Saturday, 9 December 2006

Loss of Reputation is a Risk for All

Corporate responsibility has not always played an influential role in reputation management and recovery. When Nobel Prize winner Milton Friedman was once asked "Do corporate executives, provided they stay within the law, have responsibilities in their business activities other than to make as much money for their stockholders as possible?” His answer was a resounding “no.”

Times have clearly changed. People now regard corporate responsibility as fundamental to the kind of society where they wish to live, work and raise their families.

Reputation failure is no longer a threat for companies in high-risk industries and activities alone. It has become reality for companies and organisation around the globe and in whatever sector. A 2006 Weber Shandwick proprietary analysis revealed that 33% of the Global Fortune 500 – the world’s largest companies – experienced reputation deterioration in their “most-admired” status from the previous year. And the Weber Shandwick’s Safeguarding Reputation survey showed that approximately 1/3 of global business leaders believe it is likely their company will sustain reputation damage in the next two years.

According to Weber Shandwick this higher rate of reputation loss has prompted boards and CEOs to ask how they can best shield their companies from extended reputation damage. One way is by adopting a “triple bottom line” approach – in other words, going beyond financial goals by also protecting the environment and attending to social justice.

I do agree with WS's point of view of adopting a triple bottom line approach, but I do not agree that the higher rate of reputation loss has prompted companies leaders to act. The ones who did are rather exceptions than the rule.

Source: Weber Shandwick

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