Corporate and organizational crises continued to fill the headlines and shred reputations during 2010. The Qantas A380 near-disaster off Singapore tops the list of 10 worst Australian reputational crises during the year, but there were many strong contenders for top spot.
Organisational reputation is hard to build and hard to measure, and some of the organizations on the 2010 list – such as Qantas – demonstrate that even a well-managed public relations response cannot always prevent reputational damage. By contrast the Commonwealth Bank’s inclusion on the list – twice – demonstrates that even in an industry where public reputation is consistently low, deliberate corporate policy can trigger adverse political response and the risk of regulatory intervention.
The Issue Outcomes assessment matrix considers not just adverse public relations impact, but also weighs the broader business and societal impact and recognises that reputation depends on many factors.
The criteria evaluated are
• sustained adverse media attention
• news coverage outside Australia
• impact on share price
• union involvement
• social media profile
• real or pending litigation
• executive resignations
• consumer/sales impact
• government/regulatory intervention
Using this formula the top ten reputation crises in Australia in 2010 were:
1. Qantas – A380 engine failure which nearly resulted in disaster and came after other worrying mechanical failures and alleged maintenance issues
2. Commonwealth Bank – broke ranks on mortgage interest rates and helped trigger government intervention
3. Federal Labour Government – misconceived and mismanaged roof insulation scheme led to multiple deaths, scores of house fires and multimillion dollar remediation costs
4. David Jones – CEO resigned amid allegations of sexual harassment and suggestions of systemic issues
5. National Australia Bank – prolonged computer failure blocked thousands of transactions and cascaded across the financial sector
6. Melbourne Storm – football salary cap cheating damaged the club, the players, the owners and sponsorship
7. Virgin Airways – check-in computer meltdown stranded thousands of passengers
8. Victorian Bushfire Inquiry – in the wake of the 2009 fire disaster, 2010 hearings and findings left organizational and personal reputations irreparably damaged
9. Securency – top officials of the Reserve Bank dragged in to the banknote producer’s foreign bribery scandal
10. Storm Financial –ASIC announces it will sue Commonwealth Bank, Bank of Queensland and Macquarie Group over the Storm Financial investment collapse.
Every such list must be subjective – even when it follows a formula. Your comments and suggestions are welcome here or at my website http://www.issuemanagement.com.au