What you can learn from your mistakes & how to create a proactive approach
by Wilson Long
June 13, 2018

When I was growing up, my father would challenge me with the question: “What kind of legacy do you want to build?” As an adult, my choices are defined by that challenge, and each day I strive to fortify my actions with character and integrity.

Similarly, every construction company owner needs to consider the reputation they garner as a leader to their employees and those within their community. A company’s good reputation not only inspires confidence among its corporate family, but also respect among peers and clients.

If a supplier is late and you miss a key deadline, or your project has defects and is viewed as a failure, are you equipped to handle your corporate reputation being ruined within only a few days, or even hours? Adversaries, such as activists, angry employees and disgruntled customers can launch potentially damaging attacks via social media, word of mouth, blogs and/or online review platforms. Remember that emotion will most often override rational thought; therefore, it is imperative to remind your team to remain calm.

The first step you must take following such an attack is to recognize the seriousness of the incident, an incident which could bring damage to your good name.

Secondly, employ effective decision making and remain true to your company culture. Take specific actions to fix the problem and continuously communicate with both internal and external stakeholders, including employees, financial partners, board members, suppliers, customers and governmental entities.

Finally, the chief executive officer (CEO) must remain at the forefront of the issue, leading with transparency and clarity. It is important that your company is seen as forthcoming about the issue. Never try to cover up the incident. Doing so makes you seem both guilty and deceitful.

Depending on the severity of the incident, it may be necessary to issue a press release, update your website, send emails and have management visit with key stakeholders. Do what is necessary to be sure your employees and clients can track your progress so that you control the message.

Success Story 1

In 1982, Johnson and Johnson, one of the biggest companies in the world, faced a huge problem. For unknown reasons, someone replaced Tylenol Extra-Strength capsules with cyanide-laced capsules, resealed the packages and put them back on pharmacy shelves. Seven people died as a result. Before the crisis, Tylenol was the most successful over-the-counter product in the United States with over one hundred million users. Johnson and Johnson did the unthinkable. Although there was almost no risk of additional bottles being compromised, they withdrew every bottle of Tylenol in circulation, confronted the issue head-on and communicated the problem to the public. Today, Johnson and Johnson has completely recovered any market share lost during the crisis. The organization was able to reestablish the Tylenol brand name as one of the most trusted consumer products in America. Johnson and Johnson’s handling of the Tylenol crisis is clearly the example for other companies to follow if they find themselves on the brink of losing everything.

Success Story 2

A construction client recently went through a cultural gap analysis and decided to utilize a few of their known stakeholders, including their accountant, largest supplier, competitor in a different part of the country and a former client that they no longer worked with. The leadership team decided to engage in this process, as they genuinely wanted to know whether their company mission was being perceived and executed in alignment with their intended purpose. The transparency the construction company provided to the known stakeholders­—including full access to company employees, documents, procedures, financials (where applicable) and accountability programs—was striking­­­. Through this transparency, the diverse group of stakeholders were vested and determined to provide candid feedback. Furthermore, the employees that were engaged felt assured that the information they shared would be held in strict confidence. The benefits of this particular cultural gap analysis are innumerable, but a few standouts include:

  • A competitor in a different part of the country recommended leadership shakeup, as the company didn’t have a strong accountability program or procedure process in place.
  • The largest supplier outlined how they could develop a process to deliver their raw materials in a more efficient manner to their jobsites. This finding resulted from a conversation with the operations manager, leading to an understanding that the software tracking system could be improved.
  • A former client delineated why they used a new construction firm, pointed out specific areas the company could improve upon and offered advice on how to bring value to the industry.

Through this unfiltered feedback to management, the construction company was able to develop a leadership report card, performance benchmarks and a plan to use company resources in a way that maximized profits.

Put A Plan in Motion

To better understand the strengths and weaknesses driving your reputational risk, you may also want to complete a cultural gap analysis, both internally and externally. A gap analysis should be completed on an ongoing basis as risk changes and new ideas emerge.

To put this plan in motion, you could take a formal approach and hire a firm that specializes in cultural gap analysis, or you could complete the analysis internally by having some of your key internal and external stakeholders contribute. Both approaches will help you determine some of your strengths, as well as areas of opportunity. One of the benefits of an internal approach involving key stakeholders is the relationships developed or strengthened during the process, not to mention gained institutional knowledge of your business, people and processes.

Additionally, this provides an excellent opportunity to gauge whether their expectations are being met. One downside to using a known stakeholder is that they can be reluctant to comment on certain difficult topics; therefore, as alternative, consider hiring a skilled moderator to deliver some of the tough messages.

Ultimately, a proactive approach to reputational risk using an ongoing cultural gap analysis should enhance financial performance, increase employee talent, elevate workplace culture, deliver on customer promises and ensure all regulatory and legal issues are handled appropriately. Repairing your reputation may take years, and you will most likely be judged long after the event has passed; however, consistency and persistence can keep your company relevant until your name is fully restored. Take the time to consider how you measure up and minimize your reputation risk. Your business’s legacy depends on it.

4 Key Drivers of Reputation & Sources of Risk

  • Financial performance
  • Workplace talent and culture
  • Delivery on customer promises
  • Regulatory and legal compliance