REPUTATION MANAGEMENT

There are a lot of misconceptions about online reputation management. Some people
think its just social media monitoring, while others believe it has something to do with
public relations, and still others literally have no idea how it can impact business and
sales. Just a few years ago, the internet was very different. Companies were not
engaging customers but just selling to a passive audience; people could not express
their voice in a powerful way, and the overall communication landscape was very top
down. The situation has radically changed. Today, websites are no longer static
brochures. User-generated content is a must. And regular interactions on social
networks are vital to any business success.
No matter the size of your business, they (prospects, customers, clientsanyone and,
potentially, everyone) are talking about you. They are tweeting about your latest
product, leaving comments on your blog, posting Facebook updates about their
customer experience, etc. If you think you can skip this or if you think you can make it
without taking into account peoples voices, opinions, and reviews, think again.
Here are two famous cases of reputation management failure in the digital era:

Dark Horse Caf received a tweet criticizing their lack of electrical outlets for
laptops. Their response was something like: We are in the coffee business, not
the office business. We have plenty of outlets to do what we need. Needless to
say, this kind of defensive/aggressive behavior doesnt work in the online world.

Many blogs reported the fact as a negative public relations case.

Nestl received negative comments about their environmental practices a few
years ago, and they did not address them. People started becoming aggressive
and posted altered versions of the Nestl logo, forcing the company to close their
public page. Take away? Do not pretend people are not talking, and address
criticism as soon as possible.

Simply put, social media monitoring allows companies to gather public online content
(from blog posts to tweets, from online reviews to Facebook updates), process it, and
see whether something negative or positive is being said affecting their reputation.

In the online reputation management scenario, there are two types of negative content
that companies should be aware of. One is represented by complaints on social
networks. They need to be addressed properly, but unless your company has serious
problems, they do not pose a real challenge to your business. The other is what I define
as online reputation bombs, which affect your reputation and sales long term and
can severely damage a business. They are very powerful because, unlike social
network content, they are prominent in search engine results. What if someone googles
your brand name and finds defamatory content?

Negative reviews
Hate sites
Negative media coverage

10 Online Reputation Management Commandments

1. Become well respected
2. Be radically transparent
3. Monitor what they are saying about you
4. React quickly and politely
5. Address criticism
6. Treat your Google page 1 as your business card
7. Understand your detractors
8. Attack your illegitimate attackers
9. Learn from your mistakes
10. Ask for help if necessary

In 2008, Maple Leaf Foods of Toronto had a disaster on its hands after an outbreak of
the listeria bacteria in some of its packaged meat products.
Lunchmeat manufactured and packaged in Toronto under the Burns and Maple Leaf
brands was infected, and there were nine confirmed and 11 suspected deaths attributed

to eating the tainted meat. Others who ate the meat but recovered are still putting their
lives back together, as are friends and families of all those affected.
Maple Leaf Foods chose not to listen to its lawyers. It may have saved the company.
Heres what it did:
First, it admitted it was the companys fault. It admitted it was responsible. It said, in
essence, its our fault and were going to fix it.
Second, Maple Leaf apologized. It wasnt wordsmithed or spin-doctored to deny
culpability. The company didnt dodge the issue. It apologized up front in every possible
media.
Third, it didnt hire a celebrity to deliver the apology, or a blonde actress with very white
teeth wearing a lab coat. CEO Michael McCain was the voice and the face of the crisis,
and of the apology.
Fourth, it recalled more than 200 packaged meat brands that were manufactured or
packaged at the affected plant.
CEO Michael McCain said in his apology on TV and on YouTube: Going through the
crisis there are two advisers Ive paid no attention to. The first are the lawyers, and the
second are the accountants. Its not about money or legal liability; this is about our
being accountable for providing consumers with safe food. This is a terrible tragedy. To
those people who have become ill, and to the families who have lost loved ones, I want
to express my deepest and most sincere sympathies. Words cannot begin to express
our sadness for your pain.
One year after the tragedy, Maple Leaf Foods Inc. took out full-page ads in The Globe
and Mail, the Edmonton Journal, the Vancouver Sun and other Canadian newspapers to
mark the one-year anniversary of the listeria outbreak. It was framed as a letter to
consumers from Mr. McCain. The ads said Maple Leaf was committed to becoming a
global leader in food safety to prevent this kind of a tragedy from ever happening
again. ... On behalf of our 24,000 employees, we promise to never forget.

