Why more brands need to say sorry

Expert in reputational damage and relationships talks about how the impending data breach notifications in Australia are forcing more brands to say sorry

Sorry is a word that few brands like to say. But there is a good chance brands in Australia will be apologising more often come February 2018, with the Australian Government introduces new rules for mandatory data breach notification.

The new laws make it compulsory for any commercial organisation with turnover greater than $3 million to notify the Privacy Commissioner and customers as soon as practical after becoming aware of a serious breach of personal information.

As a result, Australian brands that might have previously hoped their incursions went unreported will face fines of $1 million or more if they fail to self-report. But failure to report could see them face the wrath of a more fearsome spectre than the Privacy Commissioner – the general public.

According to New York-based psychologist and specialist in the emotions of shame and guilt, Patrycja Slawuta, the recent spate of data breaches in the US has led to a massive uplift in reputation management activity.

“It goes back to the darker side of human nature and what happens when you actually f***-up, and not only you know about it, but everyone else knows about it,” Slawuta says.

“The question is, how do you bounce back in a situation where the previous status quo doesn’t exist anymore, because the circumstance has changed and people have a different perception of you?”

Speaking ahead of her appearance at the Creative Innovation 2017 conference in Melbourne this week, Slawuta says the experience brands endure after suffering major reputational damage is in some ways similar to what couples go through one when party is found to be having an affair.

“Very often when an affair happens, it is not that the relationship was bad,” Slawuta says. “Very it is because of the forgotten parts of ourselves. And that is interesting in branding as well.”

Slawuta says these situations often lead to a significant release of mental energy, as conversations take place that might not have previously.

“And very often that energy leads to a positive transformation,” she says. “It can be destructive as well, but if handled wisely this is an opportunity to rebuild, revision, reinvigorate and reenergise.”

Slawuta says recovering from reputational damage always starts with candour and recognition of what happened, followed by remorse.

“As humans, overall we have an extremely forgiving nature,” Slawuta says. “How remorse is explained is incredibly important, because more than listening to words, we listen to tonality, and the message that is behind the words.”

Read more: Helping marketers focus on the negative side of brand engagement

She says generally people are less forgiving when executives are seen to back peddle or point the finger elsewhere, with the worst course being to attempt a cover-up.

While the immediate damage from a poorly-handled crisis can be lost sales and a damaged share price, Slawuta says companies that breach trust are the companies that bleed employees.

“You can measure the health of the organisation based on the employee engagement, and that tends to really drop when things like that happen,” Slawuta says. “People don’t want to work there, and it is also extremely hard later on to get good employees. You have to pay them 10 per cent more on average to even consider having people work for a company that has lost face in some way.”

The ability for a brand to confront its problems stems from its self-esteem at an individual and group level. Slawuta describes self-esteem as the immune system of the mind.

“When people laugh at you or roll their eyes, if your self-esteem is high you will be fine with that,” Slawuta says. “If it is not, then you will start hiding things away. You will try to hide the mistakes, because it reflects no on what you did but who you are individually.

“If the self-esteem is low we balloon out the ego and it becomes extremely vulnerable to any kind of critique, because if it is inflamed and arrogant it is very volatile and very fragile at the same time.”

Slawuta says groups that have high self-esteem feel internally safe. “They are the groups that are much more creative and much more innovative,” she says. “Those are the people who are not afraid to put their ideas out there, even if they might seem weird.”

“The courage to face what has happened comes with high self-esteem. Because it is embracing that part of ourselves that might have been flawed, that might have been weird.”

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, join us on Facebook: https://www.facebook.com/CMOAustralia, or check us out on Google+:google.com/+CmoAu

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