All too often, it is only when a crisis hits that senior management truly engage in how they are perceived by the media and their own employees.

SMEs are also not immune to the bigger reputational risks that large corporates face. They may have to handle law suits, employment tribunals and situations where their clients are called into disrepute. In fact, a major reputational issue for an SME may result in the firm suffering financial loss from a fall in clients or customers and, in the worst case scenario, could make the firm go bust. Often, it is usually only once an issue becomes serious that senior management become truly engaged and when they begin to communicate with their internal and external audiences. However, by this time it might already be too late. A firm with a hitherto excellent reputation can become damaged through its association with a company whose public image had already been called into question by the media.

What is reputation?

The English Oxford Dictionary defines reputation as “the beliefs or opinions that are generally held about someone or something”.  In the corporate setting, this definition could be extended to say that reputation is ‘what owners, staff, stakeholders, media and associated clients and suppliers say and think about a business or organisation’. SMEs usually spend a lot of time creating a good reputation through their people, client service protocols, mission statements, the media, Web 2.0, recruitment drives, directory listings, social responsibility projects, investment in people and the other management activities that define them as a business and as a brand. Accordingly, any one of these elements of a business can make or break its reputation. It follows that firms need to have all their stakeholders and audiences in mind when thinking about protecting their reputations – and this should be reflected in their risk management policies.

Dealing with issues before they turn into crises

The best prepared companies are those that develop processes and systems for communicating with internal and external stakeholders during crises and situations- think of it as an early warning system. Like any other business process reputation management should be discussed and monitored as an ongoing risk management process.

The process should start with an issues management team that includes the managing director, board and senior managers. A chain of command should be established where overall responsibility is clearly defined.

The next step is to prepare communication plans for all audiences that the issue might affect with key spokespeople assigned to each audience – for example, the a client director partner would act as spokesman to the client, the HR director would communicate the news to the employee and the marketing/communications director would liaise with the press.  The firm should also employ a staff and reception policy for dealing with external inquiries.

By having this type of contingency plan in place firms can prepare properly for managing the information that is communicated around an issue in a controlled manner, stop the issue from turning into a crisis, and importantly, ensure that the good reputation you have built is not destroyed in only five minutes as Warren Buffet warned.

A longer version of this article appeared in Solicitors Journal in November 2009

To view the article online, click here.