How bad is a bad reputation?

When researchers at Corporate Responsibility Magazine asked 1,014 people in North America about the impact of a company’s reputation on their willingness to accept a job offer, they learned that reputation costs.

Survey highlights include:

  • Even if unemployed, 76 percent of people say they’d be unlikely to accept a job offer from a company with a bad reputation.
  • Of those who would accept the offer, 48 percent would require at least a 50 percent increase in pay.
  • Women are less likely than men to leave a current job to work for an employer with a bad reputation, and they require more of an increase when they do.
  • Those with household incomes above $75,000 are more likely to accept a job from a company with a bad reputation.
  • The youngest workers are least concerned about a company’s reputation—82 percent of Millennials are willing to take a job with a reputationally damaged company.
  • Older workers are less likely to accept an offer from a company with a bad reputation.
  • 72 percent of workers believe it’s important to work with a company whose CEO is involved in corporate responsibility.

The other side of the coin…

Ninety-three percent (93%) of those currently employed would leave their current job to work for a company with a good reputation.

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While most respondents would require a bump in pay to leave their current job, they’d be tempted with a much lower bump (33 percent) if the offer came from a company with a good reputation.

Bad behavior defined

So exactly what kind of behavior drives a bad reputation?

When asked, “Which ONE of the following types of bad behavior is MOST harmful to a company’s culture and reputation? Respondents said:

  1. Public exposure of criminal acts (36 percent)
  2. Failure to recall defective products (31 percent)
  3. Public disclosure of workplace discrimination (19 percent)
  4. Public disclosure of environmental scandal (14 percent)

CR Magazine points out that the wage cost differential (i.e., the difference between what a company with a bad reputation has to pay to attract workers and what a company with a good reputation has to pay) “can be disastrous to a company’s bottom line.”

More bad reputation fallout

But that’s not all. According to the Reputation Institute, “companies with high reputations are worth as much as 150% more than those with low reputations.” This article and this article support that claim.

Also, it stands to reason that if a company with a bad reputation has to work harder to attract new employees it also has to work harder to retain them. Says CR Magazine:

“For those organizations suffering from a damaged reputation, understand the impacts of specific talent pools—the cost of acquisition/retention issues—and develop plans to mitigate loss of high performers to competitors with strong reputations.”

According to PayScale’s 2015 Compensation Best Practices Report,retention and attraction are top concerns for most employers. To meet those concerns, employers are planning merit increases, development and training opportunities, and higher initial pay. Perhaps reputation management should become a part of the list?

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