By Anna Teo

(SINGAPORE) A company gets embroiled in a scandal.

And much as the CEO would want things to blow over in a jiffy, it takes about three and a half years on average to rebuild the company's reputation.

That's according to findings by public relations firm Weber Shandwick, which has a team focused on reputation research.

Good reputation does more than raise capital and attract the best talent, says the New York-based firm.

Admired companies enjoy strong support from loyal customers, get their pick of strategic business partners and can probably charge premium prices.

But if impropriety happens, a good name can be destroyed in seconds - and sometimes for good.

'The research we have done at Weber Shandwick indicates that it takes approximately 3.5 years to restore reputation and build back confidence and credibility,' says Leslie Gaines-Ross, chief reputation strategist at the firm.

'Although many CEOs hope their reputations are on the mend at about 18 months, it takes much longer to convince stakeholders (for example, the media, investors, general public) that the company has indeed turned the corner,' he says.

'Many stakeholders need hard proof and evidence that a company has truly turned itself inside out in restoring its reputation and that new processes and culture are in place to prevent the same crisis happening again.'

In some instances - such as Enron and Arthur Andersen - the damage is fatal fairly quickly, with ramifications beyond the two organisations.

The string of corporate and accounting irregularities in 2001 and 2002 led to the creation of the Sarbanes-Oxley Act and changed the financial regulatory landscape.

Other companies, such as Xerox, IBM, HP and Shell, have taken several years to rebuild their names after a crisis, says Dr Gaines-Ross, who has written a book on corporate reputation.

Previously chief knowledge and research officer at Burson-Marstellar, she has been chief reputation strategist at Weber Shandwick for two years.

In an email interview following a recent visit here, she cited examples of prominent companies that could have done better to manage their reputation.

'A current example is Societe Generale. Over $37 billion was lost in dubious trading by rogue trader Jerome Kerviel. There were 75 'red flags' or 'early warning signs' from June 2006 to January 2008 that the company was at risk.

'The company's reputation has declined as a result of its late recognition of its problems - a survey found that its reputation among the general public fell from first place to fourth place over the past six months when asked which bank they would use if they were to switch.

'Surprisingly, it took several months for SocGen to remove the CEO who should have been accountable for the financial misconduct on his watch. He was moved up to chairman at the time.'

CEOs generally get 60 per cent of the blame during a crisis and are removed shortly after it to start anew, says Dr Gaines-Ross.

'In SocGen's example, that did not happen. Second, there has been little information forthcoming from the company's leadership, including the newly named CEO. An independent and embarrassing report was recently issued that placed blame on lack of internal checks and balances. There should have been more communications from the top during this several-month period instead of having the problems played out in the media.'

Another recent example is technology giant Dell, which in 2005 did not respond to a technology blogger's rants about his poor customer service experience on his blog.

Thousands of frustrated Dell customers flooded Jeff Jarvis's blog, adding their voices about Dell's poor customer service.

'Jarvis even posted an open letter to CEO Michael Dell suggesting that he join the conversation in the blogosphere about the complaints. Nearly one year later, Dell has repaired its reputation by joining the conversation online. It has done an excellent job of responding to customers with its new blogs, ideastorm and direct2dell. Dell has now earned reputation points for listening carefully, increasing customer service spending, and responding diligently to problems before these problems reach the boiling point.'

With easy access to information today on the Internet, companies cannot hide negative information as they may have been able to do years ago, says Dr Gaines-Ross.

'Companies and their leaders increasingly disclose crisis-related information on their home pages as soon as the crisis breaks.

'Companies know that there is no such thing as a 'secret' today and therefore are disclosing more information when they have it. Employees are now free to post about company behaviour on social media sites or anonymously on discussion boards. Bloggers are now free to investigate a company crisis and reveal what they learn.'

Indeed, there is a site - www.wikileaks.org - for whistleblowers, leaked memos, documents and government reports.

'There has been a sea change in disclosing more information today as companies increasingly recognise that we live in glass houses and that the slightest pebble can shatter company foundations,' says Dr Gaines-Ross.

As for her own job role, 'it is a fairly new title but will only increase over time.'

'Nearly all Weber Shandwick professionals practise reputation management every day working with our clients. A handful of companies include 'reputation' in the titles of their employees (Astra Zeneca, CapitalOne, Centrica, Coca-Cola, Dow, RepsolYPF, SABMiller, etc). Some people say that CEOs are chief reputation officers because they are the ultimate guardian of their company's reputation.'

This article was first published in The Business Times on 23 June 2008.