Picture: ISTOCK
Picture: ISTOCK

With business, consumer and investor confidence at all-time lows, businesses that are involved in SA’s ongoing state-capture scandals are not doing the country’s brand reputation any favours, says Leigh-Anne Acquisto, chair of Brand Council SA and CEO of strategic communications consultancy Liquorish Ink.  “A significant amount of damage has already been done – and will continue to be done – unless the public and private sector react appropriately,” she warns.

SA’s reputational issues are not one-dimensional, and they include business and political scandals, as well as crimes committed against tourists visiting the country. “The result is that we’re in the midst of a serious reputational crisis that needs to be proactively addressed,” says Acquisto.

The first port of call, she advises, is to admit that there is a problem. “Brands tend to overcome adversity when their leaders take a stand. It’s about committing to rectifying the problems and then going about this in a focused and transparent manner. It boils down to engendering trust in the brand. Trust, however, can’t be fudged – it needs to be built over time through the demonstration of small but continuous wins that address the real issues.”

The big take-out: Brands that tolerate unethical behaviour and practices should expect to be bought to book by consumers.

Acquisto says repairing a damaged or compromised reputation is a complex issue: bad news travels quickly, and stakeholders and customers will naturally want to dissociate from the brand if it does not step up to the plate. A knock-on effect can be poor morale among employees, who become demotivated and negative. This can then affect other aspects of the business, further compounding the issue.

The question is: to what extent do companies face a reputational risk by being associated with a compromised entity such as auditing firm KPMG? While a number of businesses have chosen to distance themselves from the companies complicit in state-capture allegations, a surprising number of business leaders are taking a wait-and-see approach.

Last week Discovery CEO Adrian Gore said that while companies have an ethical responsibility to not do business with organisations that have been found to be corrupt, he cautioned against making hasty decisions until investigations have been completed. Despite the fact that KPMG has publicly admitted to certain irregularities, Discovery continues to be a client of the firm, as do a number of large banks.

Says Acquisto: “The bottom line is that KPMG is essentially in the business of good corporate governance. However, its actions have fundamentally corrupted the reputational reliability of the external audit profession, so I think its clients find themselves in a very difficult position.”

Though corporate and brand reputation is taken seriously in SA, Acquisto says this is only as effective as a company’s crisis-management strategy, and it is determined by how quickly an organisation gets on top of a risky situation. “What’s important to remember is that consumers and markets at large are no longer prepared to accept scapegoat crisis-management strategies,” she says. “The fact that the leadership at KPMG was able to turn a blind eye to events that were being publicly berated demonstrates the extent to which the entire business is complicit, rather than only a few consultants and auditors in the eyes of the public.”

Recent events illustrate just how quickly consumers and stakeholders can turn against a brand they feel has behaved in an unethical manner, particularly when it affects their lives or the country they live in. “Consumer activism is likely to be an ongoing trend, so if your organisation or brand is behaving badly, expect that consumers will bring you to book,” Acquisto warns.

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