Recently, 24/7 Wall Street released its list of “America’s Top 20 Most Hated Companies.” There is no joy in piling on by naming names, so if you need to satisfy your curiosity, click the link. It’s a diverse list, consisting of news and entertainment brands, financial services firms, transportation, phone service, retail, higher education, real estate, agri-chemicals and tech-manufacturing companies.
Each committed blunders ranging from customer service miscues to sexual misconduct allegations to product performance issues to landing in the crosshairs of divisive political debates. It underscores a key point: For any company, there’s an endless supply of risks.
One study of public companies found that in any five-year window, there’s an 80 percent chance that a company will be caught in a crisis and lose 20 percent of its value. It’s not so much if a crisis will happen, but when. And, as the Wall Street 24/7 list proves, it’s not the type of crisis or what industry you’re in that determines the level of reputational threat.
What’s most damaging, in many cases, is the way companies respond.
Reducing your company’s chances of landing on the “most hated” list means ending a crisis as quickly as possible. To do that, here are five mistakes to avoid. Consider them lessons from the 20 Most Hated Companies in America.
Mistake No. 1—Misread the Facts and React Slowly
Rapid growth or years of category leadership can lead to a lack of institutional controls and senior leadership hubris that festers when Boards of Directors react slowly and are unwilling to challenge powerful CEOs. Thinking success and power can outrun a crisis often leads to a bitter lesson in the court of public opinion.
Insiders often find it difficult to question leadership, but this blind spot can be dangerous.
What policies and procedures do you have to monitor ethical, legal and business challenges? Do you have a designated team empowered to react quickly? Do you train for the “what ifs?”
Mistake No. 2—Don’t Invest in Your People
Most companies have made staff cuts in recent years, spending less on training programs and doing fewer things to boost employees’ morale. Remaining workers may be dealing with reduced benefits, lower salaries or raises that are either smaller and/or less frequent.
Remember, the staff struggling with these issues – and not executives at your headquarters — are the people your customers see in person or hear on a customer service line. Those staffers are the ones badmouthing your company at their kid’s soccer game.
Is your company placing enough emphasis on training frontline employees? Do you have an active employee-relations program? Are you collaborating with human resources and operations to invest in your people?
Mistake No. 3—Take Key Audiences for Granted
Too often, communicating is a one-way street, and honest feedback gets ignored. Companies that don’t pay attention to maintaining a positive balance in the reputation bank run a risk when they need support from critical stakeholders. When the court of public opinion is deliberating, it’s too late to build a good reputation.
To build support from critical stakeholders, how are you monitoring feedback? Does your company have an active community-relations program? Are you engaged in cause-related marketing?
Mistake No. 4—Ignore Small Problems, Fail to Prepare for Major Challenges
The companies that made the 20 most-hated list demonstrated an uncanny willingness to disregard small problems and a tendency to be slow to grasp major challenges. Responding rapidly with effective communications efforts in the face of an emerging issue is important to avoiding prolonged crisis situations.
Businesses must proactively respond to issues that emerge. There is a low tolerance when companies fail to respond in the face of negative news.
What early warning systems do you have in place to detect a crisis? How effective are your primary spokespeople? Do you have key messages that you consistently communicate to the media, analysts and other key audiences?
Mistake No. 5—The 3 Ds
If the 20 Most Hated Companies in America prove anything it’s that the 3 Ds – Deny, Delay and Deceive – spark a death spiral in today’s non-stop news cycle. The rise of social media means that the marketplace reacts with speed and force.
When your phone rings and you hear bad news, it’s already too late to prepare. Key executives should undergo rigorous media training in advance. Your emergency response team should conduct drills to prepare for the inevitable issues all companies will face.
Your reputation is a valuable corporate asset. People want to do business with companies where they feel affection, relevance and trust. These elements of the Brand as Friend philosophy are critical components to the equity your company, brands, people and products have built over time.
In difficult times, you either reinforce these feelings. Or you see them vanish.