PricewaterhouseCoopers says it takes “full responsibility” for the mistakes and “breaches of established protocols” that led to the movie “La La Land” mistakenly being named best picture at the Academy Awards ceremony last Sunday night—instead of the actual honoree, “Moonlight.” In a statement released yesterday, the accounting firm confirmed that one of its accountants mistakenly handed the back-up envelope for “Actress in a Leading Role” instead of the envelope for “Best Picture” to presenters Warren Beatty and Faye Dunaway. Some analysts speculate the firm’s reputation was temporarily damaged, however its long-term reputation and brand loyalty among its corporate clients may remain intact because the firm responded quickly, was honest about the mistake and took responsibility.

 

PwC’s response reminds me of the results from a recent Weber Shandwick survey conducted with KRC Research. In the report about the survey, “The Company behind the Brand II: In Goodness We Trust,” the authors explain that the survey respondents indicated they form opinions about companies through not just what customers say about them (cited by 88 percent of the respondents), but also concerning how companies react in times of crisis (cited by 85 percent of the respondents). The finding that company responsiveness is so important is a critical shift in reputation-building that should be addressed by all companies, large or small, the report authors observe.

 

I was also interested to read that 36 percent of the survey’s respondents said they have discussions with others or share information about corporate scandals or wrongdoings, and said they believe the manner in which a company responds to an issue or crisis clearly impacts its integrity, credibility and trustworthiness. In fact, responsiveness to issues and crises is more important in driving perceptions of a company than what the media says (say 76 percent of the respondents), what employees say (cited by 76 percent of the respondents) and what the company says about itself—whether that is on its website (68 percent), what its leaders say (61 percent) or what exists in its advertising (61 percent).

 

It's imperative then for companies to ensure they have a crisis management plan in place so they are able to respond to a crisis appropriately and protect their reputation. Indeed, Rhoda Woo, Managing Director, Crisis Management Solutions at Deloitte & Touche, says crisis management has become a critical capability for handling major reputation problems. That’s because an effective crisis management approach helps companies stay ahead of growing threats that have the potential to undermine their business, she says. It begins with identifying and preparing for strategic risks and includes a broad portfolio of capabilities such as simulation, monitoring, risk sensing, response and communications. Risk sensing is especially important because it can help a company identify emerging problems while there is still time to head them off. Nonetheless, Woo explains that all the capabilities need to be in place before a crisis hits because the absolute worst time to develop a crisis management strategy is during the crisis as a company runs out of options.

 

What are your thoughts concerning reputation risk management? Does your organization have a plan to manage reputation risk which includes simulation, monitoring, risk sensing, response and communications? Finally, should La La Land have won the Oscar for Best Picture?