The 18 Immutable Laws of Corporate Reputation by Ronald J. Alsop

Author:Ronald J. Alsop
Language: eng
Format: epub
Publisher: Pocket Books

ENEMIES WITHIN

Companies that fail to make their employees their reputation champions are taking a big risk. Employees can become their most angry adversaries and erode their reputation.

Disgruntled employees not only let their performance slip, but they also are likely to paint their company as a villain to the outside world. Although they may present a very jaundiced view, employees enjoy a high degree of credibility because they’re insiders and have developed a relationship with consumers.

Avon Products understands well how much clout the Avon Ladies ringing America’s doorbells possess. They mean everything to the cosmetic company’s reputation. They go into women’s homes and are largely responsible for the public’s perception of Avon. Andrea Jung, Avon’s chairman and CEO, knew that she couldn’t afford to alienate them when she decided to move the brand into retail stores. If she didn’t communicate the decision just right, she risked a mutiny by Avon’s 450,000 U.S. door-to-door sales representatives. Clearly, some hand-holding and reassurance were in order.

More than a year before Avon’s entry into J.C. Penney stores, Jung began what she calls a “hypercommunications plan.” She and other top managers met with the top-selling sales representatives and detailed Avon’s plan for a higher-priced cosmetics line at Penney’s that wouldn’t compete directly with what they were peddling directly to women. “Out top sellers have great credibility and backed up the messages we were sending out to the entire sales force,” says Jung. “We made sure our reps were the first to know as we developed our plans. It required honest and constant communication.” Avon also acted quickly to dispel erroneous rumors about the Penney’s plan that surfaced on the Internet.

In the end, the retail venture with Penney’s flopped and was discontinued. But Avon had nevertheless succeeded in testing a new distribution channel without damaging its relationship with its independent sales representatives. In fact, Jung says that internal satisfaction surveys show that morale has reached an all-time high.

Unfortunately, few companies manage to maintain such positive employee relationships. IBM offended many of its employees in a controversy that quickly went public in 1999. The company announced plans to convert workers from a defined-benefit pension program to a cash-balance plan, angering many older workers, who expected to lose out. Employees squawked loudly. How could the company treat its dedicated longtime employees so coldly? After several months of open revolt, IBM backed down a bit and agreed to allow some workers over forty years old to remain in the old plan. But the issue still simmered among some employees, who continued to speak out at IBM’s annual meetings and on Web sites that accused IBM of “pension theft” and “undermining the retirement security of tens of thousands of its most devoted employees.” Eventually, they won their legal case against IBM. A federal judge ruled in 2003 that the company had indeed discriminated against older workers.

Relationships with labor unions require special care. AMR and its American Airlines unit didn’t disclose some executive perks and did serious damage to their relationship with employees in the spring of 2003.

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