Reputation, an organization’s armor

In an era in which the speed of information distribution seems to be ever increasing, it has become more and more relevant for organizations: crisis communication. It is defined as managing the perception of an unpredictable event that threatens important expectancies of stakeholders and can seriously impact an organization's performance and generate negative outcomes. (Coombs, 2007) The traditional way of thinking of crisis communication might be acting upon a crisis and attempting to minimize the damage to the organization. But a new approach is required. A recent study shows that the biggest difference is to be made before a crisis, not during or after it.

The mind of the consumer

Let’s start off with a quick walk through the mind of a consumer when dealing with a crisis of an organisation and judging it. When an organisation is undergoing a crisis, the process that consumers go through is threefold. Firstly, consumers consider the crisis responsibility. In other words they make up their minds on the magnitude of the crisis and on who is to blame. Secondly they take into account the crisis history of the organisation that is involved in the crisis situation. Has it happened to them before? And how have they dealt with it? Lastly, the consumers take into account is the organisation’s pre-crisis reputation, or their prior relational reputation. This prior relational reputation has been seen as more influential than the factor of crisis history for a while, and that idea has now been reinforced.

Earlier studies had already shown that organizations with favourable pre-crisis reputation retain a better reputation after a crisis when compared to organizations with unfavourable pre-crisis reputations. (e.g. Coombs & Holladay, 2001) Yet, it remained questionable if it was not just that these organisations with good reputations had a lot more reputational capital to fall back on. It was not to be said that the organisations with favourable reputations also had less reputational damage overall. The question being; can this reputation protect an organization from the negative effects of a crisis?

Reputation, reputation, reputation

A study by Claes en Cauberghe (2014) confirms that a favourable pre-crisis reputation in fact works as shield, protecting its organisation from reputational harm, in contrast to organisations with an unfavourable pre-crisis reputation. This is illustrated by image 1.

Image 1. Reputation loss as a function of pre-crisis reputation and presence (versus absence) of negative publicity.

These findings are in line with the expectancy confirmation theory by Edwards and Smith (1996), which builds upon the concept of cognitive dissonance. When people hold positive expectations against something and new information contradicts these expectations, they attempt to reduce the feeling of cognitive dissonance that this has caused. They therefore ignore the negative and inconsistent information or interpret it so that it suits their earlier expectations. In practice this means that consumers ignore inconsistent (negative information on favoured organisations) information and therefore favourable organisations suffer less reputation loss during crises. It also works the other way around. When consumers have negative feelings or ideas about an organisation prior to a crisis, and a crisis occurs, they will be more likely to attribute the responsibility to this organisation. After all, this is in line with their expectations.

All this comes down to the fact that a favourable reputation is to be valued very highly by an organisation, even without a crisis on the horizon. A crisis is hard to predict, and as shown in this discussion, organisations with a good reputation can use this to great effect when a crisis hits.

By Maarten Snijders