3 ways to avoid destroying your company reputation
27 Feb 2015 12:00 am by Mark Dunn
The challenge today for businesses is the scale of reputational challenge. The issues that consumers care about are so numerous, and so liable to change, that keeping up becomes a problem. Likewise, the complexity and sheer number of business relationships means potential flash points can occur anywhere in the chain. Identifying where these may occur, and with whom, is no simple task. But it is worth the effort. Damage to a firm's reputation can contribute to lost revenue, increased operating or regulatory costs and a fall in shareholder value, even if the company is found not guilty
Richard Branson noted "While a good reputation precedes you, a bad reputation will follow you for a long time -- it takes years to build a strong rapport with people and just seconds to lose it. Those in your industry, from potential investors to suppliers to prospective employees, will take note."
So, what can organisations do to reduce threats to reputational damage? We outline 3 steps that will help.
- Know who your customers are (KYC). Knowing who your customers are, and what they do, is fundamental in a reputational context. Time and again major firms are attacked, rightly or wrongly, for their willingness to do business with individuals, organisations or governments who are considered by some to be ethically or morally questionable. Companies should take full advantage of the information available such as adverse media, sanctions & PEPS, and company data for checking their clients, suppliers or third-parties.
- Identify and understand your risks to human trafficking. Global manufacturers are regularly attacked for the mistreatment of workers by partners within their supply chains. We have highlighted this in our collaboration with pressure group, STOP THE TRAFFIK, and have recently published a report into human trafficking and modern slavery within the apparel supply industry.
Read the 'Dressed to Kill' report from LexisNexis and STOP THE TRAFFIK
As the evidence in our report shows, long multi-tiered global supply chains containing many levels of outsourcing and subcontracting can be a breeding ground for human trafficking
- Integrate ethical trading into your buying functions. Ethical trading and CSR are already high on consumer and boardroom agendas. Who firms buy from - and sell to - matters hugely, as does an insight into how each new business relationship could impact the brand. Increasingly companies are recognising the need to integrate ethical trading into their buying functions. Buying teams have a crucial role to play here and should put in place the appropriate precautions to anticipate and manage third-party risk, prevent litigation and protect corporate reputation.
It is worth noting that often relationships do not need to be avoided, just that firms understand any consequences, make informed decisions and plan for any adverse reaction. If experience tells us nothing else, it is that your business partners do not have to be doing something illegal to do real damage to your reputation, your brand and your bottom line.
- Horse meat scandal has had a long lasting effect on food retailers
- Risk and reputation in the oil and gas industry
p.s. 3 ways you can apply this information right now to better protect your reputation
- Supply chain risk assessments and due diligence on suppliers and labour agencies can help protect your reputation. If you are looking to manage supplier risk and protect your reputation, click here to find out how our solutions can help.
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