The worst reputation a company can have
Charting the future of public relations
Holmes Report
CEO

The worst reputation a company can have

Paul Holmes

Quick question: What’s the worst kind of reputation your company can have? A new study from BrandLogic and CRD Analytics finds that 66 out of 100 companies studied enjoyed an environmental reputation “that exceeded their actual performance.” The report cites companies such as Visa, AT&T, Starbucks, Toyota and Yahoo! There was a time when news such as this would have prompted the public relations departments at these companies to pat themselves on the back. After all, the public has a higher opinion of them than they deserve; the PR department must be doing a fantastic job! But in an age of radical transparency, there’s a case to be made that the worst kind of reputation a company can have—or at least the most dangerous—is a reputation that’s significantly better than its actual performance. Call it the BP effect. When stakeholders discover that the company is not quite as green as they thought—and in today’s environment of hyper-scrutiny, they surely will—then the reputational damage inflicted by whatever incident sparks that discovery will be amplified by outrage caused by the suspicion that those stakeholders were misled. I don’t think it really matters whether the gap between (positive) perception and (more negative) reality was intentional, the result of “aspirational” marketing (which was probably the case at BP) or pure accident—the reaction is likely to be the same. This understanding has always informed the way investor relations department operates: there’s no value in creating shareholder expectations of 20 percent growth if your year-end numbers are going to show 5 percent. And so it is incumbent upon public relations departments not just to tell the most positive stories they can, but to manage stakeholder expectations so that expectations are in line with reality.
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