What lessons can be learnt from the recent DEFRA/HMRC scandals? Garry Honey takes a view
Reputation is a strategic risk that has a direct impact on value. In the public sector that value is trust. Take a look at how this has been damaged in recent months, by just two government departments: DEFRA and HMRC.
For DEFRA, the government laboratories responsible for animal vaccine research permitted the accidental escape of a virus costing British farmers millions. The full cost of the outbreak, quarantine and travel restrictions, plus clean up bill of course has yet to be revealed. The cause of the virus escape was traced to a failure to refurbish laboratory drainage pipes recommended years ago. A cost consideration that proved a very poor economy.
More recently HMRC announced the loss of 25 million child benefit records in transit to the National Audit Office. This data has not yet fallen into criminal hands, but has enormous potential to cause financial distress to millions. The NAO didn’t want all the data only a fraction of it, but because it would cost money to separate out, the full unexpurgated records were dispatched. Another cost consideration that proved a very poor economy.
“Expenditure cuts have to be made and prudence in public spending is a good thing, but who decides which cuts or calculates the cost-benefit?
Is it just that the public sector doesn’t understand cost and value the same way as the private sector? Expenditure cuts have to be made and prudence in public spending is a good thing, but who decides which cuts or calculates the cost-benefit? In the two cases above decisions based on cost saving ultimately proved more costly. There is undeniably a financial cost but there is also the damaged trust. What does this look like and how can it be restored?
Measuring reputation damage is not easy but there are ways to do it. There are ways to manage reputation risk and to report on its control. This is not spin it is good governance.
Garry Honey is the founder of Chiron the reputation risk consultancy www.chiron.uk.net