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Treasure But Protect Your Company’s Reputation

Treasure But Protect Your Company’s Reputation

“It takes many good deeds to build a good reputation, and only one bad one to lose it.”

― Benjamin Franklin

Wells Fargo is the third largest bank in the US, with about $1.7 trillion in assets. It began in 1852 as a stagecoach operation during the gold rush. It has since grown exponentially through acquisitions and the addition of services.

But over the last decade, sales pressure on lower-level bank employees led to massive financial scandals, fines, and regulatory restrictions. In 2016 alone, the bank paid $185 million in fines from the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the City and County of Los Angeles for the creation of fake deposit accounts. 

But the problems didn’t stop there. More issues relating to lending, wealth management, trading, and compliance were uncovered. In 2020, the bank agreed to pay $3 billion to settle investigations by the Justice Department and the Securities and Exchange Commission.

These scandals severely damaged the bank’s reputation with customers and regulators. According to Nick Hanna, US Attorney in Los Angeles, “Wells Fargo traded its hard-earned reputation for short-term profits, and harmed untold numbers of customers along the way.”

Many companies come to mind when you think about reputational damage – including Anheuser Busch, Facebook, and Boeing. And who can forget Enron and World Com, whose names became synonymous with financial fraud?

You may think these things could never happen to your business. Your company’s reputation has taken years to build and is one of your most valuable assets. Yet, just one incident can destroy it. It can be the action of one or more of your employees. And once a negative impression is formed, it's tough to reverse.

Everyone in your organization is responsible for and benefits from the company’s image and reputation. Your workplace culture can encourage your team to be proud ambassadors for the company.

What is Reputational Risk?

Reputational risk is a threat or danger to an organization’s good name or standing. It can originate from the actions of either:

  • Company representatives
  • Employee(s), suppliers, or affiliated parties such as spokespeople

An organization suffers reputational damage when there is a disconnect between perceptions about a company and its actions. For example, major money center banks are considered safe places to invest funds and borrow money. Yet the Wells Fargo scandal unsettled customers who thought of retail banking as a service that takes deposits and makes loans. They didn’t think of a bank as pushing its employees to reach high targets for new account openings.

Reputational damage can result in lost customers and sales, financial penalties, and hiring challenges. Even unsubstantiated allegations can destroy a company’s public image and its business. Reputation management has thus become a vital part of running a company.

A company's image is susceptible to many kinds of damage with varying results. Some issues are quickly remedied with the proper public response. Other forms of reputational damage are more severe and can result in lost customers. These can leave your company struggling for some time.

Sources of Reputational Risk

Deloitte reported that the top reputational risks include those related to ethics and integrity, such as fraud and bribery. Next are security risks, including data breaches such as retailer credit card database hacks. Product safety, health, and environmental risk comprise a third bucket.

Third-party relationships are also growing in importance. Companies are being held accountable for the actions of their suppliers and vendors. This includes concerns about international labor practices for products manufactured abroad.

An article by technology consultancy Mitratech Holdings submits: “There’s a strong case to be made that employee actions represent the biggest risk to a company’s reputation.” This includes everything from a CEO accused of sexual misconduct to an employee’s gripes about their boss posted on Facebook. Even minor decisions can mar a company’s reputation when it involves integrity.

Reputational Risk Examples offers six primary types of reputational risks:

  1. Accounting errors. These issues can be devastating for publicly-held companies. Not only do they cause a company's credibility to suffer, but they can affect the organization’s ability to raise capital.

  2. Poor quality control. Consumers generally understand random quality defects and even the occasional product recall. However, the company needs to make things right with its customers when these situations arise. Otherwise, your company will be known for making poor-quality products.

  3. Poor customer service. The customer service team is on the firing line, and they can make or break a customer’s perceptions of the company. Most people who contact customer service have a problem or concern. It's up to the customer service team to diffuse the anger and solve the customer's problem.

    Unfortunately, people are more inclined to tell others about negative experiences with a company rather than positive ones. Your customer service team needs to be level-headed and diplomatic in problem-solving. They should aim to make the customer feel good about the interaction.