In dealing with a crisis by taking responsibility for it, Maple Leaf Foods may well have
saved its brands and saved the company's reputation. By telling consumers, sorry, its
totally our fault and we'll fix it, despite what lawyers might have advised, there was an
appreciation that someone was prepared to take responsibility for the disaster rather
than weaving, dodging and bobbing to avoid legal liability.
At the end of 2008, Mr. McCain was named business newsmaker of 2008 conducted
yearly by Canadian Press based on his handling of the crisis.
Salmonella outbreaks kept secret by Cadbury in 2002
In late June 2006, Cadbury Schweppes, the world's largest confectionary company, had
to recall seven of its branded products in the UK and Ireland due to the possible
contamination with Salmonella Montevideo. Salmonella can cause a severe case of
food poisoning, and leads to extensive diarrhea and vomiting. The company was
castigated in the media by the Food Standards Agency (FSA), and lambasted for their
negligence. Only then did the company decide to issue a recall of over a million affected
products. Cadbury's crisis management strategy to the food poisoning was
counterintuitive to the traditional crisis management mantra of being open, honest and
responsive. The handling of the crisis was at odds with current crisis management
thinking. Cadbury's market share quickly returned to pre-crisis levels, due to a number
of reasons, but the long-term repercussions of the scare still reverberate around the
image of Cadbury's.
JOHNSON TYLENOL CASE
Crisis need not strike a company purely as a result of its own negligence or
misadventure. Often, a situation is created which cannot be blamed on the company but the company finds out pretty quickly that it takes a huge amount of blame if it
fumbles the ball in its response. One of the classic tales of how a company can get it
right is that of Johnson & Johnson, and the company's response to the Tylenol
poisoning.

In 1982, Johnson & Johnson's Tylenol medication commanded 35 per cent of the US
over-the-counter analgesic market - representing something like 15 per cent of the
company's profits. Unfortunately, at that point one individual succeeded in lacing the
drug with cyanide. Seven people died as a result, and a widespread panic ensued about
how widespread the contamination might be. By the end of the episode, everyone knew
that Tylenol was associated with the scare. The company's market value fell by $1bn as
a result.
When the same situation happened in 1986, the company had learned its lessons well.
It acted quickly - ordering that Tylenol should be recalled from every outlet - not just
those in the state where it had been tampered with. Not only that, but the company
decided the product would not be re-established on the shelves until something had
been done to provide better product protection. As a result, Johnson & Johnson
developed the tamperproof packaging that would make it much more difficult for a
similar incident to occur in future
ENRON
Enron's complex financial statements were confusing to shareholders and analysts. In
addition, its complex business model and unethical practices required that the company
use accounting limitations to misrepresent earnings and modify the balance sheet to
indicate favorable performance. According to McLean and Elkind in their book The
Smartest Guys in the Room, "The Enron scandal grew out of a steady accumulation of
habits and values and actions that began years before and finally spiraled out of
control." In an article by James Bodurtha, Jr., he argues that from 1997 until its demise,
"the primary motivations for Enron's accounting and financial transactions seem to have
been to keep reported income and reported cash flow up, asset values inflated,
and liabilities off the books. The combination of these issues later resulted in the
bankruptcy of the company.

Citibank:

Citigroup, one of the largest financial services companies in the United States, suffered
huge losses during the financial crisis of 2007 and 2008. From early in the decade until
2007, Citi invested heavily in mortgage-related assets, and by September of 2007, the
company owned approximately $43 billion of these assets. In mid-November of 2007,
the market value of Citigroup's stock was $180 billion; one year later, on November 21,
2008, its market capitalization was approximately $20 billion, a loss of nearly 90%. In
all, the bank reported about $20 billion in losses in 2008 (Morcroft, 2008). Citi
experienced financial difficulties because of the credit crunch and the write-downs of
bad investments and other assets.
In late November of 2008, Citi's CEO, Vikram Pandit called the company's universal
banking model "the right model" and said that its strategy was to be "the world's truly
global universal bank" (Read & Lepro, 2009). Days later, the government stepped in
with millions of dollars of bailout money to prevent the bank from failing. Citi was
criticized for not having a credible management team or a credible board (Dash, 2008).
In fact, William Smith of Smith Asset Management said that "the problem with Citi is the
model, the execution, the management" (Read & Lepro, 2009). Throughout its financial
crisis, Citi faced several situations that threatened its image and necessitated a
response.
Citi also used corrective action strategies in its responses when the company tried to
make amends for the wrong that was committed and took steps to prevent recurrence of
the crisis (Coombs, 2007; Benoit, 1995). Stakeholders are most concerned by how the
crisis affects them. By using corrective action strategies the company communicates
what actions it plans to take to protect stakeholders from future harm. We also find that
Citi used effective communication strategies in five of the ten excerpts we analyzed
according to Coombs (2007) and Benoit & Czerwinski (1997) frameworks.

