How important is reputation when it comes to your bottom line? You know that when your company image is damaged, you may struggle against competitors that are seen in a better light.
Customers who research companies and products are generally going to choose to patronize the brands that are viewed in a positive light by other consumers, their employees, and the general public.
However, loss of sales is just the beginning. When you have a bad reputation, there’s a good chance that it will cost you plenty of money on many fronts. Here are five reasons this happens.
- Hiring Costs Go Up
The painful truth is that nobody wants to work for a company that has a damaged reputation. Think about it from the perspective of a job candidate. When they are recruited by a company that has had a recent PR crisis or is simply viewed as having practices that aren’t very admirable, they have to consider:
- That the company’s values may not align with their own
- How their employment might be viewed by future employers
- How they might be treated by an employer with a negative reputation
- Whether the company will survive their current reputation crisis
Also, don’t dismiss the fact that people want to be proud of their employers. If you have a bad reputation, you will have to build employer branding and recruiting strategies to help you overcome these concerns.
You’ll spend quite a bit of money on hiring efforts when you have to convince people that they should give your organization a chance. This work will lead to significant cost-per-hire increases. You may even have to increase your salary and benefits to attract employees.
- Retention Rates Go Down
Unfortunately, when your company’s reputation has been damaged, you can assume that your best employees are looking for new opportunities. There’s simply too much risk involved for many people to stick around. So any increased hiring costs are now multiplied.
Also, the employees who stick around may not be your brightest, most engaged team members. You have to consider that they may not be sticking around due to loyalty but because of their inability to find something better.
This “brain drain” can lead to more issues such as lack of productivity or poor customer service, which may have impacted your reputation in the first place. Additionally, poor employee retention increases your training and onboarding costs.
- Reputable Recruiters May Back Away
If you use third-party recruiters to meet your staffing needs, a poor reputation can be very problematic. A good recruiter essentially serves two groups. They must consistently deliver top talent to the companies that contract with them. At the same time, they have to consider their own reputation among job seekers.
No recruiter wants to be known for sending candidates to companies that are unstable or that have a reputation for treating workers poorly. Even if you can make the argument that your reputation isn’t deserved, many recruiters will find it easier to step away from their business relationship with you.
When recruiters walk away, that leaves you relying on your internal resources to attract the right talent. If you aren’t prepared for that, you will struggle to build the team you need. You’ll also have to invest more money in recruitment marketing.
- Social Media Management Becomes a Nightmare
An incident that damages your reputation can quickly snowball. While people are slow to spread the good news, they are often very quick to use any tools they have to vent their frustrations.
Today, social media provides everybody with a platform to share their experiences and opinions. You’ll quickly discover that even your social media presence creates a place for people to call out your brand about the issues that have caused your reputation to sink in the first place.
Of course, you can’t ignore these things. You have to engage with people who come after your brand on social media. It’s also imperative that you approach this with diplomacy, courtesy, and a focus on customer service.
This focus means that you can’t leave the job of social media management to just anybody. If you do, you can be relatively certain they’ll make a bad situation worse, even if they do so inadvertently.
Instead, you’ll have to shell out additional money for someone who specializes in social media engagement during a crisis. They’ll know how to respond to disgruntled workers and customers and how to create a social media strategy to help repair your reputation. That’s just one more cost associated with having a bad reputation.
- PR Costs Increase
In the absolute worst cases, you may have to do more than invest in a bit of social media cleanup. Instead, you will need to find a PR professional who specializes in crisis response.
These folks don’t come cheap, but they have the experience and skills to help organizations confront and overcome issues that might otherwise be absolutely devastating.
What Can You Do About It?
Your reputation has taken a hit. Now, you want to manage things so that you redeem yourself and minimize the costs you incur. These tips should help:
- Be proactive: Know what your workers and the general public think of your brand
- Invest in consumer and employer branding efforts now
- Build a solid employee value proposition
- Create and promote a positive company culture to balance any negative news about your company
- Hire a strong team in the first place
Finally, create a plan of action. It’s important to know how you will respond to a reputation crisis before one occurs.
