There’s an insurance policy for everything these days – and we mean that literally. Whitney Houston insured her voice, Michael Flatley insured his legs – and America Ferrera insured her smile for $10m in 2007. However, in our industry, reputations are a bit less tangible – but you can nonetheless take out insurance to cover them!
Is this ridiculous?
Well perhaps not. According to a study in 2018, reputation represents as much as 41% of the FTSE 100. 70% of jobseekers say that reputation is important when considering a new opportunity. And for every 5% improvement in reputation, organisations will see a 6.3% increase in purchase intent, according to the Reputation Institute.
Reputations are valuable – there’s no question about it. We’ve all heard about catastrophic events that can seemingly break brands in seconds. I usually cast my mind back to Ratner in 1992 and Domino’s in 2009, but it’s also true that many brands have more resilience, even to strongly adverse effects. So, despite Elon Musk’s many gaffes about scuba divers, being accused of fraud by the SEC and smoking weed during an interview with Joe Rogan, Tesla’s share price has remained relatively robust.
Now, we are strong advocates for preparing for the worst, but you can’t plan for everything. And once you’ve mapped likely and impactful scenarios out in a crisis plan with the leadership and communications team, most managers will put the folder back on the shelf and make a coffee, content that their job is done.
They couldn’t be more wrong.
The future is unknowable, but there is something else you can do about it.
Consider the unknowable
As we’ve said, you can’t plan for everything. You can’t possibly anticipate the reaction of every single employee to a data breach. You can’t plan for the reaction of your suppliers or channel partners to an unethical deal you made in the past – they might raise their prices because they perceive you as untrustworthy, or actually appreciate your ingenuity! You can track shareholder confidence fairly easily through share price, but what about hostile questions during an AGM, or a panel that you’re speaking at?
We’ll assume that you have indeed, already planned for the worse (and if you haven’t, don’t worry – there are a few pointers below) but we also recommend taking a lesson from international diplomacy. As Margaret Heffernan mentions in her TED talk, small countries often know that they lack the clout to force other nations to do what they want, so they simply try to be friends with everyone and spread their bets.
This isn’t an easy path by any means; and it flies in the face of many organisational strategies that focus on efficiency, cost cutting and ‘just in time’. Establishing positive relationships with suppliers, partners, customers, staff and other third parties is a tremendously intensive activity, demanding a significant amount of time and effort. It’s not just about planning for the worst – it’s about making sure that you’re prepared, right down to your organisational DNA and how you do business.
However, it’s a very ‘human’ thing to do. Establishing reputational robustness means that organisations and customers often give you the benefit of the doubt. At the very least, in the event of an issue, they’ll come to you first and give you the opportunity to fix an issue privately, rather than going to the press (or worse!) without your knowledge. Being kind and considerate, valuing your business partners and treating them well can be costly – but in the event of an issue, it pays off in spades.
The path to robustness
So, what’s the best path to ensure your reputation, above and beyond insuring it? It’s a big topic, and the first step is to know who you need to know and build or improve relationships with them. Similarly, there are a few other steps that you can take to build up reputational robustness – here’s a few resources that might be helpful, depending on where you are in the journey:
- Identify your stakeholders: check out Charlotte’s piece here for that
- Maintain a pedigree of agility and innovation: We can’t all be landmark brands like Tesla, but most brands have something worth shouting about. Being known for resilience, agility and innovation helps to maintain a ‘halo effect’ with shareholders
- Think about reputation in the round: Don’t turn a blind eye to any parts of the business
- Be ready for the unexpected: If you are in a crisis situation, Check out our advice in a few of our crisis guides.
We haven’t come across any brands that have taken out reputational insurance so far, but it’s something we’re very intrigued by! People have long memories, and although Domino’s – for example – is now seen as a landmark brand rather than ‘the dirty pizza company’ – we’d be fascinated by how an insurance company would help a brand restore its tarnished reputation!
For those that aren’t considering insurance, ‘ensurance’ is the best policy, investing in the confidence and trust of your own employees, suppliers, customers and third parties, as well as doing commercial due diligence around supply chains, modern slavery and fair working policies. This is an intensive process, but if a supplier makes a rash decision or an executive tells a catastrophic porkie, it might just save your bacon.