By Bob Conlin …
Organizations are no longer the majority shareholders of their reputations. Employees, customers and the general public are the new proprietors of brand reputations in the marketplace. And this group has grown increasingly skeptical as case after case of ethical lapses roll in through various media outlets. Thanks to the media, social and otherwise, organizations today have to be proactive in demonstrating they have a strong, ethical culture that customers will want to endorse.
Consider the story of Zespri International, a New Zealand kiwifruit exporter with a large global footprint. Their success was achieved through an efficient decentralized model. This model, however, left the responsibility for clearing its products through customs to local distributors.
It was an inexpensive strategy for growth – until one of its importers was found guilty of evading duties in China. Zespri’s Chinese subsidiary was prosecuted as an accessory to the crime, substantial fines were imposed and a Zespri employee went to jail. The company’s compliance officer later acknowledged they should have been on guard and asked more questions about how distributors were handling the risky business of dealing with customs officials.
Ethical Cultures Are the Foundation of Strong Brand Reputations
Entanglements in China were costly for Zespri, and so was repairing the damage. They began by deploying internal and external communications that reaffirmed behavioral expectations for employees, distributors, importers and customers. They then doubled down on this cultural effort by investing in whistleblower hotlines tailored to each of its global markets. This showed employees the company was invested in change, and if employees saw instances where those changes were failing, they now had channels to do something about it.
To embed new behavior and practices throughout the organization, Zespri promoted their whistleblower hotline through posters around the office and in its employee code of conduct. It also incorporated messaging into its compliance training program and extended it throughout the supply chain through agreements with customers.
TOPLINE REVENUE IMPACT IS MINIMAL COMPARED TO THE REPUTATION DAMAGE THAT OCCURS WHEN YOUR TACTICS COMPROMISE YOUR REPUTATION.
New steps and initiatives are necessary in proactively driving an ethical culture, but ceasing old actions are equally important and often signal real change. Zespri identified and eliminated actions that were in any way ambiguous to their cultural goals. When some of their partners failed to live up to their new expectations, Zespri stopped doing business with them. There is no doubt this resulted in some short-term pain for leaders and teams across the company, but that was temporary. They learned any topline revenue impact is minimal compared to the reputation damage that occurs when your tactics compromise your reputation.
Zespri’s internal audit and compliance function noted a litany of negative results from the incident, not the least of which was negative media attention. When the curtain is pulled back, poor internal cultures turn into poor brand reputations. Zespri acknowledged that the bad press was actually the catalyst they needed to publically state “This is not who we are.” This realignment initiated the internal culture focus necessary for their reputation rebuilding.
Today Zespri has developed a handful of reliable business partners that help it grow with its reputation intact.
We can all learn from this cautionary tale. Don’t wait for bad activity and bad press to force you to defend or repair your organization’s reputation. Be conscious of your workplace culture. Ensure your practices and people are ethical and your culture is strong. Make your culture one you are proud of so your reputation is one your employees and customer are proud to endorse.