Reputation resilience is the benefit arising from having a company pre-position stores of goodwill on which it can draw when the headline crisis strikes. It means stakeholders will tend to feel a company’s pain and empathize rather than holding a company culpable.
Consider the remarkable reputational comeback of Toyota Motors (NYSE:TM). As shown in the first of two charts of the Steel City Re Corporate Reputation Index, Toyota’s ranking has zoomed back to the top of the automotive (motor vehicles) sector globally among its 35 peers from a start one year ago of 0.62. While it is currently underperforming the median of its 18peers in the automotive sector by 23% due to costs associated with its recent issues (and the subsequent pile on of litigators, regulators and mommy bloggers), its future prospects are good. Stakeholders are giving the company the benefit of the doubt in terms of pricing power, labor costs, credit costs and earnings multiples. Toyota built the capacity for reputational resilience over years of generally doing the right thing on six key fronts: ethics, innovation, quality, safety, sustainability, and security.
Now contrast Toyota with what we expect will be a long a steady reputation loss at BP (NYSE:BP). BP’s ranking has been sliding for the past year having started at the 87th percentile and finishing most recently at the 56th. BP, a firm that is no stranger to reputation issues, is currently underperforming its 51 peers in the integrated oil sector by 14% and, notwithstanding the bright colors of the chart, the future is not rosy.
Heads Up1. Risk, governance, and compliance are the topics for this Friday’s Mission Intangible Monthly Briefing at 12h00 EDT. The program, titled Driving risk and reputation into the C-suite, is complimentary, and a sample download of a recent program is available to further pique your interest. For more information and registration, click here.
2. The book, Mission: Intangible is available from the Society and from other major online book retailers. The book is available in hardcover, softback and e-book versions. Society members benefit from a material discount if purchasing the book from the Society.
3. The Society will release next week regular data on the first-ever reputation composite index. Provided by Steel City Re, the data reportedly show that firms actively engaged in the process of reputation enhancement tend to outperform their peers. Spoiler alert: Since January 2005, the Steel City Re Corporate Reputation Composite Index of reputation rising stars has returned 18% while the S&P500 has lost 3%.
And of course, we extend to you an open invitation to join the Society as a full member; and to Link-In to the Society's regular chatter availabe conveniently through the Linked-In website and IAFS group membership. Join us.