How Co-Operative Bank Challenges Can Improve its Reputation Management - Essay Example

Co- Operative Bank Challenges and how it could improve its Reputation Management . Introduction In the recent months, Co-operative Bank has experienced various challenges that have directed their management to focus on new ides of improving their reputation in their managerial practices. This paper intends to analyze such challenges and make recommendations on how best to remedy the situation. Some of these challenges are discussed in brief as hereunder. None other than the CEO Niall Booker while opening the plc’s annual report noted that the bank faces “significant risks and uncertainties”. It was noted in that report that the short to medium term outlook for the Bank uncertain in various areas ranging from funding and credit risks to reputation, people and regulatory bodies. The banks image has suffered some nasty scandals and made significant losses as was the case in their 2013 annual report that indicated that the bank suffered a 1.3 billion pound loss. The Flowers debacle and his disgraceful resignation after claims that the Bank had a 1.5 billion pound hole in its coffers really dipped the Bank’s reputation to the lowest ebbs. This scandal and that of Lord Mynors that led to his resignation are sores in the reputation of the Bank and must be avoided. Lord Mynors resigned from the Co-op Group due to stiff opposition mounted against his proposal to scrap the boardroom. This is after he warned that the group risk losing a further 2 billion pound loss this financial year. This can be construed to mean that the group is resistant to the reforms necessary for it to reshape its reputation. Reputation Management Reputation management can be defined as the understanding or influencing of a person or business’s reputation or image. The term was originally used as a public relations term, but the aggressive development in information technology has transformed it to an issue of searching the internet for answers. In some cases, managers Astroturf review sites, censure negative complaints or apply other software’s such as SEO tools to fix the system and hence gain an advantage as they influence the results. Studies conducted by the University of California Berkeley found that sellers often took their reputation management on eBay by selling their products at lower prices in order to get positive feedback and hence game the system. These are however viewed as bordering on the unethical behavior and are thus not recommended for an association like Co-operative bank where the shareholders are the owners of the business and must thus have a say on the goings on. The more ethical form of reputation management entails responding to the complaints from customers, checking on online sites for any incorrect information and asking them to take it down and review it with the correct position from the bank (Tchankova, 2002). Through its online feedbacks the bank can the tune it to aid its product development. In reputation management, businesses keenly watch their brand and address issues negative to them and use customer feedback tools to get reports on any signs of reputation problems. Mostly, it involves pushing down negative results and shaping how an organization is viewed by its people and the public (Griffin, 2008). Sites like eBay and Wikipedia are often used by organizations to shape their reputation by publishing correct information and also including other positive publications at their sites. Some ways by which Co-operative Bank could use such sites in its reputation management include: improve their tagging and optimize their search engine, publish original and positive websites and social media accounts with a view to clamp down on the negative results, regularly submit press releases online in widely used websites as an effort to promote the Co-op Brand, and take legal redress mechanisms in instances that the Bank feels they have been libeled. The Bank should also proactively respond to criticism from the public regarding its recent misfortunes and offer proper tuition to the public about its brand. It is important however to emphasize that in line with the Bank’s values and ethical standards, all action taken in managing its reputation must be above board. The risk of using dirty- hand tactics to influence results are too obvious incase the cover is blown and the scam exposed. Such tactics are too dangerous to be attempted at an institution with so much public representation. The good news is that there are organizations like the Online Reputation Management Association who promote ethical best practices through its certification program. In 2011, Google introduced a toolset for users to monitor their online identity and take down unwanted content. This should be a starting point for Co-operative Bank as it tries to build on its dented reputation. Many respondents on the question of whether companies use online reputations to choose their staff or clients have given a resounding yes. Many managers use online information to screen their candidates. It is therefore a serious matter that Co-operative Bank must undertake an aggressive media campaign to build on its brand name and promote its product. However, warning must be sounded of the risks in online reputation management. Many users have reported being conned by extortionists who attack their sites with threats of posting blackmailing documents on their sites to ruin their reputation. The following should be noted with regards to Online Reputation Management; most responses made to customer complaints could only help prolong the matter and push such content up the search list and could be avoided where necessary, the Co-operative Bank must therefore strive to encourage their customers wiling to help combat the negative comments to post positive accurate comments in order to push forward their reputation. Such postings of numerous positive comments may also be counter productive as involving too much purchased URLs push the genuine search results down and may end up chocking the system with several unnecessary and uneducated comments (Burkhardt, 2008). It is therefore important to be careful while using Online Reputation Management sites as they may be prone to attacks