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How firms can avert reputation crises

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Summary

  • A number of organisations in Kenya have come to rue the folly of not investing in timely and consistent proactive stakeholder engagement and reputation management strategies.
  • The organisations could have saved millions of shillings in costly litigation and reputation had they engaged with their stakeholders as part of their everyday operations.

A number of organisations in Kenya have come to rue the folly of not investing in timely and consistent proactive stakeholder engagement and reputation management strategies.

The organisations could have saved millions of shillings in costly litigation and reputation had they engaged with their stakeholders as part of their everyday operations.

A typical scenario goes like this. Company A is doing quite well, raking in good profits. And in order to appear to be a caring and responsible corporate citizen, the company engages in ‘token CSR’ and ‘Greenwashing’ — falsely conveying to stakeholders that their products, service, or operating practices are socially or environmentally responsible.

Whilst positioning itself through ‘token CSR’, the company silences vocal community leaders and government officials, and invests a negligible part of its profit to renovate a crumbling health centre or a local primary school in its vicinity.

If lucky, the community will get a borehole branded in the company’s logo and colours. The handover of the projects is normally an elaborate and glitzy affair, with media houses in tow to record the event.

Whereas CSR is an important undertaking for companies wishing to position themselves as socially responsible and as a brand building strategy, real issues of concern by critical stakeholders should never be swept under the carpet or glossed over.

It only takes a small incident to bring down the veneer and facade of corporate invisibility and stability. And once the incident is picked up by media, it becomes ready fodder for all, including investors. All the money, and years spent on building and positioning the brand count for nothing as the company desperately tries to mitigate and reclaim its reputation.

Millions of shillings, which could have been spent on improving employee welfare or impactful CSR are spent on hiring costly reputation management and crisis communication experts.

In 2019 and 2020, several claims were brought in London against Camellia Plc and its subsidiaries, Linton Park Plc and Robertson Bois Dickson Anderson Limited through law firm Leigh Day.

The claims were based on allegations of serious human rights abuses against local residents by security guards employed by Kakuzi Plc, a company listed on the Nairobi Securities Exchange and which is part of the Camellia Group.

The claims had been there for many years. As a result, Britain's largest supermarket chain, Tesco banned avocado supplies by Kakuzi pending investigations into the alleged assault and sexual misconduct by some of the company’s employees.

To its credit, and arising out of the allegations, Kakuzi has now constituted and established an independent advisory panel benchmarked against the United Nations Guiding Principles on Business and Human Rights.

Incorrect stakeholder engagement has been cited as one of the biggest drivers of brand erosion and reputation amongst companies.

More often than not, this happens when companies allow issues to fester to crisis level by not resolving them quickly enough. Add limited and poor media engagement strategies into the mix, and you have a full recipe for disaster.

A robust stakeholder engagement strategy ensures that companies have the goodwill of the community and others every step of the way.

A good stakeholder engagement strategy is also critical in ensuring business sustainability, and continuity, with the added benefits of a good corporate reputation.

In the long run, investing in good stakeholder engagement pays a lot of dividends, especially in crisis situations as your stakeholders will be able to look at you in more favourable light.

Proper stakeholder management starts with mapping, which involves identifying, analysing and prioritising the needs of the people and organisations with a stake in the business operations of the company.

This is also important because the company is able to pick out simmering issues with the potential to snowball into a full crisis and address them appropriately.