Dealing with the Crisis of Reputation

Evolution of Human Capital




This is the fourth article in a series of six focused on the Evolution of Human Capital Management.

Crisis of reputation somehow feels more like contemporary political commentary than a reflection on the evolution of our work in the human capital domain. Yet, with debates, challenges and indiscretions the fodder of social media, it is nearly impossible to keep “dirty laundry” in the closet and out of the public eye. Human capital professionals can and should step up and step into supporting how organizations navigate the mine fields crises bring. Why has HR become a “player” in crisis management, particularly one dealing with reputation? We are all about people, performance and the intersection of these two key forces – which are chartered to translate into organizational success. When something disrupts the flow of success, HR really needs to engage.

Let’s begin with trust. If we think of trust as involving three forces, the influence and impact begins to appear more clearly. First, there is the organization. The organization and its employees (the second force) serve. They exist to serve consumers, patrons, members. The third force, service may be demonstrated through delivery of products (container of milk), or actual provision of “helpful activities” (plumbing repairs, your morning latte, analytical assessment of attrition). The three forces must co-exist and collaborate to fulfill their mission. If one is challenged, the other two will suffer. Trust erodes or can be irreparably damaged.

There are numerous and well documented examples in recent history of trust challenges. Think of the Tylenol Crisis of 1982. Cyanide was injected into the over the counter drugs which killed seven people. Tylenol, at the time, held 37% of the over-the-counter pain killer market. Once the issue became clear, the makers of Tylenol, Johnson & Johnson, took the unprecedented step to undertake a nationwide recall of some 31 million bottles – with a loss of more than $100 million dollars. J&J undertook extraordinary measures to insure consumer safety, highlight their heightened security initiatives (triple-seal tamper proof bottles), along with a massive educational campaign within the medical community. As an organization, they faced the headwinds of trust erosion head on to re-establish the brand’s trust amongst consumers. Remember – Johnson & Johnson had absolutely nothing to do with the sabotage, yet they paid a huge price.

If the trust shield is broken, the next battlefield is that of reputation. When we think of companies, educational institutions or even community organizations, we judge them based on what we know, think or feel about them. Their reputations are an amalgamation of known facts, public perception, first hand, second or even more distant experience with the organization. Reputation is belief in someone or something that has a special characteristic. Just as we assess whether one is trust worthy, we also judge reputation as well. Why would a crisis of reputation necessitate human capital professionals jumping into the fray? Very simply, organizations, people and even company culture are assigned, assessed, and ultimately judged resulting in reputations. Our work is people, culture and yes, even the way the organization itself is viewed. When reputations are challenged – this is a direct call to action for us in the human resource arena.

You must be thinking; doesn’t the Public Relations team tackle these reputation issues? PR may well be the “front team” on issues reaching crisis level, however, they typically deal outwardly. HR must think first of current employees, then candidates and the workplace in general. You may find yourself asking why would our employees care? Think of yourself as an employee. Do you want to be associated with an organization whose reputation is tarnished, assaulted or even vilified? Of course, we don’t. Our colleagues want the same thing as us: they want to associate with an organization that is viewed positively, afforded trust by its market and consumers and carries a reputation that is well regarded. Our employer’s reputation influences our own. When an organization’s reputation is challenged the downside is significant and far reaching, individually and collectively.

So how do these challenges play out such that we need to dive into the deal? Let’s think first of products. Ivy League institutions have century old reputations that afford them prestige, stature and the “right” to charge top dollar for tuition and associated services. Their “products” are matriculating students and graduates. Must these schools “live up” to their well-earned reputations? Without a doubt, however, reputational challenges are far more difficult given their history. The pressure of positive reputation alone buffers these post-secondary institutions when crisis erupts. Their reputation can help them weather reputation attacks.

Leadership is another factor where reputations can serve their organizations well or as has been well documented (think #MeToo Movement) be devastated when the head of an organization comes under fire for behavior, performance or beliefs that exist outside the acceptable norm. Likewise, a strong and credible leader take can unprecedented risks because of who they are. Andy Grove, a leadership force at Intel (semiconductors) had the reputation for being a tough-minded leader who didn’t waver in holding someone accountable. Yet, he was credited with intelligence, a keen sense of market dynamics and organizational insight that was uncanny. He led Intel as president for nine years, as its CEO for a decade and Chairman and CEO for one year. While his business decisions and approaches may have stirred controversy, the debate typically served the organization, its employees and customers well. This was a leader and brand whose reputation inspired, attracted and succeeded. Leader’s reputations matter.

Following the yearlong investigation and associated trials resulting from the U.S. Gymnastics handling of the sexual abuse complaints, a clarion call for “complete culture change” was demanded. If we think of culture as the way organizations get things done, then the cultural challenges’ importance is clear. Did the women’s gymnastic team compete on the international stage with success? Yes. Did the athletes earn fame (and hopefully some fortune)? Yes. By all outward appearances women’s gymnastics was performing exceedingly well with impressive results. Unfortunately, success came at a price resulting in several hundred victims suffering unspeakable abuse. Those former participants in the organization report that the culture was one of go along to get ahead, don’t raise difficult subjects and do not challenge practices. The culture (the way things get done) kept secret for far too long what has now been exposed. Was the reputation of gymnastics damaged by the culture? As Ali Raisman (captain of the 2012 Fierce Five and 2016 Final Five U.S. women’s Olympic gymnastics teams) recently declared “…we have to change the way our society views women …” and how our sports teams conduct themselves. This tragic example of insidious culture pinpoints the importance of how organizations get done what they do.  

Human capital professionals can and should be the source of support when trust, leadership, or culture falters. Even when the issues are front page news, and crisis management experts are drafted to address the publics’ concerns, HR can and must lead within. We must assume the role of champion for the people involved in our organizations and offer support, guidance, even legal assistance. When crisis erupts, we must stand firmly in the leadership position of attending to the human side of the issue. This may not have been the traditional role of the human capital professional, yet it is a vital element of work today.

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