Firms should protect their reputations and tell the truth
LONDON - As US firms face the glare of the investigative financial spotlight, they have been warned that their brands face losing the public's trust and its money if they fail to tell the truth, according to a survey by PR giant Hill & Knowlton.
Americans will give companies accused of illegal behaviour the benefit of the doubt as long as they explain themselves fully, according to the research, while those opting for a "no comment" stance will find their products shunned.
Referring to the Enron and Worldcom scandals, Harlan Loeb, Hill & Knowlton's director of litigation support and companies, said the reputation of business is under siege. "The reputation of business in this country is now under siege. More than ever, companies must realise that the only way to combat negative perceptions about them is to communicate with the public in a forthright, unambiguous and comprehensive manner."
Cynicism among American consumers was found to be rife, according to the Hill & Knowlton/Opinion Research Corporation litigation survey.
Among respondents, 40% said a company is probably guilty if it is officially charged with wrongdoing. Another 45% agreed that just the launch of a government probe means that the target company is likely guilty of something illegal.
The survey comes at a time when a record number of companies are being accused of financial irregularities. Hill & Knowlton's sister WPP Group agency Ogilvy & Mather has itself been accused of over-billing the US government for work on the anti-drug campaign and faces losing the account.
Rival agency group Omnicom also faces charges. It has more than a dozen shareholder class-action suits lined up against it with accusations over its accounting procedures.
The research argues that one reason for these attitudes could be an increasing tendency for companies under heightened scrutiny to assume a "bunker mentality", refusing to discuss the matter publicly or only issuing very limited information.
According to the survey results, 62% believe that a company is likely to be covering up misdeeds if a spokesperson replies "no comment" to any inquiries.
One figure that US companies should look most closely at is the one that says more than half (51%) of those surveyed said they would be less likely to buy the products of a company accused of misconduct.
On the up side, 81% said they would be willing to suspend judgement over the guilt or innocence of a company involved in court action if that company were to provide a clear and timely explanation of its actions.
What it showed, Loeb said, is that the courage to communicate actively can change the course for an organisation while silence only accelerates the reputation free-fall.
"The bottom line is that the public will cut corporate America some slack if companies tell their stories. For many, though, this lesson remains unheeded -- a particularly costly oversight since it's clear that what's left to the imagination of many Americans can wreak havoc on corporate image," Loeb said.
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