Can being too successful be bad for your reputation?

By | May 5, 2011

It’s earnings season, and despite the daily headlines about the recessionary economy, the earnings reports haven’t been all bad.  Today, GM reported that it tripled its profits from last year.  Whole Foods reported its best quarter in five years.   Goldman Sachs disappointed the street with quarterly earnings of $2.74 billion.   MasterCard profits are on the rise.  Big oil, same story.

Healthcare,  energy, banking and financial services are trending well – something that their investors expect, and appreciate.  But how successful is too successful?  Particularly when gas and milk are both costing nearly $4 a gallon?  When millions of Americans are uninsured or can’t afford their prescriptions because they’ve lost their jobs and can’t afford private healthcare?  Do companies run the risk of reputational backlash when their success is perceived as being “on the backs” of their employees, their customers or their communities?

This is a tricky equation.  A growing profitable business creates and preserves jobs, provides much needed tax revenue to our communities and fuels growth of our stock markets and our economy.  I think the answer to this question is “it depends.”   When necessities like food, gas, healthcare and heating your home are viewed as “unaffordable” for many Americans, record earnings growth, big bonuses and other symbols of so-called “corporate greed” can create real reputational challenges.  This is where the communications becomes very important…the difference between applause and reputational backlash is all about context.  What will the Company do with those record profits?  Who will benefit (in addition to the shareholders and leaders of the company)?  What new employee programs can be funded?  How many people will be hired?  What investments will you make in the future?

This is why investor relations and financial communications professionals can no longer just think about their messaging and narrative exclusively through the lenses of Wall Street’s response – management’s commentary and company news spreads through the twitter-verse in minutes.  Your financial performance is relevant to consumers, communities, regulators and elected officials.    And it is reflected in both your valuation and your reputation.

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