Reputation Rules: Don't Neglect Your Company's Most Precious Asset

Daniel Diermeier

June 08, 2011

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"CEOs and board members routinely list reputation as one the company's most valuable assets. Yet, every month a new reputational disaster makes the headlines destroying shareholder value and trust with customers and other stakeholders. During the last year leading companies ranging from Toyota, Goldman Sachs, BP to HP and Johnson & Johnson battled severe reputational crises. In recent weeks we have witnessed not only the devastating earthquake and Tsunami in Japan, but also the so far futile response of Tepco, the nuclear operator of the Fukushima nuclear power plant. [...] Trust is now an essential part of business success. Yet trust in U.S. business has substantially dropped over the last decade. While trust in business is still higher in developing countries, Non-governmental organizations (NGOs) are on a par with businesses in emerging markets and more trusted in developed markets including the United States. These data suggest that business can no longer rely on a trust reservoir. Rather trust needs to be earned. Companies have not responded to these changes. Their reputational risk has increased dramatically, but their capabilities have stayed the same. The result is one crisis chasing another and the long-term erosion of public trust in private enterprise."

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