  4. Internet reviews. ca notes that unhappy customers are 2-3 times more likely to leave a review about the company than happy customers. So, most internet reviews harm your reputation rather than bolster it. Address, don’t ignore, the negative posts, and attempt to resolve the causes of customer dissatisfaction.

  5. Social media posting. Social media posts by company representatives addressing societal and cultural issues have often backfired. It’s best to keep official posts focused on your products and services. Be selective about word choice and avoid trying to inject humor.

  6. Smear articles. Companies may be smeared in the media through no fault of their own. Instead, media outlets may attempt to drive their own “clicks” and readership by publishing something untrue. Libel can harm your reputation even when it’s unsubstantiated. However, if the article is true, you should acknowledge the situation and address the allegations.

The Role of Social Media

The Bud Light example demonstrates how rapidly a brand's image and sales can deteriorate if a consumer posts something negative and it goes viral. Employees’ use of social media has also been a cause of reputational damage. CrossFit and Estee Lauder are among companies whose leaders stepped down over racially insensitive comments posted on their personal social media accounts.

Employees must remember that their social media posts also reflect on their organization. Even a rank-and-file employee looking to vent about their boss should keep it offline. Even better, they should deal with the issue directly with their supervisor.

The Significance of Employee Pride

All employees benefit from their company’s reputation. When your organization portrays a positive public image, clients will be loyal and recommend you. Vendors and suppliers are more likely to cooperate with you. Potential team members want to work for you. When your reputation is boosted, everyone wins.

Employees must consider themselves brand ambassadors both at work and in their communities. The CEO or top leaders don't stand for the company—every single team member is a brand ambassador. They represent the company with clients, prospects, vendors, colleagues, or the general public.

People’s impressions of an organization reflect the aggregate of all their experiences. If they see one of its representatives doing something admirable or offensive, they’ll remember it. It could make the difference between gaining or losing a client.

Employees who wear clothing with their company's name or logo need to be particularly aware. If bystanders observe an altercation with another shopper in an after-work grocery store run, they will remember that logoed shirt. That might give them a negative impression of the company.

When employees are proud of where they work, they are more inclined to be cautious in what they say about their work outside the company. They understand that innocent gripes can be taken out of context and go viral on social media.

It Comes Down to Trust

Mitratech Holdings explains how reputational issues can quickly spin out of control and go viral.

Brand reputation is inherently about trust. Trust that a company is protecting the best interests of its employees and customers and is operating ethically, honorably, and competently. When people feel that trust has been betrayed, they take the “betrayer” – in their eyes, the company – to task, even if it’s an unfair rush to judgment.”

When employees trust their employer, they treasure that relationship. In turn, they will protect the organization’s reputation at all costs.


A company culture in which employees trust their leadership and one another is built on ten critical behaviors:

  1. Honor commitments. Doing what you say you're going to do when you say you will do it.

  2. Listen to understand. Listening in a way that is more than simply “not speaking.”  Giving others your undivided attention. Being present and engaged.

  3. Assume positive intent. Setting aside your judgments and preconceived notions. Giving people the benefit of the doubt.

  4. Embrace diverse perspectives. Encouraging all employees to contribute, regardless of their age, background, experience, or tenure with the company.

  5. Speak straight. Speaking honestly and directly in a way to move things forward.

  6. Invest in relationships. Getting to know your coworkers, vendors, and customers. We’re more inclined to trust people we know.

  7. Act with integrity. Always doing the right thing, regardless of who’s watching.

  8. Show meaningful appreciation. Acknowledging people doing things well instead of just pointing out when they do things wrong.

  9. Share information. Considering “who else needs to know this?”

  10. Practice blameless problem-solving. Focusing on the “what” went wrong, not “who” messed up. Keeping the focus on finding solutions so the same problem doesn’t recur.

A culture in which employees routinely exhibit these behaviors creates trust. And when employees trust their leadership to do the right thing for them, they, in turn, become more like owners of the business, protecting its reputation and resources.