Reputation, of course, has always been a complex stew of brand, product, service, and employee and customer experience. But its evolution from secondary to primary consideration dovetails with a perfect storm of factors over the last 15 years, among them the financial crisis, the rise of social media, and the coming of age of a new generation of workers and consumers.
The financial crisis, for instance, sowed the seeds of mistrust among millennials and Gen Z. That mistrust arose in tandem with social media, which put power literally in people’s hands. Social media’s combination of immediacy and amplification empowered people to question what organizations were saying and doing in a way they’ve never before experienced. Jon Banner, executive vice president of global communications with PepsiCo and president of the PepsiCo Foundation, says social media upended the idea that a set of influencers—i.e., the CEO, financial analysts, academics, and the media—determined a company’s reputation. While those groups still have enormous value, Banner says the sphere of people who can impact a company’s reputation for better or worse has dramatically increased. “Anybody can influence reputation if they want to, and the stronger their reputations, the more their comments take on greater meaning,” says Banner.
These social and technological changes emerged just as the biggest demographic shift since the baby boom was hitting. The result: people who both want and expect to work for and patronize companies that not only give back but also don’t cause harm. It’s a shift that even WMACs are struggling to some degree to figure out. Korn Ferry’s research shows that WMACs report difficulty connecting with what the youngest generation of employees wants and needs.
Nowhere are these dynamics more evident than in the emergence of employee activism. In 2019, employees staged protests over their own companies’ diversity and inclusion practices, pay policies, environmental sustainability, and business partners. Moreover, a clear line can be traced from these events to the Business Roundtable’s statement last year, signed by nearly 200 CEOs from companies such as Amazon, PepsiCo, Walmart, and General Motors, that social responsibility is just as important as shareholder value.
“When it comes to reputation, if you aren’t connecting what you do with what is needed in the broader society, you are mortgaging your future success,” says Evangelisti.