In the world of big business, a spotless reputation is everything. But for some of the planet’s best-known brands and personalities, 2018 is the year they took a hit – with reputation disasters that caused serious, long-lasting reputational damage.
Whether it was uproar over executives’ pay, outrage because of health and safety breaches or offensive social media comments, the year has seen some serious breaches of trust.
As the year draws to a close, several senior bosses and household name companies are left trying to pick up the pieces. We take a closer look at the worst reputation disasters of 2018 to see just what went wrong – and what happened next. Read on for a lesson in how not to manage your reputation.
Pret a Manger in the dock – reputation disasters
Food retailer Pret a Manger suffered a serious reputation disaster following the death of customer Natasha Ednan-Laperouse – a British 15-year-old who died after eating one of their sandwiches.
Pret hadn’t flagged the fact that the meal contained sesame seeds and Natasha suffered a severe allergic reaction. At the inquest into her death, the Coroner criticised Pret’s food labelling as ‘inadequate’ and referenced six previous examples of customers suffering serious reactions in the 12 months before the tragedy. Since then, spot checks continued to find problems with their food labelling and Pret struggled to rebuild their shattered reputation. Customer trust in Pret declined, despite Pret announcing it was to start printing full label ingredients. Another death linked to a sandwich is being investigated.
On a purely financial level the company does seem to be weathering the storm – a planned expansion into more spaces in the US is going ahead – but consumer confidence has taken a huge hit here in the UK. For a company that prides itself on delivering honest, no nonsense food, rebuilding customer trust must be a priority for 2019.
Persimmon pay row
An off the cuff question from a BBC reporter, sparked a full-blown PR crisis at house builder, Persimmon.
Chief Executive Jeff Fairburn, was forced to step down after details of his mind-blowingly large, £110 million bonus (he later accepted a pay cut to £75 million) were revealed.
The massive payment was seen to be hugely at odds with a housing market where many are struggling to secure an affordable home. The housebuilder said the distraction around his remuneration is having a negative impact on its reputation and on his ability to continue in his role. As one Guardian commentator put it: “Firms, including Persimmon, protest their innocence but the whole industry has an image problem when there is an affordability crisis in housing. Mega-million payouts to lucky managers look appalling.”
Phillip Green attacked in Parliament
He was once known as the king of retail – but in recent years a series of personal crises have seen Arcadia boss Phillip Green recast as a villain.
Following the BHS pensions scandal in 2016/17 – during which he was spotted relaxing on a £100 million yacht and calls were made for him to be stripped of his knighthood – this year saw him facing even more serious allegations. After a super-injunction stifled a Daily Telegraph story accusing him of sexual misconduct, Labour peer Peter Hain used Parliamentary privilege to share the details. Aside from the obvious damage to his personal reputation, industry experts say the crisis is likely to affect his business interests too.
Sales were already down across many of his retail interests and the trend appears to be continuing at his flagship London Topshop store. Staff in some shops even threatened to walk out following the revelations, causing further problems for the ailing Arcadia group. There have been rumours Green is looking to sell assets but for now, his tarnished reputation could make that an even trickier proposition.
Ryanair fails to react to racist
The budget airline found themselves in PR hot water AGAIN this year – after failing to remove a racist passenger. Not only that but the travel provider made the victim of the racist tirade – a 77-year-old woman – change seats instead of her verbal attacker.
In what many see as a highly negligent move, the airline seemed to only really react and contact the police when a clip of the shocking incident went viral. A two-line Twitter apology seemed far too brief to be sincere and it was all a case of ‘too little, too late’.
As a result, campaigners urged passengers to boycott the airline and #ryanairracist began trending on Twitter.
Elon Musk acts out
The Tesla CEO has come under increased scrutiny – after accusing a heroic British diver of being a paedophile, blasting journalists, tweeting sensitive business information and smoking pot on TV.
When Elon took a drag of a spliff during an internet chat show in September it caused Tesla’s shares to fall, wiping more than £1 billion off the company’s stock market value.
Analysts warned his reckless behaviour risked damaging his own credibility, and by implication his company’s reputation, which it has. Speaking about Elon’s string of misdemeanours Dave Sullivan, an analyst at AutoPacific, said: “Elon Musk is the face of Tesla 24 hours a day, 7 days a week, and I understand he’s under a lot of pressure, but you really should be leading by example. I don’t know of any other CEO that would do something like that. That’s not leadership behaviour.”
Shares rose by one per cent the day after the announcement of a new Chairman.
TSB’s IT failure
It will be remembered for all the wrong reasons and has been dubbed one of the worst IT system failures in banking history.
As if TSB’s computer crisis wasn’t bad enough, the bank’s poor handling of the situation made it a major reputation disaster.
When the company rolled out a new IT system, their teams took to social media to toast their own efforts. But over the next few days panicked customers began reporting they were locked out of current accounts, unable to access security details and cut off from their own mortgage details.
Small businesses couldn’t pay staff and families were left without cash. The bank took days to respond with insiders revealing there had been worries about the system from the beginning.
It cost TSB more than £175 million, they received more than 95,000 customer complaints and they lost 12,500 customers in the aftermath of the IT failure. The bank Chief Executive stepped down, but the damage was already done.
TSB really needs to take what its learned from its mistakes and turn this to its advantage heralding change, but also ensuring that it has a much better crisis management plan in place should anything like this occur in the future. A new, improved facility is now in place but a slew of compensation claims are likely to cost TSB millions.
Reputation disasters can be recovered from
What these 6 reputation disasters show us is that PR crises need careful handling as always.
We’re also living in the #metoo era where people are rightly alert to anything that is likely to cause offence – and are ready to call out racism, sexism and other unacceptable behaviour. How business executives and owners act both in and out of the work environment has never before been under such scrutiny.
And when bosses behave badly or things do go wrong, the ripple effect can be devastating. By association individuals, companies and brands can be harmed by actions out of their hands as much as if they were in their hands.
So how can people, companies and brands protect themselves from reputation disasters? How do you avoid wiping millions off your share price or seeing your credibility in tatters?
Being pro-active is everything. Monitoring reputation and responding quickly to any complaints will always pay off. Having a reputation strategy, crisis plan and a hierarchy of command to deal with problems are essential too. And call in expert help – to help ensure you are prepared.
Discover who made our 6 best reputation rescue stories of 2018 here.