from professional slanderers. Surveys have shown that most adults follow their product brands online and that most people also follow on social sites such as face book. It is therefore difficult to control what the people talk about. As such, the best way for a company like Co-operative Bank to manage its reputation is through proper behavior. It is important also to point out to the reputation managers at Co-operative Bank that creating falls impression is a useless effort as these do not last. Therefore, the most effective course of action for the Bank would be to market it honestly, implement customer experience practices and engage their customers actively online. Appropriate ethical behavior must be upheld by all employees of the Bank and such scandalous scenario like that of its former chairman Flowers must be avoided at all costs. This is because such behavior may be interpreted to show the level of incompetency of the top management (Helm, 2011). Many observers of the crisis coupled with the reported losses commented that there isn’t any need keeping your money in a bank that lurches from crisis to crisis. As such the reputation mangers at Co-operative Bank must actively engage in rebuilding the broken bridges. According to a recent research commissioned by the Co-operatives UK to gauge public opinion on the reputation of the co-operatives business model, 40% of those sampled responded that they still trust this model of business against 53% who said their trust had somehow diminished. Adults were found to still trust co-operatives more at 47% two percentage points up from an earlier recording in 2013. It is very difficult to cultivate trust but so easy to lose it. Businesses must therefore endure to keep their reputation high. The figures shown above those co-operatives still enjoy a significant level of trust, much more than shareholder companies at large whose rating stood at a paltry 7%. This is good news to Co-operative Bank which by its large pool of shareholders can still count on enough support in its endeavor to rebuild its dented reputation. The management must now realize that the public now view the Bank more critically than before and as such the steps taken to remedy the situation should be one that uphold high values of ethics and are efficient. Co-operatives membership stands at over 15 million members and the reputation management team can channel information to reach them by engaging more its customers who may then pass on the information to friends and acquaintances. With the much awaited Co-operatives Act now being legislated, new frontiers of opportunity to market the business will be available and must be explored to the fullest. The business can shape its products and influence public perception by confidently assuring a better way of doing business. The Bank must live up to its customs and build loyalty by the quality and integrity they offer. There seams to be positive progress in this regard as Co-op Group through its online survey #Haveyoursay is asking people to participate and give opinion with respect to its structure, values and services nd how they could better develop it to fit their needs. Such participation must always be encouraged as it is assure way of keeping up with the public perception and influencing it. The Co-op Group’s marketing director Gill Bar believes that their brand is in “pretty good shape” and that Co-op has a “special place “ in the hearts of it consumers and hence an aggressive online campaign has been launched. She has stated that the online survey will offer Co-op an opportunity to develop a unified position across its business as this has been lacking. It will help inform communications and marketing strategies adopted going forward and this is going to help Co-operative Bank better channel its information and improve its reputation in the market (Amsterdam: Elsevier/Pergamon Flexible Learning: 2009). From the foregoing discussion it is evident that a lot needs to be done to redeem the image of Co-operative Bank by engaging in thorough reputation management. The risks to its reputation are further highlighted in the succeeding discussion. Reputational Risk The Bank’s image in the eyes of it customers, its staff and other institutions it is engaged in business with could be dented by factors such as poor decision making by the managers at their various levels of service, poor performance, and the unfavorable effects of the operational failures or other issues external to the Bank. Its been noted with concern that certain managers in their various departments do not uphold the values of the Bank while conducting business and numerous reports of poor service have been reported in various branches of the Bank across the globe. Operational failures majorly result from poor planning and deviation from the policy guidelines by some managers’ and this should be halted with urgency (Fombrum, and Van Riel, 2003).The Bank’s PR team should always monitor and manage the media, the public and customer views in a way that portrays the image in positive light. They must work closely with external rating agencies to guarantee fair and balanced coverage. This approach if taken could go along way in improving the customer, investor, public and even market confidence for the Bank. It is further recommended that the Bank should conduct regular advertisement of its products and shape such adverts to reflect on the intended image to be developed. The product-portfolio must be expanded and new innovative products shaped to meet immediate customer needs introduced into the Banks offerings (Romeike, 2004). Revision of the existing products is necessary to bring them to line with the Banks strategic plans. More effort must also be put on improving the Bank’s customer care service to ensure that customers are properly served. Public workshops where the Banks policies are explained to the public could also be conducted to enlighten the people on the new products or changes made on the existing products. Conduct Conduct risk is the risk that the Bank’s operational behavior and offerings will give way to unfair results for customers. Co-operative Bank’s Executive Risk Committee has classified it as a Principal risk and keen attention is kept on it. It must always be