Business reputation is like a glass vessel. You build it hard, put your heart and soul into it, and then one day, something happens, and it's broken. The goal of this article is to prepare entrepreneurs to handle the possible corporate scandal situations as fast and smooth as possible.
Learning about the corporate scandal cases of other companies can help with your own crisis management in case it happens. It is important to know about both successful and unsuccessful measures. For example, Volkswagen still continues to repair the damages caused by using carbon dioxide emission-cheating software. The Dieselgate scandal happened in 2015, and the company still deals with lawsuits in 2021. Thus, you may study it as one of the unsuccessful corporate cases.
Brand reputation is easy to damage, which is why all critical brand-related decisions must be made by the professionals and people motivated to keep the company's reputation sterling. Your company must be equipped with everything needed for crisis management before it occurs. By doing this, you'll be able to provide a timely and effective response. What is most important, in many cases, such teams prevent companies from situations bad for corporate reputation. The first signs of dissatisfaction among customers or employees won't grow into a massive brand scandal with severe consequences if you react quickly.
Unsatisfied customers or employees usually want to be heard and get a satisfactory result. Unless their primary intention is to get money from the company this way or another, individuals who started the corporate scandal are the people who got negative experience with the company's goods, services, or attitude towards them. Thus, they want an apology, some compensation for moral damage, and a guarantee that a situation like this will never happen again to them or other customers/employees.
Unlike minor misunderstandings with customers or employees, massive scandals need the immediate presence of the company's top management and their response. When CEO, founder, or top management representatives take such situations under their personal control, it is always good for the company, brand name, and public view. If the company is somehow guilty – there always must be an apology and a damage-repairing action.
However, if the company is unfairly accused – there should be a controlled internal investigation on the case.
Today, every case of reputation scandal is highlighted in public information sources like news and social networks. Even if the company is wrongfully accused, at the beginning of the scandal, most people initially take the side of a customer or an employee, especially if the company is big and thriving on the market. Lack of information causes speculation; thus, you need to willingly be present in social media in good light if possible. The public response from the company's top management can show the human side of the business and that companies care about their customers, partners, and employees.
Lack of information and excessive information are equally bad when related to a corporate or reputational scandal. In the majority of cases, the public and the victim don't need all the details. What they want to know is that:
In some cases, the report on investigation and measures may be demanded by the victim or the public. However, this usually happens when a large corporation is involved in a high-profile case.
If the company has developed an effective reputation management strategy, it can transform such a negative experience into benefits. With an optimistic view, one can say that corporate scandals can:
Being somehow involved in a scandal is bad for any brand. For this reason, big brands like Coca-Cola, Nike, Chanel, and many others terminate their contracts with celebrities immediately when they get involved in reputational scandals. The business world has many challenges for entrepreneurs in all industries, and some of them may be utterly unfair. However, learning from others' mistakes and making the business function in good faith towards customers, partners, and employees will help overcome every challenge and eliminate many brand name-ruining situations.