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When it Comes to Reputation Management, Actions Speak Louder Than Words

5 min read
September 2, 2016


National Football League (NFL) Hall of Fame Member and Former Buffalo Bills Head Coach Marv Levy famously said, “What you do should speak so loudly that no one will hear what you say.”

When it comes to reputation management, Marv was right; actions typically speak louder than words.

Two well-known and once highly respected companies – Volkswagen and Chipotle Mexican Grill – continue to suffer the consequences of their actions, and the negative impact recent crises have had on their respective brands and corporate reputation.

Interestingly, a third organization – the NFL – has suffered a series of black eyes in the court of public opinion the past few years, but hasn’t experienced the same negative impact on its popularity.

Until last year, Volkswagen enjoyed a favorable reputation and a core group of extremely loyal customers. The VW brand was seen as reliable, fun and environmentally friendly.

In late 2015, the auto manufacturer was caught purposely manipulating software in order to avoid strict emissions control requirements on 11 million cars in the U.S. and Europe. According to a USA Today report, VW’s attempt to clean up this mess will cost the company a staggering $18 billion, not including the loss of future sales and significant brand damage caused by the negative press coverage.

A Gallup poll found:
• 75 percent of those surveyed were familiar with the news
• 69 percent said it resulted in a major or moderate negative impact on the company’s reputation
• 41 percent said they would be less likely to purchase a Volkswagen as a result

Volkswagen now has the worst reputation among the 100 most viable companies in the U.S. according to the 2016 Harris Poll’s annual Reputation Quotient summary report. Company sales are also down by nearly 10 percent even as the auto industry enjoys record sales.

Things aren’t much better for Chipotle, which was forced to deal with criminal charges last year resulting from several recalls related to foodborne illnesses that sickened hundreds, closed stores and sent the company’s stock tumbling.

To help deal with the situation they closed every store earlier this year for a thorough cleaning and held a food-safety meeting for all employees at more than 1,900 locations nationwide.

Over the past several months they have launched a new marketing campaign, introduced a customer rewards program, and offered coupons for free burritos and introduced half-price drink specials in select markets.

The company continues to struggle, however.
The National Labor Relations Board ruled in August the company’s social-media policy, which prohibits employees from disparaging the company publicly online, violated federal labor law.

The NLRB ordered Chipotle to get rid of the policy, as well as terminate a number of other policies, including one that restricts employees from circulating petitions for better working conditions, and another that prohibits employees from discussing politics and religion. Chipotle was ordered to post signs at its restaurants noting the policies were illegal.

In addition, a jury recently awarded a Chipotle employee more than $500,000 based on her claim she was harassed and ultimately fired because she was pregnant – in violation of anti-discrimination laws.

And the company is now said to be facing legal action from a Boston-based restaurant chain that claims Chipotle stole the name of its new “Tasty Made” burger from them.

In July Chipotle announced revenue decreased nearly 20 percent the first six months of 2016 and restaurant sales were down nearly 26 percent.

There has been plenty of negative news the past few years for the NFL – including player-related domestic violence, replacement referees and botched calls, the concussion cover up, and of course Deflategate – involving Buffalo’s archenemy Tom Brady, quarterback of the evil empire, the New England Patriots.

Despite it all, NFL sponsorships grew last year, reportedly up 7.8 percent to $1.2 billion and the league’s female fan base continues to grow (somewhat surprising given the numerous domestic abuse storylines). The NFL remains the world’s richest sports league, raking in more than $12 billion in revenue per year.

What can companies to do earn a positive corporate reputation and what are the benefits to doing so? I will discuss that in my next blog.

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