The Trust Deficit: The cost of neglecting reputation management
Taazima Kala-Essack | Monday August 19, 2024 06:00
Yet, in an age where news travels faster than ever and public opinion can shift in the blink of an eye, many fail to actively, consistently, and authentically invest in growing their reputations. It is an unfortunate and costly oversight that leads to a significant trust deficit with far-reaching consequences.
When we neglect reputation management, a trust deficit inevitably develops. This gap between perception and reality can manifest in various ways, from scepticism and doubt brought on by inconsistent actions or messaging that lead stakeholders to question your integrity; to customers and clients becoming increasingly wary and less likely to remain loyal. Without a proactive approach to reputation management, negative events can also dominate public perception.
To avoid the pitfalls of a trust deficit, it is crucial to actively invest in your reputation. Why? Because reputation is not just a reflection of past actions but a predictor of future behaviour. It is a composite of what others say about you and what you consistently demonstrate through your actions. It is how they feel about you or perceive you even without really trying. A strong reputation builds trust and attracts opportunities. It also helps you bounce back in the instance of a crisis; you’re strong enough to survive.
A study by The Economist found that, on average, organisations lose up to 30% of their value after a big scandal or crisis. Imagine how much less worrisome that would be if they had a little something stronger to fall back on. We call it a brand’s Relational Capital Reserve or RCR, a concept developed by Hotwire that serves as a quantifiable measure of goodwill, trust, affinity, and sentiment. The more you have of it, the better you can seize opportunities and avert crises, and the stronger you pull yourself out of a trust deficit and into some healthy surpluses. A higher RCR means a stronger brand.
Why bother? Because that 30%, and all other associated costs to a tarnished reputation are simply too costly to be acceptable. The trust deficit, unattended to, can lead to lost revenue, as customers who don’t trust the brand take their business elsewhere; diminished brand equity that makes it harder to compete in the market; and even increased scrutiny: from regulators and the public.
Think of the Parable of the Feathers, a great example of how hard it can be to come back from too deep a trust deficit... In a small village, there lived a man who often gossiped about others. One day, feeling guilty about the harm his words might have caused, he went to a wise elder in the village to seek advice on how to make amends. The wise elder listened to the man's confession and then handed him a bag full of feathers. 'Take this bag,' the elder instructed, 'and place a feather on the doorstep of every person you have spoken ill of.' The man did as he was told, thinking that this task would absolve him of his wrongdoings. After he had placed a feather on every doorstep, he returned to the elder and proudly announced that he had completed the task.
The elder then said, 'Now, go back and collect every feather you placed.' The man was taken aback. 'But that will be impossible!' he exclaimed. 'The wind will have scattered the feathers far and wide. I will never be able to retrieve them all.' The elder nodded wisely and said, 'Just as you cannot gather all the feathers once they have been scattered, you cannot take back your words once they have been spoken. Gossip and harmful words, like feathers in the wind, spread far beyond our control, and their impact cannot be fully undone.'
In the context of reputation management, this story serves as a powerful reminder of the importance of mindful communication and the lasting impact our words and actions can have on others. It underscores the necessity of building and maintaining a positive reputation through consistent, authentic, and respectful behaviour. Once a reputation is tarnished, the effort required to restore it can be immense, and full recovery might never be achievable, much like the man’s futile attempt to collect the scattered feathers.
The reality is that reputation is not a static asset; it is a dynamic, evolving entity that requires ongoing investment, much as the trust deficit is a real and pressing issue that can have profound implications for businesses and individuals alike.
More often than not, we fail to invest in growing our bank of goodwill, sentiment, trust and affinity, and we live in perpetual trust deficit until the chickens come home to roost as we find ourselves stuck. By committing to active, consistent, and authentic reputation management, we not only build trust but also ensure long-term success and resilience in an ever-changing world, sparing ourselves the near-impossible task of gathering all our proverbial misplaced feathers.
*Kala-Essack is a CIPR Chartered professional and General Manager and Chief Consultant at Hotwire, as well as a published author