subject: The Role Of Organizational Culture In Reputational Risk [print this page] A recurring theme in our discussion of the sources of reputational risk will be the contribution of the organizations culture to the event that triggers the reputational crisis.
In virtually every example of a reputational crisis there is a connection to an element in the organizations culture. Sometimes it will be a level of dysfunction that is so high that it borders on toxic. Other examples will present an organizational culture that is stuck in a time warp. Still others will present an organizational culture that is firmly in denial that anything could possibly go wrong with their operations, relations with their clients or with their product.
By believing that a reputational crisis will never happen in your organization, you risk:
* Making front page news.
Bear Sterns, Lehman Brothers and a host of Wall Street financial firms probably thought it would never happen to them. Kenneth Lay and Bernard Madoff probably never even dreamt that their firms would implode in a horrific reputational crisis.
* Inflicting permanent damage to your organizations brand and image that will either diminish or destroy the organizations competitive position.
All organizations, including nonprofits and academic institutions, have brands and images.
* Losing sales at least in the short term as the details of the crisis unfold.
This loss of sales may be so dramatic that your organization will not be able to secure financing or attract capital to fully resume operations and production.
* Exposing the organization to regulatory or criminal investigation.
Who's Watching Your Company?
Your Nonprofit?
Your University?
In todays 24/7/365 web-based media environment, a serious reputational crisis becomes news heard around the globe. Businesses, nonprofits and academic institutions are subjected to a higher level of scrutiny than ever before. Knowing who would be following the news of a crisis at your organization is important in crafting strategies to communicate with these stakeholder groups and in preparing information that address their needs.
The Media
Public opinion of the corporate world and the nonprofit world is often influenced by the types of scandals it reads about in print or on the internet or hears dissected on cable television. Corporate scandals such as Enron, World Com or even Martha Stewarts drama were the source of news stories for months on end. ACORN, the American Red Cross and United Way affiliates across the country were just some examples of the pervasiveness of scandal-driven media coverage.
The world of higher education is not immune from this type of intense media attention. Any college, university or other types of academic organizations who believe that the media could not possibly be interested in their operations need only review the almost daily coverage of the massacre at Virginia Tech. The coverage went on for weeks. The ever-present cameras, even the ones on a cell-phone, can produce material for web sites such as Facebook and You Tube and can make even the smallest story headline news if the timing is right. Media outlets such as CNN can arrive on virtually any location around the world within hours of a story.
Federal Regulatory Agencies and the Internal Revenue Service
A crisis that impacts an organizations reputation, brand and image attracts not only media attention, but can also attract the attention of industry regulators, OSHA and the Internal Revenue Service. No organization can afford to attract this type of scrutiny.
Watchdog Groups
Watchdog groups exist to keep tabs on the conduct of businesses, nonprofits and academic organizations. The purpose of these groups is generally to observe the organizations operations and interaction with the public for the purpose of loudly exposing actions that they deem harmful to their constituency, or the public at large. As with any sort of watchdog organization, some are more evenhanded than others, generally based on their values and tenure.
