We use cookies to allow us and selected partners to improve your experience and our advertising. By continuing to browse you consent to our use of cookies as per our policy which also explains how to change your preferences.

What is reputational risk?

By Rebecca Milligan

We look at how the way you behave at work can threaten or protect your business reputation.
crumbling wall, bricks with broken mortar and hole

It can take years to build up a good reputation, and moments to lose it. Reputational risk is the risk of losing money as a result of damage to your and/or your business’s reputation. Without reputation it is hard to win work, as everyone knows who has started up their own business.

So what could damage your reputation? Simply getting something wrong – that could be making mistakes at work, intentional wrongdoing, criminal activity or misjudging the relationship with your customer. Some actions are obviously risky, but sometimes acting with the best of intentions can create a situation where you could be at risk of reputational damage. A bad review can be damaging, even if you’ve done nothing wrong.

Read our guide to dealing with negative feedback on social media, or read on for more tips on protecting your reputation.

How to avoid reputational risk

It’s essential to bear reputational risk in mind when going about your daily business, to avoid opening yourself up to reputational damage. Every job has the potential to go wrong, and working in the correct way will protect you. In general, it’s about doing the right thing and behaving in a professional manner at all times. A useful trick is to imagine you are being filmed for a reality TV show – how would your behaviour come across? Would you look like a reliable professional, or could you be open to criticism?

This list of dos and don’ts is designed to help. Jason Simmons of Advance Construction Solutions Ltd came up with the original list, but it’s not definitive. There may well be other areas within your own particular trade that should be listed.

We’d hope that, as Which? Trusted Traders, you wouldn’t need to be reminded about any of these points. In fact, you might feel that some of the dos and don’ts are so obvious that they don’t even need to be mentioned. But Jason assures us that he’s witnessed traders getting all of this wrong, and more - and any of these points could damage your business’ reputation.

The Tradesmen’s dos and don’ts guide

Access

Do arrange with your client in advance how you will access their property.

Don’t keep clients’ keys overnight.

Why?  Keys are a potential problem area. If you’re holding keys and the property is broken into or something goes missing, you will automatically be under suspicion – even if it’s nothing to do with you.

If you do hold on to keys, ensure you protect yourself by keeping them in a secure location. Hand keys back at night, or post them through the letterbox so you don’t have the responsibility of anything happening while you’re not there.

Opening up their home to someone is a risk for a customer. Traders need to respect that and treat customers’ property with even more care than they would their own. It’s easy for traders to overlook how strongly customers feel about their homes and property.

Jason has witnessed traders hiding keys under a brick in the front garden for a colleague, without the customer’s knowledge. It only takes one person to see you doing that and the customer’s property is vulnerable.

Alcohol

Don’t give customers an excuse to doubt the quality of your work by drinking during the working day or turning up for work hungover.

Do accept alcohol as a gift if customers are happy with the outcome of a job.

Why? It may seem obvious not to drink while working, especially when you’re driving or operating machinery and the culture of lunchtime drinking is largely a thing of the past. However it does happen.  Jason recalls an incident where a customer complained about a contractor’s work, in part because the contractor had turned up to the job smelling of alcohol.

Building control

Do ensure you have the correct contact details for the building-control officer.

Don’t work on projects where the client refuses to use building-control officer, when building regulations are applicable.

Why? If building regulations apply, then you must use the services of either a private surveyor or the council building-control officer. Failing to use their services leaves you liable for any costs arising as a result of using materials or processes that can’t be signed off at a later date.

Cash

Do accept cash payments. Ensure you check the amount openly, in front of the client, as soon as you receive it to avoid any misunderstandings about the amount paid. Once you have counted and confirmed the amount, issue a signed and dated receipt for the cash immediately.

Don’t remove VAT from client’s cash payments. If a customer asks you to do this, remind them it’s illegal and you would risk criminal charges if you did so.

Why? Counting cash in the presence of your customer might appear over cautious, but it makes sense. Accepting a customer’s word for the quantity handed over means you have no proof if you later find they have made a mistake – it will be your word against theirs.

At times, even banks can make mistakes. Jason recalls an occasion where the bank claimed it had issued £1,000 in a sealed envelope, having weighed the notes, but there was only £900 there. It turned out the notes were dirty and the weight of the dirt caused the counting machine to malfunction.

Best practice is to sit down together, remove all other paperwork from the area, and count out the notes with your customer. Then send them an email to acknowledge receipt, and check they’ve received the email.

Removing VAT from a cash payment is illegal. VAT evasion can be prosecuted as either a civil or a criminal offence. Once you’ve got a conviction, you have to declare it on any future DBS checks, job applications and mortgage applications, and it will rule you out from working in particular environments.

It’s difficult to deal with individuals who expect you to reduce your rates because they’re paying in cash. If you need the work, you can appease your customer and avoid breaking the law by accepting a lower level of payment and then working the VAT back into the invoice later.

Communication

Do communicate any changes to the timings, nature of the work, people and processes involved to your customer.

Don’t expect customers to mind read. Keep them up to date with progress.

