December 10, 2010
The financial value of Corporate Reputation Management
Many executives still believe corporate reputation management and corporate social responsibility to be fuzzy evolutions of PR with no measurable ROI or firm business basis. This short video by 3BL Media highlights the relative performance of two major automobile manufacturers in terms of communications and financial outcomes:
Toyota and Ford’s stories are actually symmetrical in that the lackluster Ford model range was revived by Alan Mulally whereas Toyota’s image of absolute reliability was shattered by the recent recall saga. Crises (and good surprises) arise when reality is at odds with stakeholder expectations and this was the case in both stories.
Ford’s CEO, Alan Mulally was recently awarded MarketWatch’s CEO of the year for 2010 award for his masterful navigation of a historic automobile crisis. Indeed, the seemingly prescient CEO of then faltering Ford mortgaged the company’s assets to raise $24 billion before competitors had to be saved from bankrupcy by state and, therefore, taxpayer money. As Shawn Langlois (MarketWatch) puts it: “Ford to this day continues to cash in on the goodwill it earned by staving off the bankruptcies that swallowed the domestic competition in 2009. And Mulally has, in turn, become the face of what’s right in American manufacturing.”
But this glowing image is not only due to insightful financial stewardship, as Mulally also has a very strong record of stakeholder engagement engaging with consumers for product feedback on blogs, Facebook, YouTube, and other social media, supporting an always tricky dealership, and acting on public criticism by drastically reducing the use of corporate jets in favour of greener options.
At the other end of the MarketWatch rankings lie (somewhat predictably) Tony Hayward, former chief executive of BP PLC and Lloyd Blankfein of Goldman Sachs Group. David Weidner (MarketWatch) writes: “[Blankfein was] defiant before Congress, unapologetic, a defender of ruthless Wall Street practices, invoking God and bare-knuckle capitalism in the same breath“. Hayward, as we all know, asked for “his life back” while thousands around the Gulf were struggling and 11 families mourned their dead. Both are typical examples of leaders to which stakeholder engagement and corporate reputation management are meaningless. Toyota is a slightly different case, in that senior management cultural specificities elicited a response to the crisis that fell short of public expectations and created a PR nightmare. But Toyota has also made audacious use of social media to promote some of their models.
- BP: Down 23% over 12 months (in a rebound market)
- Goldman Sachs: +1%
- Toyota: +7%
- Ford: +98%
Is this ROI enough?