CRISIS INSIGHTS NEWSLETTER

Practical insights, resources, news and more. Your information remains private.

Search
Expert Guide

How to Choose an Emergency Notification System

Download the Guide
Tuesday
Jan292013

Executive Trust is a Major Factor in Reputation Risk

Scandal isn’t just the subject of TV shows.  It seems to be the flavour of the month at boardrooms around the world, and it is taking a terrible toll on corporate reputation.

  • The CEO of Barclays Bank forced out over interest rate fixing
  • Executives of Japanese camera maker Olympus plead guilty to accounting fraud
  • Yahoo boss Scott Thompson resigns after lying on his resume
  • HSBC accused of money laundering for terrorists
  • Former Australian Wheat Board CEO fined over illegal kickbacks to the Saddam Hussein regime

These and many other such cases have spawned endless analysis on how unwise executive decisions destroy corporate and individual reputations.  But they also highlight a major challenge for crisis managers and professional communicators– the public don’t trust business, and they trust CEOs and other leaders even less. The only good news is that the public have even greater distrust of politicians.

The annual Edelman Trust Survey for 2012 found that the credibility of CEO as spokesperson had dropped to 38%, while 27% of respondents around the world did not trust CEOs to tell the truth. Moreover, for the second year in succession, banking and financial services were the two least trusted business sectors.

Sadly these are not isolated findings.

A Gallup poll in the US found business executives rate low in honesty and ethics, way down in the rankings, just above stockbrokers, advertising practitioners, telemarketers and politicians. A Pulse study showed 33% of Americans rate non-managers as having high honesty and ethics, whereas only 8% think CEOs possess have the same level of integrity

For organizations trying to respond to issues, or to communicate in crisis situations, this reality is a major problem.  If people don’t believe or trust you, even the best communication won’t fly.  So what can be done?

  • Spokespersons should be chosen for their credibility, not their job title
  • Senior executives need to accept that they are less likely to be believed than NGOs and other opponents, and should treat them with respect
  • CEOs must avoid being surrounded by people who share the same prejudices, which encourages damaging groupthink
  • Communication should be better targeted at supportive or neutral stakeholders to start building credibility
  • Issue Management and reputation risk are not just about communication, but should be embedded into all activities
  • CEOs need to identify and wind back corporate hubris and arrogance, and not think they are above the law

It is impossible to quickly reverse decades of executive misdeeds and mistrust, but these first steps would be a pretty good start.

Tony Jaques is an internationally recognised expert on issue and crisis management and author of the online newsletter Managing Outcomes. Contact him at tjaques@issueoutcomes.com.au.

MissionMode's streamlined incident management and mass notification software enables organizations to take control of fast-moving crises and reduce reputation risk.

« Crisis Communications 101: A Crash Course | Main | 6 Websites and Mobile Apps to Combat U.S. Flu Risk »