Why? Changing a job’s start time is a real bugbear for customers. It’s also a potential litigation area – if you commit to start on a Monday and are two days late, your customer could claim loss of earnings.

While that would be an extreme reaction, it’s always best to keep the lines of communication open.

Customers on site

Do enquire from your client if they will be present during your working day. Plan your day around their movements.

Don’t work alone in homes with children. You would be liable if anything were to happen to the child. If a client indicates they are going out, leaving their child unattended, that is your cue to go and collect materials or have a break.

Why? The more people who are present while you’re working, the more you’re exposed to risk. If someone is injured as a result of your presence, for example by tripping over your tools, you could be liable for compensation. It’s always a good idea to plan work when customers are not there.

Customers often ask if it’s OK to leave a child in the house with you, maybe for five minutes while they go to the local shop. While it’s great that they trust you, it’s not appropriate for you to take on that responsibility. They would not normally leave their child with someone they’ve known for only a few hours or days, who doesn’t have childcare qualifications. It exposes you to the possibility of later accusations, and if something were to go wrong – the child falls or chokes on a toy, for example - you would be held responsible.

Invoices

Do remember that your invoice counts as a legal contract. The details need to be correct.

Don’t change customers’ names or address on invoices. Altering the details of where you have carried out work, for example from a home to a business address to allow customers to claim back costs, is illegal and could leave you open to charges of fraud.

Why? A lot of people work from home, are self-employed, are landlords or have different business and home addresses, and will ask you to alter details on an invoice so they can claim back the cost through their company. This is illegal. An invoice is a legal contract, and all details must be correct.

You don’t want to get into a confrontation with your customer about this. It can help if you point out that other bits of paperwork – delivery address, delivery notes, quotes etc – are all linked up in your system, so it’s not possible to change the address.

Planning

Do check that any work you do meets with appropriate planning regulations.

Don’t work on new builds or extensions that have not gained planning consent.

Do ensure you understand the designs you are working to. If in doubt, ask.

Don’t work on extensions or new builds without a design unless you work with a design service.

Professional behaviour

Do be polite and friendly but respect your client’s privacy and space.

Don’t discuss politics or religion; give health, financial or relationship advice; or make jokes about former jobs.

Do keep your professional and personal life separate.

Don’t borrow any personal property, or bring your pets or children to customer’s houses.

Why? Traders need to do everything in their power to protect themselves from possible litigation. Every job has the potential to go wrong, and these examples are all things that could be fired at you in a court of law and make you look bad. Individually they might not seem important but, put together, they can paint a picture of an unreliable individual

Protecting clients’ property

Do ask your clients to remove important, fragile and valuable items from working areas before starting a project.

Don’t assume your client complied with your request. Check with them that they have moved any breakable items before beginning work. Once you’re sure the area is relatively clear, cover everything in the vicinity. Twice!

Why? This is a no-brainer. You would have to pay for any damage, plus you’d never get invited back and risk bad reviews if you don’t protect customers’ property.

Tools

Do bring everything you need for the job with you.

Don’t ever borrow tools from a customer. You will be liable if something goes wrong.

Why? Never borrow tools from the customer. This opens up questions about liability in the event of an accident. There has been more than one incident where a trader borrowed a ladder from a customer, fell off it and sued the customer. Protect yourself and avoid unpleasant situations like this by not borrowing tools.

Uncontracted work

Do notify your client if you find there is extra work that needs doing, as a result of your current project.

Don’t start any jobs in addition to your original contracted work before getting written confirmation of agreement from your customer. Either ask your client to email a job request or email them the details of extra jobs and ask them to send a reply to confirm their agreement.

Why? It’s very common for extra aspects to a job to appear once work has started. Regular complaints from customers and traders highlight that this is a real problem area. Without having extra jobs agreed in writing, it’s easy for misunderstandings to arise. Read more in our article about why no contract can mean no payment.

Underestimating work

Don’t try to gain back lost profits with additional jobs you’ve discovered to make up the loss.

Do notify the client of your under estimate error. Make it clear what you want, allow time for the client to agree. If agreed, revise all paperwork before starting.

Why? In some areas of the building industry, it’s an established practice to underestimate the original price of work and then make up your costs by finding extra jobs as you go along. Other people will just miscalculate. In either case, this is not good practice.

Giving an honest quote, which you are then able to stick to, will create more loyal customers than consistently increasing the price of each job you do. If, however, you have underestimated the cost of a job, ensure you notify the customer immediately and explain what has happened, then revise the paperwork and recontract accordingly.

Utility supplies

Do locate the electricity, water and gas supply in case of emergency.

Don’t shut off gas, water, or electricity without notifying your client and checking that all computers are shut down and nothing is running from the supply.

Do ask permission before charging tools or phones from the client’s supply.

Don’t use the client’s resources for anything unrelated to the job you are contracted to do.

Waste

Do be clear about the cost for waste and the responsibility for its removal in your estimate.

Don’t leave waste in customers’ bins.

More on this...

Tags: Business advice Reputational risk Dos and don'ts

Here are some other articles you might find helpful