Online Reputation Management – The Domino effect

The King Report on Corporate Governance for South Africa 2009 describes a company’s reputation as its most significant asset – a lesson painfully learned by Domino’s Pizza in 2009 when a video was posted on you tube showing two employees breaking a number of health code violations in the preparation of a food order . In a few days, given the power and reach of social media, the video went viral and the company ended up with a public relations disaster resulting in a sharp decline in its share price.
Domino Pizza was able to pull back the share value lost through a social media campaign of its own but prior to the posting of the video it would seem that the company had no coherent Organisational Reputation Management strategy in place. The reputation of a company therefore can be inextricably linked to the economic value of that company forcing companies to more proactively manage the gap between stakeholder perceptions and the performance of those companies. The information revolution continues to enable the rapid spread of information through a number of social media platforms such as face book, twitter and you tube and has thus necessitated that companies invest in online reputation management in order to manage the reputational risks associated with social media.

Google have more recently been quite proactive and visible in their efforts to manage their reputation spending time with every day users of their products and through constructive feedback, implementing improvements and eradicating the shortcomings of their products. Online reputation management is also about listening to what your customers are saying about you and your products, picking up on their conversations and responding accordingly. It is in these conversations that reputational risks are birthed and have the ability to spiral out of control.

Online reputational risks should also form part of an organisations risk management processes where risks are duly identified, assessed and responded to. With online reputation management now clearly elevated to a board level issue, the executive of a company should be tasked with developing a strategy and formulating policies for the management of relationships within identified stakeholder groupings. Further to this, mechanisms and processes that support constructive engagement with stakeholders should be developed as evidenced in the Google interactions with their customer base.

The King Report on Governance for South Africa also maintains that transparent and effective communication with stakeholders is essential for building and maintaining their trust and confidence. To this end it maintains that communication with stakeholders should be in a clear and understandable language and that the board should adopt communication guidelines that support a responsible communication programme. This has become imperative with the introduction of the Consumer Protection, a rights based piece of legislation effectively empowering the consumer with the right to be heard – having consumer interests represented in the making and execution of government policy and development of products and services and the right to be informed – Consumers need facts to make informed choices and to be protected against dishonest or misleading advertising or labelling.

For assistance in training and advice relating to Governance, Strategy and Leadership please go to www.sinkorswim.co.za or contact us on roger@sinkorswim.co.za.

Leave a Reply

Your email address will not be published. Required fields are marked *

%d bloggers like this: