Reputation Gurus

A lot has been written in both MSM and online about Delta Air Lines’ emergence from bankruptcy, and the company has earned a new-found respect from industry insiders for using bankruptcy protection to completely overhaul its operations. I saw one comment about Delta being the “one who did bankruptcy right,” compared to its competitors and others who have sought Chapter 11 protection in the US.

The company has also gotten a lot of kudos for how it treated its employees during the time that it was in Chapter 11, as well as what it has done for employees as it emerged from protection at the end of April. Delta’s CEO Jerry Grinstein made a noble announcement that he would forego any additional compensation or bonus that he earned by navigating the company through this arduous restructuring. Instead, he has asked Delta to give that money to financially strapped employees as well as to a scholarship fund for Delta employees’ children.

As someone who worked with Delta just as they were going into Chapter 11 protection, I know that the company did everything right when it came to employee communications — before, during and now after the bankruptcy. They provided complete transparency with everything that was happening, including when they asked employees for paycuts and furloughs. They had a robust intranet for disseminating information, and they even held regular town-hall meetings to allow employees to vent their frustrations and fears. After they emerged from bankruptcy, the company announced modest raises for everyone — a true sign that they appreciate what their employees did during rougher times.

Delta is on its path to recovery, and hopefully has a loyal employee base to rely upon as it tries to grow internationally — it needs its employees now more than ever. Any company wishing to engender positive employee relations would be smart to talk with Delta’s employee communications team.

The FT ran an interesting short piece this morning (June 19, 2007) about how brands that were once tarnished have been able to turn around their image in consumers’ eyes. It states that Nestle, which was once subject to boycotts for developing world marketing activities, topped some national rankings when a research group asked consumers in five countries to name their most ethical brands.

As someone who grew up in a household that boycotted Nestle, I find this fascinating. In my mind, Nestle will always be linked to poor baby formula … but they’ve been able to resurrect their image by being much more progressive with their marketing practices.

This reinforces my conclusion that most companies’ corporate images can benefit from a progressive stance on an issue important to them — be it the environment, “living wages”, supply chain diversity, etc. The key is to have the first mover advantage — to be the first in their industry to take a leadership position on an issue that’s important to the company, its employees and its consumers/customers.

Old Rule: Corporate reputation is defined by external stakeholders.

New Rule: The most important element of corporate reputation comes from within the company. While it’s important to understand how the company is viewed externally, reputations are built or lost by internal stakeholders. It’s the internal stakeholders who need to live and breathe the company’s values – and to make decisions on a daily basis using those values as the guide. One company I admire in this area is Darden Restaurants, which makes daily decisions based on its core values. Whenever in doubt, Darden uses its values as a filter to help make the right decision for the company.