Reputation and recruitment
The reputation of your business is almost certainly having an impact on your most important long term asset, the ability to recruit the best people. Not just entry level graduates, but all through the organisation. This might not generate the same headlines as the short term share price impact, but it's probably having a much greater impact than you think on how the value of your company is perceived. We would argue that working to enhance the reputation of the organisation you work for is one of the top 5 contributions that Sustainability Professionals can make to enhance the value of the business. And by that I don't mean trying to hide things. We mean making sure that you actually do the right thing, preferably first time around. Reputation building should not be just about fighting fires.
The finance world (and many journalists) tend to think about reputational damage in terms of the direct impact on a company's future profits, and hence their share price. One of the first commentaries we saw on the resignation of the BP CEO, following what was described as "a lack of full disclosure" regarding personal relationships with colleagues, talked about how shareholders might react. Was this good news or bad news for the (near term) share price?
But, reputational damage also has more important longer term impacts. As Alison Taylor highlighted in a recent LinkedIn post on the latest scandal to hit McKinsey, "I’m left thinking that one of McKinsey’s biggest strengths has long been its super effective approach at hiring young, idealistic graduates. But this is now becoming its biggest vulnerability".
The McKinsey pitch, that you could have it all - a good paycheck, respect from your peers, and the ability to do good, is starting to look frayed around the edges, if not totally unravelling.
For many businesses their future value is created by what the financial world calls intangible assets. And the most important intangible asset is the people who work for you. So what happens when it gets harder to employ the best. When potential employee's just don't support your 'brand' any more?
We are seeing this in mining, something we highlighted in a recent LinkedIn post. Before you think that this is not your industry, I don't work in Mining, this is likely to be the beginning, not the end of a trend. Reputations are more easily lost now.
We have written previously about the dangers of inadvertent greenwashing which impacts reputation but is also a factor that potential recruits look at. Unfavourably. 👇🏾
Sandy Jayaraj
This article featured in What Caught Our Eye, a weekly email featuring stories we found particularly interesting during the week and why. We also give our lateral thought on each one. What Caught our Eye is available to read in full by members.
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