A study in 2015 showed that reputational risks were the top concern for businesses. Customer satisfaction and profits are both harmed when a company gains a bad reputation, so it’s not hard to see why it’s such a major worry! Most recently we’ve seen both ride-sharing platform Uber and once notable tech giant Yahoo! plagued in controversy by a CEO stepping down and an acquisition respectively.
Reputational risk is a little like the debates surrounding climate change; we can argue about how important it is, but there’s no arguing that it is important. There are clear and present dangers to business reputations, so it’s essential that you read an article that quickly lists the most common risks to business reputations. You’re well on your way reading this article as a starting point.
A lack of understanding
Going against the codes and morals that people expect of a business is one of the most common ways in which businesses harm their own reputations. It seems fairly simple to stick to your code of ethics, right? Sure — but what if the standards to which your customers hold you is a complete unknown to you?
A lot companies aren’t aware of exactly what people expect from them. Your reputation isn’t something your construct by yourself — it’s the result of an interaction between what you do and say and what customers interpret those things to mean. Making sure you keep track of your own reputation is a vital part of this field — otherwise, you’re not as likely to know what might make your customers or business interests at large upset.
High employee turnover rate
Are employees slipping through your fingers like water or sand? Are employees coming and going at an alarming rate? There are a lot of reasons this is bad; it affects productivity, and overall employee satisfaction will take an unpleasant hit. (It also costs quite a lot — recruiting and training is hardly a cheap process!)
But it also affects something else, something that’s directly affected by the loss or productivity and employee satisfaction. You guessed it — your reputation. Managing employees well is crucial to success — as well as the upholding of a good business reputation. When people know that turnover is high, they wonder if you’re treating your employees badly. They may feel that an investment in your company wouldn’t be very ethical.
Remember back in school, where your playground enemies would spread nasty rumors about you? (Or perhaps it was you who was spreading rumours, you villain.) Many of us thought that we’d see the end of that kind of behavior by the time we grew up and entered the adult world of business.
But, as it turns out, the world of business really isn’t all that different to the playground. Competitors may be more than happy to spread around a few rumors about your company. You’ve always got to keep a close eye on your business enemies, because they’ll often look to improve their own reputation by damaging your reputation, instead of actually improving their products and services.
Social media mistakes
It’s easy to make a fool out of yourself on Facebook and Twitter. We know about this in the personal realm. But do we know what kind of reputation — damaging mistakes a business can make on social media? Check out some examples of business misbehaviour on Twitter to ensure you don’t make similar mistakes!