1. BP Oil Spill

BPa company that for the past decade has been assuring stakeholders of its intent to
move beyond petroleumwas responsible for the worst accidental oil spill in US
history following an explosion on a rig in the Gulf of Mexico that killed 11 and injured 17.
Plugging the leak took months, and by the time the company had the situation under
control, 4 million barrels of oil had been pumped into the ocean in one of the world's
biggest environmental disasters.
Analysis:
If the original Tylenol crisis is the ultimate textbook do for crisis communications, BPs
handling of the biggest oil spill in history will surely become the textbook dont for this
generation, says Carreen Winters, executive vice president at MWW Group and head
of the firms crisis practice. While millions of people watched the spill growing via a live
video feed on the internet, BP downplayed the impact of the incident, attempted to shift
responsibility to a sub-contractor and generally did just about everything wrong.
Perhaps the most memorable moment of the crisis, according to Winters, was CEO
Tony Heywards misguided comment that: I just want my life back, which alienated the
media, politicians and most notably the Gulf community that was actually suffering the
real consequences of the crisis.
The CEOsince replacedseemed to get both the tone and the content of his
response entirely wrong. The Observers City editor, Richard Wachman, summarized:
Given that about half of BP's business and 40 percent of its shareholders are in the US,
there was a need from the outset for Hayward to address US public opinion. The last
thing the Americans wanted was aloofness, wry smiles and a stiff upper lip that were
hallmarks of the Hayward riposte.
The company also seemed to be blindsidedat least initiallyby some innovative use
of social media by its critics. A Twitter account, @bpglobalpr, attracted more than
180,000 followers and pushed out a stream of statements that not everyone realized
were parody: "The bad news: we're being sued by the United States. The good news:
they sue in dollars, not pounds."

Finally, it was clear the crisis had a major impact internally as well as externally.
Interviews conducted by the Financial Times "reveal[ed] a company where many are
fearful about jobs and savings, dismayed at their employer's part in another terrible
accident, and furious at management's handling of the crisis." According to one
interviewee: "The question [employees] are asking is: am I working for the company I
thought I was working for, with the right values?"
Lessons:
Perhaps one obvious lesson is that communicators need to rethink the idea that it is
important for the chief executive to be the face of its crisis response.
"The CEO needs to be visible at the outset but can designate the person in the U.S. to
be the face of the crisis." Harlan Loeb, director of US crisis and issue management at
Edelman, told The Wall Street Journal. Davis Weinstock, chairman of Omnicom-owned
Clark & Weinstock, agreed that Hayward "was not the right face" for this crisis.
But while the crisis was badly mishandled, the real problem was that in the preceding
years, BP had worked to create an image that was detached from the reality of the
companys behavior.

Ultimately, BPs lack of authenticity was its downfall, says

Winters. Three successive CEOs pledged to make safety a priority.

The company was recognized by the UN for environmental stewardship. The statistics
of on the job injuries painted a rosy picture mostly because of an emphasis on rules
like all coffee must have a lid, and people must hold handrails, rather than processes
that actually assured safety.
If the company had been committed to improving and assuring safety, rather than
simply giving the appearance of safety, it may have found itself with better
communications ammunition than finger pointing and attempts to minimize the severity
of what quickly became an environmental Armageddon. But even when BP said the
right thing, it was too little, too late. Because saying the right thing is not a substitute for
doing the right thing.
2. Toyota Recall

Toyota was forced to recall millions of its vehicles in the US and Europe and reports of
accelerator defects emerged. The Japanese automotive giant was criticised for putting
profits ahead of safety, and an ill-coordinated communications response did not help
matters. Toyotas brand valuesreliability, safety and qualitycame under sustained
scrutiny.
Analysis:
Like most Japanese companies, corporate communications and overall corporate
message development, was heavily centralized in Japan, according to Kreab Gavin
Anderson Japan managing partner Deborah Hayden and New York CSR director Mark
Boutros.
This caught Toyotas Japan HQ, dominated by its engineer-led, consensual culture,
flatfooted. There was a lack of leadership from Japan, which meant countries had to
pick their own strategy in the early days, explains Porter Novelli corporate practice
leader Neil Bayley. This meant they appeared paralyzed, reacting in different ways
across key markets. The findings that are emerging from lawsuits are showing that
there does not appear to have been a fundamental product problem; at the end of the
day Toyota faced a public relations problem, adds Hayden.
Handling a PR problem of this magnitude was not something that Toyota was equipped
to do. The media went chasing Toyota and the eventual press conference, where Mr
Toyoda wore a surgical mask, didnt do the company any favors, says Bell Pottinger
head of issues and crisis management Alex Woolfall. Sadly, nor did his faltering
English.
The press conference itself was held in Nagoya, further inflaming international media
sentiment, and was conducted largely in Japanese.
These were a few very simple problems that could have been avoided leaving the
media to concentrate on the issue and what Toyota was going to do about it, add
Hayden and Boutros.

