Reputation Impacts the Bottom Line

We need only look back a short period of time to see how the erosion of trust has destroyed well-established organizations, as well as the effect it has had on public perception of corporate culture. From the Enron scandal to the sub-prime banking fiasco, mistrust of corporations large and small is rampant, and for good reason.  The more recent issue with Volkswagen’s misguided fuel economy numbers is yet to be played out, but VW has estimated it will cost the company $7.3 billion in the long run. In the short run, VW stock plummeted more than 35% and the company reported a whopping $1.9 billion loss in the third quarter, down from almost a $3 billion profit a year ago. These examples have led the public to see corporations largely as having a sole purpose – to make money – without a higher obligation to society. Moreover, it appears that those companies with higher levels of trust and a stronger reputation can weather challenges better, as the recent Chevrolet ignition issue exemplifies.

How then do organizations build their reputation and trustworthiness in order to increase resilience if not for sales and profits? It all revolves around culture and values. Honesty, integrity, caring for their employees and the environment, combined with a quality product and perceived value, are key drivers in building a strong trusted brand. In fact, according to the Edelman Trust Barometer, “treating employees well” and being a “good corporate citizen” are in the top 10 factors most important to a corporate reputation. Building external trust, however, cannot be accomplished without first establishing internal values that drive trust within the organization and building a corporate culture of trust starts with, like most things, the leadership.