Name and shame

It is almost impossible to open a UK newspaper without reading somewhere of the perceived failure of a particular public sector organisation. Whether it’s bullying at school, the failure of social services to prevent child abuse, or allegations of racism, organisations’ brands and reputations are under fire.

Over the last 10 years, there has been a huge investment in the public sector. As a result, communities have high expectations about the services they should be receiving. Not measuring up means destruction of public confidence and also reputational fall-out, which may have an impact not only on the organisation involved but also on specific individuals in cases where blame can be attributed.

It’s a difficult issue for local authorities, says Zurich Municipal’s head of local government, Andrew Jepp.

“When things go wrong, you tend to see resignations at different levels, and there’s also the knock-on effect on staff of loss of confidence and morale. People don’t like working for organisations with a poor reputation, and an authority could even potentially lose one or more of its major partners who do not want to be tarnished with the same brush.”

There may also be increased cost to the organisation, due to stringent scrutiny by government and regulators, and the need for staff to dedicate time to addressing the issues.

Who’s to blame?

With increased outsourcing, authorities face the problem of confusion as to who is in charge of what.

The public sees the local authority as providing certain services and holds them accountable, but often those services may be outsourced to one or more other agencies, and the authority is acting as an overseer. This can represent a change in the skill sets required from the people involved.

Police and fire authorities can also face reputational risks. Their work is very much in the public domain and the situations in which they are involved are often dramatic and can result in headline-catching incidents, such as injury or death.

Simon Dixon, who heads up Zurich Municipal’s police and fire segment, admits that in certain areas of the country the police have a poor reputation, and it’s a difficult risk to manage. “Most police authorities are trying to tackle this, particularly by supporting the national policing pledge whereby every police force promises to listen to individuals and their neighbours and to act on any problems raised.”

Zurich Municipal’s head of charities and social organisations, Paul Emery, believes that brand and reputation will become increasingly important as fund constraints grow and charities and social organisations have to rely more on trading and donations. “Brand and reputation drive those things, so the cost of getting this wrong is significant,” he says.

For social housing organisations, the key risks of reputational damage often centre around health and safety. While people seeking social housing may have no alternative but to go to the local provider, an incident can affect their perceptions in terms of the type of property they find desirable.

The effects of adverse public perception can also be seen in the low demand for certain schools. Zurich Municipal’s head of education and social housing, Tom Shewry, comments: “Clearly, issues about bullying, poor discipline or low academic standards can have a big reputational impact on a particular school – and once a school has a bad reputation, it tends to linger.”

Once again, people may have little option but to use the local facility. But that is not the case with colleges and universities, which can be far more affected by reputational risk as there is greater freedom of choice. Shewry says the quality of teaching and courses is crucial in attracting students. A key element of this is a good position on the plethora of published league tables. And those institutions conducting research run an additional risk, due to the need to attract academics, post-graduate students and research grants. The risk of this being compromised due to discredited research, disputes with key academics or poor facilities needs to be mitigated against the key role this plays in funding. The international nature of higher education means that the consequences of reputational damage can have an impact on income not just generated in the UK, but also from overseas, which is a significant concern.

The PR game

Public sector risk managers, faced with the current huge agenda for change, need to consider the implications for reputation. As with other kinds of risk management, it pays to plan in advance, identifying potential reputational risks, looking at ways of minimising them and then deciding how to deal with any possible fall-out.

Emery says: “Ideally, charities, for example, should have a list of events and scenarios that could affect their reputation or brand. They then need to think about how to manage or react should any of these occur. The quicker they can respond with a co-ordinated approach, the less damage will be done.”

David Davies, who recently retired as managing director and chief executive of Davies Business Risk Consulting, believes that the public sector often gets a raw deal when it comes to reputational risk. It comes down to public perception, he says. “Major supermarkets generally get away with unpalatable things, such as squeezing their suppliers and some of the actions they take on reducing the value of things, because the public expectation of supermarkets is they give us cheap food.”

Good public relations is seen as one way of combating reputational damage but public sector organisations may not be using the right people, according to Davies. “In some authorities, public relations is contracted out. And in any event, there’s an emphasis on putting a gloss on things, talking about what the authority is doing well. Their PR people are not experts in defending a situation.”

Davies also says that no one in such organisations has the remit to show that if you carry on doing certain things in a certain way, you are going to potentially have some bad publicity. “No one is empowered to say that we have got to change something because it could damage our reputation. No one is in control of reputational risk.”

He cites a survey of reputational crises which showed that in 64% of cases, the only way to have managed the reputational risk would have been to change the way things were done. The remaining 36% were as a result of handling a crisis badly.

But Davies warns that the risk manager who points out these things is likely to be very unpopular. “Usually it’s a case of shutting the stable door after the horse has gone.” When it comes to managing reputational risk, managers working in the unforgiving limelight of the public sector will always have a daunting task.