on proactive reputation management.
Reputation is all about trust; it’s about how the whole company is viewed and perceived by society, customers, stakeholders and the market as a whole. A strong reputation is important because it builds a strong relationship with your customers. But, unfortunately, most leaders currently use reputation management only to mitigate damage during a scandal that’s already occurred.
Instead, leaders should be looking to proactively build and maintain a positive reputation so that if there were a scandal, trust is already built with the community.
As an advisory board member of CRO-Counsel, a reputation management network, I have witnessed firsthand what makes proactive reputation management so difficult, and advocate that every company has a chief reputation officer. With over 80 factors that create a strong brand perception and reputation, leaders can often feel uncertain or overwhelmed about where to begin or how to wrap their arms around the concept.
But despite the challenges, ignoring reputation management can be a costly mistake. Here are the five biggest reasons why your leadership team needs a dedicated chief reputation officer.
1. Reputation is even more critical in the digital era.
Reputation management was a much easier task before the age of the internet. In fact, new concepts like “call-out culture” have been created, where it’s commonplace to publicly humiliate or shame a company in an attempt to hold them accountable for a (perceived) misdoing. It takes almost no effort for a customer to complain about your services on social media and have it spread to 1 million followers instantly.
Take the extreme responses against Facebook’s policies around data handling and content filtering. Boycotts and hashtags such as #DeleteFacebook and #StopHateForProfit lost the platform countless users and over 400 companies’ advertising revenues. An established reputation can help to maintain customer loyalty even when facing public call-outs.
2. There’s a missed opportunity when you’re only thinking about reputation management defensively.
Most companies, including your competitors, are usually only thinking deeply about reputation management after a crisis has hit. They react and try desperately to repair the damage. This is a huge missed opportunity because the damage done was often completely avoidable. Just like no sports team wins a game playing only defense, your company needs to play strong defense and come out with a strong offense.
Take Southwest Airline’s proactive approach to the inevitable-yet-dreadful scenario of a delayed takeoff. Southwest is known for excellent and offbeat customer experiences, so it was an on-brand moment when a gate agent entertained delayed crowds with games like paper airplane contests and “Worst Driver’s License Photo.” They turned a mishap into a fun experience simply by proactively thinking of ways to keep guests entertained.
3. No one holds the day-to-day responsibility of maintaining your company’s reputation.
Most people think reputation is the responsibility of the CEO or perhaps the communications, marketing or risk management teams. The challenge is that the people in each of those roles have other (significant) daily responsibilities that overshadow a focus on proactive reputation management activities. They might ultimately be responsible for reputational outcomes, but maintenance is not the main job they were hired to do (and it’s certainly not the key performance indicator they need to meet to get their bonus). In other words, team members might get fired for a reputation problem, but it’s not why they get hired. There aren’t strong enough incentives to get them to spend the required time on proactive maintenance.
4. It is difficult to cooperate across many silos organically.
Reputation is created from many different factors, with elements coming from the departments of marketing, communications, product development, sales, customer service, quality assurance, corporate social responsibility, finance, compliance and more. Who has the authority to oversee all of these areas if it’s no one person’s job?
It’s certainly possible for teams to be successful in creating cross-functional project teams, such as this team at Oreo who created an award-winning, real-time Twitter campaign, but they are by far the exception as opposed to the norm. Your reputation is too important to be relegated to “hoping” that inter-departmental team meetings might be occurring.
5. Repairing broken trust is sometimes impossible.
When two separate Boeing 737 MAX jets crashed within six months of each other in 2018-2019, customer trust in the brand plummeted. According to the New York Times, even almost one year after all MAX planes were grounded, Boeing’s surveys indicated that “40% of regular fliers said they would be unwilling to fly on the MAX.”
Then, in early 2020, a Boeing 737 plane crashed in Iran and $4.3 billion of Boeing’s market value was erased immediately. Although the crash was later attributed to human error by the Islamic Revolutionary Guard Corps and was confirmed unrelated to the aircraft, consumers at the time were ready to immediately blame Boeing because of the loss of trust that they could make safe planes. Once trust is damaged, consumers are even warier of trusting you and may refuse to use your products or services again.
In the 21st century, reputation management is simply a must to ensure success (and survival). Much like a company would never leave their finances unchecked and uncontrolled due to complexity, why leave the valuable asset of reputation uncontrolled?
Many leaders don’t yet know how to take a systemic approach to managing reputation effectively. A chief reputation officer can solve those challenges. It’s time for your company to upgrade to proactively building a strong reputation — instead of leaving your good reputation to chance.
This article originally appeared on Forbes.com