This reinforces the fact that, in a crisis, the messenger is just as important as the
message, says Woolfall. But Toyota also failed to communicate with customers and
dealers early on about the nature and scale of the problem, which simply heightened
anxieties.
Eventually, Toyota plugged the communications gaps, enacting an aggressive social
marketing campaign, coupled with a PR offensive, to try and mitigate the damage. By
the summer of 2010, meanwhile, it finally called in external PR counsel, asking
Brunswick to help it develop a better strategic PR architecture.
Lessons:
Toyotas insularity, compared to other companies its size, stood out, as did its evident
inexperience in proactively communicating with key stakeholders in the US.
As the biggest car brand in the world, they need to understand the world and listen to
the world, say Hayden and Boutros. They need to incorporate more diversity in their
global team that can help them understand and communicate with the markets they
operate in for example, they have one American on their board and this is new
Honda has none.
The cozy tradition in Japan of simply briefing the Nikkei, knowing that they would
portray the company in the correct light, no longer worked, add Hayden and Boutros.
Toyota learnt that they needed to communicate with all their stakeholders, which meant
preparing communications initiatives that fed both a domestic Japanese audience and
an international one, instantaneously.
The company also reorganized its PR department in Japan, giving more access to
senior executives, a development that would not go amiss at other Japanese
manufacturing giants.
3. Goldman Sachs and the Global Financial Crisis
Arguably the most successful firm on Wall Street for several decades, it is not surprising
that Goldman Sachs came in for much of the criticism when the financial markets

crashed in 2008 and it was forced to seek assistance from the federal government. But
the companys hardball tactics, lack of contrition, and swift return to profitabilityand
the culture of excess that fuels public mistrust of big businessmade it the most
tempting target for Wall Streets critics, and in April, the bank was accused of securities
fraud in a civil suit filed by the Securities & Exchange Commission that claimed it had
created and sold a mortgage investment that was secretly devised to fail.
Analysis:
Says Rich Tauberman, executive vice president, financial communications at MWW: It
was a rough year for Goldman Sachs, which suffered through lawsuits from the SEC,
federal investigations on their mortgage practices and leaked emails disparaging
investments the firm was peddling to clients and unhappy shareholders to name just a
few highlights.
Early in the year, the company sought to ease its public relations problems by setting
aside $500 million in a fund to help thousands of small businesses recover from the
recession. It is an indication of how damaged the Goldman Sachs brand had become
that most of the coverage was scornful rather than grateful. The New York Times
editorialized: The money will be welcomed by the recipients, but if Goldman wants to
make a meaningful contribution, it would have to be in the billions and aimed more
directly at taxpayers.
Asked reputation management consultant and author Peter Firestein: "When was the
last time a company voluntarily took half a billion dollars out of its own pocket,
contributed it to the good of others, and still failed to erase the perception that the
money amounted to nothing more than a fine or a sentence of community service?"
One reason for that response was an interview provided by chairman and chief
executive Lloyd Blankfein to the Sunday Times, in which he insisted that the bank was
doing "God's work." The implication appeared to be that anyone who opposed Goldman
or criticized its behavior was pretty much by definition an agentwittingly or otherwise-of Satan. According to Taubermann, Blankfeins bravado assertion that Goldman Sachs

was doing gods work ranked right up there with BP head Tony Heywards I just want
my life back as classic what not to say quotes for media training instruction.
While many financial institutions had serious issues to deal with and public relations
gaffes along the way, Goldman Sachs communications and lack thereof at critical points
smacked of a hubris that didnt take into account the vastly changed views of Wall
Street across audiences and the hyperbolic 24-7 media/social media environment that
even the firm now lives in.
Blankfeins attitude appears to have infected the firms approach to communications.
Market Watch, commenting on the communications style of its senior public relations
executive Lucas van Praag: "The message is you're emotional and don't have your facts
straight. We're reasoned and objective about our own matters. You, dear media critics,
don't know what you're talking about."
Lessons:
After being tone-deaf to the mood of the country regarding financial institutions and
taking his beleaguered shareholders for granted for too long, Blankfein did go on a mea
culpa tour to repair his and the firms reputation at the annual meeting of shareholders
and a media tour where he pledged greater transparency at Goldman Sachs, says
Taubermann. Besides transparency which is always a good thing for a public company,
the Goldman Sachs dramas also show that humility, a proactive approach to
communications and thinking before you speak can also help protect ones reputation.
If Goldman Sachs wants to be seen as a responsible company, as part of the solution
rather than as part of the problem, it needs to come a lot cleaner about what it did
wrong ("we participated in things that were clearly wrong," is, as the Times points out,
irritatingly non-specific) and about what it is going to do to ensure that it doesn't make
the same mistakes again. It needs to define what a responsible financial institution
would look like, and then provide sufficient transparency so that people can judge
whether it is living up to that standard of responsibility.