Opinion: “How can brands protect their public reputations?” asks Neil Bayley
By Neil Bayley
How can brands protect their public reputations? Neil Bayley, corporate director of London-based brand communications agency Good Relations analyses the HSBC and Tesco reputational crises
These days, the public understands that businesses like banks have different divisions, but people don’t expect their leaders to operate with different values. HSBC stood out as one of the banks that avoided the failure and scrutiny suffered by others in recent years. But this latest story about its private banking business brings its ethics into question at a time when tax avoidance is a red hot issue.
There is a building sense in Britain that some of the brands we have trusted to help us have been taking steps to avoid tax at a time when our economy needs business to play its full part in supporting recovery. What they are reported to have done may be permissible under law, but it’s not acceptable in the court of public opinion.
The conventional corporate response is unlikely to cool the heat quickly. Putting things into context, correcting facts or confining situations to a time under previous leadership are all rational ambitions, but they fall well short of an apology.
Coverage of the open letter to customers in weekend media – which the Independent described as, “In the grand tradition of non-apology apologies” – and the subsequent Select Committee hearing this week suggests HSBC has plenty more work to do. Worse still, the story has taken on a political dimension in the run up to an election thanks to the involvement of a former leader with government.
Brands like HSBC suffering a reputation crisis need to avoid fuelling the fire of media criticism through their initial response and start planning a recovery strategy quickly, because the legacy of perceived wrong doing lasts for a long time.
As much as they might like to, they cannot begin recovery straight away. A period of acknowledgement, reflection and contrition is expected these days. What is important right now is that they double-down to deliver flawlessly on the aspects of their product or service that helped them build customer confidence in the first place. This is the way HSBC prevents this negative story affecting other parts of its business and minimises lasting reputational damage among the public.
Brands like HSBC suffering a reputation crisis need to avoid fuelling the fire of media criticism through their initial response and start planning a recovery strategy quickly
That’s also exactly what Tesco is doing right now too. There is still plenty to sort out about what went wrong under the previous leadership, but the retailer has its focus back on the shop floor and delivering value to customers. As a result, sales have started to show positive signs, analysts are talking about how the market will be affected by a strong come-back and its reputation is likely to recover quicker.
It’s times like this when brands get a sense for the real value of intangible assets such as reputation. Research by Accenture suggests as much as 60% of company values on stock markets is not found in tangible assets like equipment or real estate. Instead, it is made up of intangible assets such as skills, culture, leadership and reputation – the sources of advantage that cannot be created quickly or copied by competitors.
That’s why a corporate reputation crisis often affects share price. The market may not have flinched nor the ‘nuts and bolts’ of a business been affected, but investors worry trust and confidence may not return so prospects could be damaged.
This is where leadership truly counts. Organisations that come through a crisis often recover to higher levels, because the leaders have proved an ability to manage their intangible assets just as well as their tangible ones. What better way to build trust?
Neil Bayley is the corporate director of Good Relations