a priority of the Bank’s management to ensure that its customers are well taken care of and are happy. Good customer service results in customer loyalty and in maintaining this Co-operative Bank could greatly improve its reputation in the eyes of its customers and the public at large (Romeike, 2004). The Banks staff must therefore at all times carry themselves with dignity and observe the values of the bank. Recommendation For Co-operative Bank to remain competitive and survive in the market, a holistic approach must be taken to better its reputation in the eyes of its customers. In the last annual report the Bank reported a one point three billion pound loss. This cannot be wished away and the top management together with the relevant committees must burn the midnight oil and come up with workable solutions to mitigate the risks. Most of the Bank’s policies have failed at implementation due to poor planning and execution by poorly trained staff (Muazam, 2013). It is therefore urgent that the Bank train their staff with the relevant skills to ensure efficiency in implementing the set plans. The Bank must also look into new ways of generating capital as a means of keeping their coffers in good shape. Proper controls must be set to ensure compliance with the set objectives and company values. In this regard, the staff must be well educated on good interpersonal skills to boost the quality of customer service. In view of the rapid evolution in technology, employees must be educated on innovative ways of doing business. The management should consider the level of I.T knowledge of the employees and where necessary equip them with the appropriate skill if lacking. Intense lobbying must also be conducted by the top management to find other sources of funding the budget. As was noted in the above discussion, the Bank currently do not have sufficient staff and therefore the management should consider hiring more staff as well as promoting others to build on their succession scheme. The top managers should however be employed on contracts and be engaged in extensive lobbying for the Bank (Burkhardt, 2008). The Banks risk committees must be engaged at all times in identifying inherent risks and come up with innovative solutions to minimize losses. Other risks external to the business must also be critically analyzed and avoided if possible. The financial meltdown witnessed recently has opened the eyes of managers and new controls must be set to shield the Bank from incurring heavy losses as witnessed in 2013. The product-portfolio must also be improved and properly marketed with efficient advertisements. New products to be introduced into the market must be packaged in ways that suit the customer needs. Close liaison with regulatory agencies must also be a priority to ensure that the bank receives positive reporting (Helm, Sabrina, and Gobbers, 2011). These agencies may also help with the audit work and this is very necessary for the Bank to identify areas of weakness and mitigate accordingly. The Banks marketing division must engage in aggressive media campaign to market the Bank’s products. It is very necessary that the Banks’ image be positive in the eyes of its people. By keeping a close eye on the media and its people the Bank can the tune its messages to market itself as great company with clear values and principle (Fombrum, and Van Riel, 2003). Conclusion The rapidly changing market conditions dictate that institutions that are focused on bettering their service delivery must entrench a culture of good customer service in its daily operations. In this regard Co-operative Bank must exhaustively explore such a culture in its management frameworks. It is therefore necessary that the Banks’ management after identifying the associated risks must develop innovative ideas of mitigating them. The Bank has a global network and thus diversification of its products in the different markets is necessary as people have different needs depending on their localities. This paper was intended to analyze Co-operative Bank’s recent challenges and make recommendations on how best to build its reputation. Though not exhaustive as some risks are hidden in the systems, the few that have been highlighted can help understand the situation. Such recommendations mentioned in the discussion above cut across the entire Bank’s operating framework and should be closely followed to ensure success. Reference 1. Griffin, A (2008) New Strategies for Reputation Management: Gaining control of issues, crises and corporate social responsibility, Kogan Page 2. Fombrum, C and Van Riel, C (2003) Fame and Fortune: How successful companies build winning reputations, FT Prentice Hall 3. Burkhardt, Robert. Reputation management in small and medium-sized enterprises analysis and evaluation of the use of reputation management: a survey of small and medium-sized enterprises in Germany. Hamburg: Diplomica Verlag, 2008. Print. 4. Burkhardt, Robert. Reputation management in small and medium-sized enterprises analysis and evaluation of the use of reputation management: a survey of small and medium-sized enterprises in Germany. Hamburg: Diplomica Verlag, 2008. Print. 5. Dar, Muazam. "Operational Risk Management, Risk Management Approaches, and Risk Mitigation Techniques: Challenges Faced By Islamic Financial Services." IOSR Journal of Business and Management 11.2 (2013): 72-79. Print. 6. Griffin, Andrew. New strategies for reputation management gaining control of issues, crises and corporate social responsibility. London: Kogan Page, 2008. Print. 7. Helm, Sabrina. Reputation management. Berlin: Springer, 2011. Print. 8. Helm, Sabrina, and Kerstin Gobbers. Reputation Management. Berlin, Heidelberg: Springer Berlin Heidelberg, 2011. Print. 9. "Models of risk management and the global ascendancy of political risk management." Whitehall Papers 67.1 (2006): 1-22. Print. 10. Reputation management. Rev. ed. Amsterdam: Elsevier/Pergamon Flexible Learning: 2009. Print. 11. Romeike, Frank. "Buchbesprechung: Corporate Risk Management— Cash Flow at Risk und Value at Risk von Peter Hager." Risknews 1.3 (2004): 71-72. Print. 12. Tchankova, Lubka. "Risk identification – basic stage in risk management." Environmental Management and Health 13.3 (2002): 290-297. Print. Read More