Reputational risk an issue for all employees
When companies think about reputational risk management, their main motivation is often about building a successful long-term business that can weather any storm. However, a recent study has highlighted the variety of different ways that damage to a company’s reputation can continue long after any original issues have faded. The research from Stanford University has found…
When companies think about reputational risk management, their main motivation is often about building a successful long-term business that can weather any storm.
However, a recent study has highlighted the variety of different ways that damage to a company’s reputation can continue long after any original issues have faded.
The research from Stanford University has found that job-seekers will have a harder time finding another job, having previously been employed by a company that has experienced significant damage to its brand.
In fact, even lower- or entry-level job seekers can struggle to find new employment if they’ve been employed by a company whose senior executives and brand have sustained significant reputational damage.
The study argued that there is a moral spillover from these events, which prejudices the opinions of subsequent decision-makers. The researchers cited examples like Enron, where the immoral behaviour of senior executives have affected the careers of everyone involved in the company.
Fortunately for those that are charged with maintaining the reputation of a major organisation, the study did point to ways this action can be mitigated against. One of the researchers, Takuya Sawaoka, suggested this backlash could be avoided by distancing the actions of a few within a company from the brand as a whole.
However, Mr Sawaoka also pointed to damage that can occur if responsibility for immoral behaviour is spread too far through a company.
“If top management takes responsibility, it means that the behaviour could be perceived as representative of the organisation as a whole, expanding the reach of the spillover and ultimately hurting more organisation members,” said Mr Sawaoka.
While it is useful to know how these scandals can be mitigated against, this survey only reinforces the many forms of reputational damage companies and employees can experience.
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