Holmes Report 21 Feb 2014 // 8:55AM GMT
Two years after the sinking of the Costa Concordia off the coast of Italy, it seems the tragedy is still mentioned in practically all the corporate media coverage of Costa Cruises and its parent company Carnival. Carnival has recognised that it is going to take some time for Costa’s reputation – and its commercial position – to recover. The righting of the vessel and the ongoing legal battles – which pit the Captain of the ship against his old employers – provide stakeholders with a constant reminder of the catastrophic incident and the company’s poor crisis response.
By contrast, British supermarket chain Tesco is well on the road to reputation recovery from the crisis it suffered in early 2013 when horsemeat was found in some of its own brand products. The leading retailer had been a poster child for the issue – which involved many other retailers, manufacturers and suppliers in the beef value chain – from its inception.
One year later, when the company announced disappointing results, few media reports even mentioned the horsemeat crisis. The crisis has arguably been ‘resolved’ and Tesco has moved on. Whilst the crisis was undoubtedly a commercial setback for the company, the reputation repercussions seem to have been minimal.
What makes the difference in crisis recovery?
1. Manage the crisis well in the first place
The best way to speedy post-crisis reputation recovery is to manage the crisis well in the first place. Costa Cruises made so many crisis management errors, it built mistrust and resentment amongst many of its stakeholders, not least the families of those who had tragically lost their lives on the Concordia. This deepened the reputational damage and made the recovery far harder.
Recovery should be on the agenda of a far-sighted crisis management team (CMT) from an early stage. If a CMT, as opposed to an incident management or other operational team, has assembled, it is because something extremely serious has happened which will likely have an impact on licence to operate, strategic and commercial interests, and reputation. The role of the CMT is to think strategically and long-term, managing – and recovering from – these impacts whilst also having oversight of the immediate crisis response. Having clear objectives for reputation recovery may in fact help inform actions whilst the crisis is still being managed.
2. Reach out to rebuild reputation
After a crisis, stakeholders will be re-evaluating their opinions of the organisation, which in turn affects its wider reputation. Reputations that have been built over many years can be severely challenged or destroyed in a small number of days.
Rebuilding trust and recovering reputation can take time: months or even many years depending on the severity of the reputation ‘shock’ and the strength of stakeholder feeling. This means that reaching out to stakeholders becomes even more important.
The most important part of reputation recovery is in proving that performance is once again meeting expectations. Reputation is in delivery, not promise. So the best way to recover it is to get delivering again. This is therefore about far more than communications: it is about showing more than telling. How can we show that our products are high-quality despite the setback that led to the recall? How can we show that senior management is steering the organisation in the right direction despite the public failings of some executives (or their predecessors)? How can we show our safety commitment is real and substantive despite the terrible accident?
But this does not mean there is no room for communications in a recovery based on substance and action. Just as with crisis management, the trick is in showing and telling whilst you are doing. This will mean getting the right messages with the right proof points into many communications with many stakeholders – external and internal.
3. Rebuilding within the organisation
It is vital to recognise the importance of internal stakeholders here. In many ways recovery starts at home. Internal trust might have taken a severe hit; morale might be low. All the good work that has been done over the years to turn employees into ambassadors might have been undone in a matter of days. An internal communication campaign to rally the troops and to rebuild the business will be needed.
4. Create alternative content
Major crises create volumes of content both online and in traditional media. However well managed the crisis, this content is still premised on a negative, so organisations at the centre of crises are understandably relieved when interest in the story starts to wane. But whereas today’s newspapers might be tomorrow’s chip paper, online content remains in perpetuity. If internet users are searching for your company name and the content that appears concerns your recent (or even not so recent) crisis, the reputation damage can seem hard to shift.
There is little merit in trying to game the search engine system by flooding it with content of minimal interest; things that are not interesting do not get read, so soon drop off the crucial first few pages. The best solution is to provide alternative interesting stories that people want to read. Tesco has provided a great example of how to do this. The positive new content that has been driven by the company in the last year has pushed the company’s connection to the horsemeat scandal far down the search results. This reinforces the perception that, for Tesco, the horsemeat crisis was a regrettable hiccup in a rich corporate history rather than the company’s defining reputational moment.
5. Use the window of opportunity to affect real and lasting change
The most convincing action in the aftermath of a serious crisis in which reputation is damaged is real and lasting change. ‘We are changing’ is a convincing recovery message, if it is true. The purpose of change is not to rebuild trust alone. A crisis provides a window of opportunity for an organisation’s leaders to fundamentally change and improve direction, purpose, values and strategy.
Seeing a crisis as an opportunity is very difficult when the heat is on and the pressure high. But it is undoubtedly the case that, whilst no leader would wish a crisis on their own organisation, far-sighted leaders can make the most of the change opportunity that the otherwise unwelcome crisis presents.
Tesco’s recovery from the horsemeat scandal is based on a promise of change, which it now needs to deliver. Tesco produced an excellent crisis response, taking immediate ownership of the issue, recalling products and making an ‘unreserved apology’ in national newspapers. Tesco loyalty card customers received emails with the subject ‘we are changing’ and launched Tesco Food News, a website focused on making the supply chain more transparent for consumers. The supermarket also committed itself to sourcing more meat from the UK and Ireland.
Tesco’s decision to take a greater share of the responsibility for the industry-wide performance problem arguably harmed Tesco in the short term, but crisis management is not just about tomorrow’s headlines and till receipts. It is about long-term recovery and an opportunity to change for the better. If chief executive Philip Clarke means it when he says ‘we have changed’, and Tesco is seen to have made improvements that its consumers will see and appreciate, he may well have played an excellent reputation long game.
The best way to ensure a focus on rebuilding reputation is to get the most senior crisis management team thinking about it from an early stage. Understanding the probable extent of the commercial, financial and reputational damage, and devising a plan to recover from it, is exactly the sort of high-level, strategic thinking in which the CMT should be engaging. This should be written in to the crisis manual. And the sooner the CMT recognises this as an opportunity – albeit an unwelcome one – the more likely the recovery will be genuine and successful.
Andrew Griffin is chief executive of Regester Larkin.