When It All Goes Wrong: Managing Reputational Risk in Firms
A risk is an inevitable part of a change. And although the controlled difference is essential for business growth, unexpected circumstances, like a senior executive leaving your firm, inadvertently increases reputational risk. It can raise insecurity among all stakeholders who have an interest in your firm including partners, executives, employees and clients. That’s why you need to manage reputational risk effectively. And when it all goes wrong, here’s some advice on what you need to do.
Stay calm
Don’t hit the red button and sound the alarm! When a senior executive resigns from their position, don’t panic. It might be challenging at first, but the experience will make your business stronger.
Set up a meeting with the person departing, and ask them to keep the information confidential. Not disclosing it to clients or employees, buys you time to work out a communication plan aligned with company policy and culture. In fact, in an ideal situation, you’ll have a communication template and checklist ready, so that it can be used to lead the discussion with the person departing and you can leave the meeting with a common understanding and plan.
Assess the situation
Call a meeting with your senior managers and identify any potential risks. Did the former executive manage any important accounts? Yes? What accounts and how can you protect them? Will their absence cause disengagement among employees? How will you replace their expertise?
Prepare a SWOT analysis (strength, weakness, opportunity, threat) to assess the situation that surrounds this departing person and their position, and create an action plan to deal with it. Expose hidden dangers, particularly with regard to current client relationships and opportunities that are in pursuit, and actively seek out strategies to overcome your current position. It’s the best way to raise morale in your team.
Collaborate with your team
Team up with your senior managers and plan how to communicate the recent development to staff, suppliers, customers and other stakeholders. Inside your firm, speak about relationships with the outgoing executive, reasons behind their decision, and how can you come together to recover from the situation. Most likely, your team will respond to your call and take on additional responsibilities to protect your firm and customer relations.
Communicate the news
How you communicate the news relies on the seniority, role, and tenure of the former manager. If their responsibilities didn’t extend beyond the company, a memo, followed by a meeting would be enough. If they were a beloved, client-facing leader,you may best handle it with a public statement to clients and / or the press.
In both cases, call up the whole team to include them in the announcement, and answer these questions:
- When is the former executive leaving?
- What are their intentions for the future?
- How is going to affect business operations?
- Will you be replacing the person? Who is it?
- Will you be honouring them with an event? When?
And when it comes to essential client accounts, you will need to address matters in person. Answer any questions to relieve them of their fears, and retain their trust in your firm. After the meeting, follow up with an email to provide updates to reassure the client and remind them it’s business as usual. Their new account manager may need to ‘show them the love’ a little more than usual practice, in order to discourage them seeking an alternative provider.
Follow through with the plan
Carry out the entire plan and continually update critical members about its progress. A long-term transition like this will last at least a couple of months, so minimise its significance and the impact it can potentially have on company culture. If the leader was admired by staff and integral to operational success, provide routine assurance about employees’ job security and the stability of your bottom line. It’s also a good idea to check in with their replacement, direct reports and clients at least at 3, 6 and 12 month intervals in the early stages of the change in circumstance.
Managing situations that can potentially damage your firm’s reputation requires a strong contingency strategy that can resolve the issue quickly and efficiently. The Thought Leadership Initiative can prepare you for such a situation, and to completely transform your mindset so you can successfully manage any case and maintain a strong reputation.