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The Cost of a Bad Reputation

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Corporate Responsibility (CR) Magazine, in conjunction with Alexander Mann Solutions, announced the findings of the publication’s annual corporate reputation survey, which found that when making decisions about their future employment, the majority of Americans (71 percent) want to work for a company whose CEO is actively involved in corporate responsibility and/or environmental issues.

CR Magazine commissioned a poll of over 1,000 employed and unemployed Americans to gain insights into how corporate responsibility, reputation and transparency can impact job decisions.

“The results of this year’s survey demonstrate the influence a positive reputation can have on both CEOs and the companies they represent. In fact, we’ve found that there is direct connection between responsible behavior, employee acquisition and engagement, and corporate financial sustainability,” said Elliot Clark, CEO of Corporate Responsibility Magazine. “Our focus is to highlight the negative costs of bad business practices and the great benefits attributed to companies that employ ethical business practices. Corporate social responsibility has the power influence entire organizations: from corporate culture to the supply chain.”

“This research demonstrates that the vast majority of people want to work for organizations that live up to the same high standards they set for themselves,” said Adam Shay, Global Head of Employer Brand Management Services at Alexander Mann Solutions. “What’s more, it shows that a bad reputation has the potential to cost companies real money in terms of higher recruiting costs, increased difficulties in sourcing and on-boarding new hires, and the higher salaries needed to attract candidates.”

Working for Companies with Bad Corporate Reputations

About 76 percent of Americans would not take a job with a company that had a bad reputation, even if unemployed. This is a 5 percent increase from 2013. According to respondents, the bad behaviors most harmful to a company’s culture and reputation include public exposure of criminal acts (36 percent); failure to recall defective products (31 percent); public disclosure of workplace discrimination (19 percent); and public disclosure of environmental scandal (14 percent).

Of the employed Americans surveyed, only 70 percent would take a job with a company that had a bad reputation if they were offered more money. That number has increased by 3 percent year-over-year and 7 percent since 2012. Of that group, 48 percent would need a pay increase of 50 percent or more to consider moving to a company with an unfavorable reputation.

Year-over-year findings also indicate that certain demographics affect Americans’ decisions to move to a company with a bad corporate reputation. According to this year’s findings, more affluent individuals with a household income in excess of $100,000 are more likely to take jobs at companies with bad reputations (77 percent) than individuals with a household income of $35,000 to $50,000 (64 percent). Women were more sensitive to corporate reputation than men with 37 percent saying they would turn down an offer from a company with a bad reputation versus 24 percent for men. Surprisingly, young people in the 18 to 34 year age range were less likely to decline an offer from a company with a bad reputation (21 percent) versus older workers in the 45 to 64 year old range at 44 percent. This is the third year older workers were more sensitive to company reputation than younger workers.

Working for Companies with Good Corporate Reputations

In contrast, the vast majority, 93 percent, would consider leaving their current jobs if offered another role with a company that had an excellent corporate reputation. Similar to both 2013 and 2012 findings, most individuals would require a salary increase of 52 percent less to consider working for a company with an good reputation than a bad one.

Methodology

This report presents the findings of a telephone survey conducted among two national probability samples, which, when combined, consists of 1,014 adults, 509 men and 505 women, 18 years of age and older, living in the continental United States. Interviewing for this CARAVAN Survey was completed on August 21-24, 2014. 614 interviews were conducted from the landline sample and 400 interviews from the cell phone sample.

SOURCE CR Magazine

Download the report: The Cost of a Bad Reputation: The impacts of corporate reputation on talent acquisition (Registration required).