December 10, 2010

The financial value of Corporate Reputation Management

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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.

Net results:

  • BP: Down 23% over 12 months (in a rebound market)
  • Goldman Sachs: +1%
  • Toyota: +7%
  • Ford: +98%

Is this ROI enough?

10 Comments

  • I personally know the importance of Reputation Management, especially online reputation management. I run a small footwear website that has relatively good sales and satisfied clients. I put a lot of value on quality service. I want my clients to come back and buy the stuff I sell so just imagine the shock I had when I opened up my laptop one day to find tons and tons of bad reviews about my website and my merchandise. They were all lies spread by a competitor footwear website.

    I luckily found these guys at http://www.rexxfield.com/ and they really helped me get my business back on my feet. They specialize in protecting your online persona and help you manage your business reputation so I highly recommend them.

    Versie - January 27, 2011 at 12:50

  • I have researched many reputation management companies. A lot of them can’t even manage their own reputation. If you look at complains with their name…however there are some reputable ones out there. Also you can use software to manage your own reputation without having to pay a ton I use http://www.botpod.com but there are other like it out there as well…

    Tony Roberts - February 10, 2012 at 00:22

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    branded packaging - April 19, 2013 at 06:33

  • Hello i am kavin, its my first time to commenting anyplace, when i read this post i thought i could also create comment due
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    brand republic - April 25, 2013 at 07:11

  • It’s difficult to find educated people in this particular subject, but you seem like you know what you’re talking about!

    Thanks

    reputation management for physicians - May 22, 2013 at 18:16

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