PR firm Bell Pottinger’s long-term future as a company is under threat, with even its founder doubting it can survive, following a disastrous reputational collapse.

The seeds of the firm’s strife were sown when it took on a £100,000 PR contract for South African firm Oakbay Capital, which led to a social media campaign based around the ‘#WhiteMonopolyCapital’ hashtag – designed to focus attention on the quantity of white-owned businesses in the region.

In the wake of a barrage of criticism arguing that Bell Pottinger had allowed itself to be used as an instrument for stoking racial tensions, the firm has been expelled from major trade body the Public Relations and Communications Association (PRCA). Its leader Frances Ingham said: “Bell Pottinger has brought the PR and communications industry into disrepute with its actions and has received the harshest possible sanctions. The PRCA has never before passed down such a damning indictment of an agency’s behaviour.”

In addition, the firm’s CEO James Henderson has resigned, telling the BBC: “While I had no involvement in the account, there were warning signs that I should have heeded. Therefore I must take responsibility.”

Essentially, it is a real-life, worst-case scenario of how reputational damage stemming from questionable decision making can hole a company below the waterline. What kind of steps can leaders take to protect and maintain their firms’ reputations – not just in the public eye, but among business partners and collaborators?

The Institute of Leadership & Management's CEO Phil James says: “Bell Pottinger’s crisis has many similarities to crises in the financial services industry, whereby a few people make small decisions, and the havoc that those judgments wreak upon the wider reputation of the firm is significant and enduring. But this isn’t about blaming the individuals that take those decisions. The principles that underpin decision making must be known by everybody. It’s not just a question of making the correct decision when people are looking, and the relevant people feel they are under scrutiny. It’s about an organisation saying, ‘This is the way we do things around here.’ It’s for senior management to lead the way, and to encourage the emergence of correct decisions.”

James adds: “Nick Leeson – the so-called ‘rogue trader’ who infamously brought down Barings Bank with a spate of ill-starred market speculation – admitted that if he’d been managed properly at the time, he wouldn’t have made the decisions that led to that chaos. It is the culture of these organisations that allows these things to happen. Cases like these serve to remind us all that trust and reputation are destroyed so quickly, and take so long to rebuild. So you should be encouraging staff to ask, with every decision and every action they undertake, ‘Is this the right one for our brand, and our reputation?’”

For further thoughts on how to establish trusting relationships with all your clients, check out this learning item from the Institute