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Mainstream objectively on business reputation in magazine BUSINESS

10.11.2014

The main problem of companies that are building their business reputation on their own is the high level of subjectivity. They are not always capable of assessing the situation objectively and taking a detached view of themselves, they are not ready to force majeure and make gross mistakes when dealing with the crisis. All this affects directly their business reputation. But they are not so hopeless: they are good at arranging internal communications, press offices and communications departments cope skilfully with their current work.

But they are not always successful in holding reputational audit, finding the way out of difficult situations. Anyway, is it worth troubling the head about this at all when some tasks can be outsourced to “PR-people”? BUSINESS asked Svetlana Sverchkova, Managing Director of Mainstream Communication & Consulting, and Roman Maltsev, Client Service Director, what problems are currently tackling the specialists of the company, which supports positive business reputation of Ukrainian industrialists (steel, ore, pipe and energy manufacturers and farmers).

- Where does begin building of business reputation of industrial companies?

Roman Maltsev: Reputation of any company is the core of its business strategy. Quite often industrialists want to sell their products to certain foreign markets as they see prospects there. And this requires building of communications in several directions. These are public authorities, major market players (prospective partners and competitors) and consumers. There are lots of peculiarities that must be considered properly at the stage when a company only prepares to enter the market. But in Ukrainian realities, it is often vice versa – a company enters the market and then it turns out it is not ready to work there.

- If a foreign company comes to Ukraine with an intention of building communications with officials, and they act by “some palms need to be greased” principle, then it is forced to contribute to corruption.

RM: Perhaps, this is the reason why many global companies refrain from development of Ukrainian market. It is not clear for them and the game rules on it are unacceptable.

Svetlana Sverchkova: A company must understand when it comes to any market, it will face reputational challenge. At least, because national producers will group and oppose the competitor. This is the ordinary course of business and one should be ready for this.

- What crises do you currently overcome together with companies?

RM: From the standpoint of business and reputation, nowadays is the most difficult time in history of independent Ukraine. An example of recent information wars – the so-called “nationalisation” or re-privatisation: the beautiful name cloaks a banal war of oligarchs for the “golden toilet bowl”. Nobody will want to invest in the country, where the change of ownership happens simultaneously with the change of power.

This is ridiculous, such situation contradicts the international practice. For backbone enterprises this means suspension of all investment programmes inside the country. For example, only Metinvest Holding is currently implementing the investment programme, which cumulatively exceeds $500 million.

SS: All this, undermines the situation in the country even more and plays into the hands of Russia and its supporters. However, unfortunately, nobody thinks of this as Ukraine does not have a single reputation strategy, neither internal, nor external.

- How should this be dealt with?

RM: In most cases, departments dealing with communications act situationally. In fact, they smother the fire by hurling all effort into this. While it is necessary, firstly, to form a long-term communication strategy for both business and the first person (first persons) of the company based on business strategy and reputation audit; and secondly, to conduct reputational audit twice a year and to pay special attention to the areas of risk – the things that are most frequently ignored by owners of companies. And finally – thirdly, to stay ahead: to elaborate a programme of preventive measures and to adhere to it strictly.

RM: There is another problem: virtually no company understands how to respond to seizure of office or enterprise. When “SWAT teams” rush in, begin shooting and intimidating people.

- And how to act in such cases?

RM: We’ve prepared a training on how to resist seizure of enterprises, which includes many aspects. Being aware that the main purpose of invaders are offices of Director and Chief Accountant, it is possible, for example, to confuse raiders by hanging a sign plate “Director” on the door to the meeting room. While raiders will try to understand where have they come, Director will time some time to copy/cut-and-paste important documents to other carrier. It is even possibly to train staff by playing the scenario of possible capture.

If a “hostage”, playing the role, loses consciousness or complains of a heart attack, “raiders” will have to call an ambulance. We also encourage organising an an alternative video surveillance. After all, when the trained raiders attack an enterprise, they cut off camcorders in the first place. Raiders can plant prohibited substances on top manager and then ostensibly “found” them. Meanwhile, covert video surveillance will prove the innocence of a person.

We even accustom top managers to the sound of gun shots to prevent panic in future. This concerns to power component of resistance. What shall PR-department do at that time not to hurt the company’s reputation? Who are the “talking heads” and what do lawyer say? How to call a press conference quickly for coverage of the situation? These are the few of many nuances, in which we train the companies.

- How does influence the passivity during raider attacks on company’s reputation?

RM: This can lead to financial crisis when all partners will demand to make payments in one day, thus draining the company, even if it manages to fight back raiders somehow and to keep control. Prospective partners agree to cooperation rather reluctantly in this case as there is a considerable risk of

Agreements disruption.

SS: Besides, the internal reputation is undermined: hardly anybody will be willing to come through another seizure. Moreover, there is a risk of non-payment for labour, which leads to outflow of specialists. This leads to immediate reduction in efficiency, speed of production, sales volumes and profits.

- What shall do enterprises with inaction periods caused by military operations?

RM: Everything depends on their business strategy. There is a possibility of sale or partial sale – this is one communication strategy; there is a possibility of joining efforts with the contractors, for example, to minimise costs and risks involved in supply of spare parts – this is another strategy. If production facilities of the company are located in the zone of the antiterrorist operation and there are problems with sale, I would recommend launching a communication campaign a-la “Support In-house production”. Ukrainians are the kindest nation in the world. We share in others’ grief and cannot stand aside.

SS: The biggest mistake in the current situation is to remain silent. I would even say that silence is the worst evil in building of business reputation and at times of crisis it is lethal. Take a look at Ferrexpo (global company with Ukrainian assets – edit.). In its recent report, the company says that the mining facilities of the company are located outside the zone of military operations, it works in the same regime as before, which is proven by volumes of ore mining. They sent the right message to the market.

- Have you recommended this to them?

SS: Decisions are made at the level of London office. We provide them the key daily news of business and politics in English. By the way, foreign companies, including prospective investors usually have a great need for materials on our business and economy in English. Unfortunately, there is a big gap in this segment in Ukraine.

It would be great if BUSINESS published its materials in English online. Without English content, investor cannot assess what is the market potential, where and what opportunities exist. Moreover, has begun the process of moving the headquarters of global companies from Russia to Ukraine as it is difficult for them to work there because of sanctions. And migration of investors will be followed by foreign capital, and we should be ready for this.

RM: One should understand, the more global companies are present on Ukrainian market, the more protected they are, since they are protected by international law, and this involves interstate relations. Moreover, when settling down in Ukraine, international companies will set an example for the domestic ones regarding the culture of business reputation building.

- How to build work with analysts in order to limit the flow of negative information about the company?

RM: It is not worth being afraid of negative information, which may be called a constructive criticism. The sooner we learn it, the more time we will have to change the situation or at least to prepare for force majeure and crises.

SS: People should be grateful for criticism as it fuels development. Unfortunately, many industrial companies are not ready to independent critical opinions, but still market analysts are necessary.

- Is there demand for “paid-for” analysts among companies?

SS: We haven’t faced this and we do not encourage our customers to do this.