“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.”
Those words are attributed to Warren Buffett, and if Buffett said them, I’m buying.
In articles I have previously contributed to this series on relationship management, I have discussed ways in which we can establish and build relationships with clients, colleagues and others with whom we wish to achieve mutual reciprocity. Of course, solid relationship management is inevitably linked to strong reputation management.
Following the crash of two of its passenger jets, Boeing is presently winning the “How quickly can you ruin your reputation?” sweepstakes as it faces U.S. legislative inquiries and international government reports. According to its own value statement, “Boeing has been in the business of aviation safety for more than 100 years.” On the company’s home page, Boeing’s CEO has pledged on behalf of all Boeing employees, “Together, we’ll keep working to earn and keep the trust people have placed in Boeing.”
Established in 1916, Boeing has worked more than 100 years to build its reputation as a jewel of American industry. It can be argued its reputation was lost in the time it took two 737 MAX jets to fall to earth. The CEO’s pledge should be reworded, “Together, we’ll work to win back the trust people have placed in Boeing.”
Reputation Management 101
When our children were young, my wife and I would frequently bring them to a popular restaurant in New York City for Sunday brunch. It is true the lines were always too long, and we could choose to wait either outside in the cold or in a crowded corridor. Parking the car on New York City streets was always a challenge. The bill would run to $100, which was silly considering all we were ordering was accessorized eggs and coffee.
Yet we happily withstood these deprivations because we always had a good time. I liked to say no one was ever unhappy inside that dining room. (The fact all diners could afford to pay $20 for accessorized eggs may have had something to do with their happiness.) With eyes wide open, the restaurant and I had willingly entered into a mutually beneficial relationship.
Not very long ago, we returned to this restaurant when our older daughter was in town from Austin on business. Now that our daughters are all grown up, we ordered a pitcher of Bloody Mary cocktails. The menu price was $25. When the waitress gave us a choice of vodkas, I assumed all were included in the $25 price. I was wrong. Our choice, Tito’s, cost $35.
After my appeal to the waitress failed, one of the managers arrived at our table to hear my sorrowful tale. I explained brunch at this restaurant was a family tradition. This was, if you will, one of our “happy places.” As such, it was her responsibility to preserve this aura of happiness. It was in her job description.
All would have been good had the waitress cited the $10 up charge when taking our order. That wasn’t the issue, as I could afford the extra $10. What I couldn’t afford was to lose this restaurant that held happy memories for us. Oh well, as a family, we persevere through adversity!
Reputational Damage and the Insurance Industry
As weather-related events assault the Earth with increasing frequency and intensity, it is clear to me climate change could be the insurance industry’s Achilles heel. Should claims advocates be slow to respond to claims following a catastrophic weather event, the industry’s reputation could be chewed up and spit out by the 24-hours news cycle. If claims managers were to go from slow to insensitive when responding to insureds, reputational damage would only be worse.
So far, the industry’s reputation has remained intact through multiple “once every hundred years” weather events. A fortunate yesterday, though, does not guarantee good fortune tomorrow.
As professional risk managers, the carrier community is called upon to look into the future and anticipate increasing claims due to weather-related events. Just as carriers and brokers advise insureds to prepare for calamitous events before they happen, the industry must heed its own advice by building claims staff and infrastructure before another raindrop falls or another tornado touches ground.
Carriers and brokers are being tested again as insureds throughout the Midwest endure record-breaking end-of-winter floods caused by rapidly melting snow and early spring rain.
- The National Oceanic and Atmospheric Administration reports that 25 states are at risk of “major or moderate” flooding in coming weeks.
- The National Ground Water Association estimates groundwater for people living in 10 states is threatened from bacterial and industrial contamination carried by floodwaters. Water safety in more than one million wells could be threatened.
- Farmers are losing livestock due to flooding.
Let’s get to work protecting both insureds and our reputation.