Home » Business » Analysis & Opinion » All you have is your reputation. So why are some companies so keen to trash theirs?

All you have is your reputation. So why are some companies so keen to trash theirs?

by admin
0 comment 4 views

Former Woolworths CEO Bran Banducci walked out of an ABC interview about price gouging, one of many issues that has stained the reputation of the supermarket this year.

"What's the new guy like?"

Earlier this year, I was asked this question by about 10 people: friends, contacts and people I've run into.

"Who?" I'd respond.

Each time, I'd be wondering how this person would have inside knowledge of movements in our small-but-mighty ABC business unit, a crew so compact we fit on the same Teams screen every morning and brace ourselves when school holidays take one or two people out of the roster.

"The new guy! The chair, Kim Williams."

Oh — the penny drops.

That guy.

All you have is your reputation. So why are some companies so keen to trash theirs?

Former News Limited CEO, AFL commissioner and chair of the Sydney Opera House Trust (amongst many other high-pressure roles in business and the arts) Kim Williams was announced as the new chair of the ABC earlier this year. ( ABC News: Matt Roberts )

The ABC has more than 4,300 staff.

I live in a different state to the head office.

I've never met Mr Williams*.

But the way that power, impact and reputation are projected means a change of leader, scandals and visible choices resonate far beyond the source.

Don't believe me?

Talk to someone from Rio Tinto, Qantas, PwC, Coles or Woolworths.

Pain for PwC lingers

The supermarkets are in the firing line, and we'll get to them.

But first take, as an example, the past two years of embattled consulting firm PwC Australia.

PwC review doesn't stop conflicts of interest

Photo shows Side by side photos of business logos for accounting firms Deloitte, PwC, KPMG and EY

All you have is your reputation. So why are some companies so keen to trash theirs?

Former Telstra chief Ziggy Switkowski has unveiled a review of PwC, but it's unlikely this is the end of an intense probe of its business and the way other consulting firms manage conflicts of interest.

They've deserved the scrutiny (and got it), after it became public that senior partner Peter-John Collins allegedly misused confidential Treasury information designed to help multinationals avoid paying tax.

A larger group of staff then sold the scheme to big global customers, made millions in fees and gloated about it in internal emails, like this one.

"We were … heavily helped by accuracy of the intelligence that Peter Collins was able to supply us…"

When the tax scandal went public, the issue exploded.

PwC's CEO was sacked, senior leaders were removed and criminal investigations were launched.

A government keen to curtail the billions it spent with consulting firms spied an opportunity — the chance to trim a rapacious vine that had grown to cover the run-down facade of the public service.

Other firms largely kept their heads down, as you would if your name was KPMG and you'd been busted for widespread cheating in an internal exam about ethical behaviour.

(You can't make this stuff up.)

The global management of PwC sensed the potential for contagion. After booting out senior leaders, it cut the firm in half and sold off the 1,500-employee-strong part that dealt with government contracts worth many hundreds of millions of dollars in profit for $1.

Yes, $1.

But the pain lingers.

The overwhelming majority of PwC Australia's then-10,000 staff didn't work in tax, didn't know about the inappropriate disclosures and would read the online updates with mouths agape as new revelations came out.

Those people suffered through being attached to a stained brand name, tarnished by people they'd have never met.

And it's not over — by a long shot.

Bad reputations stick

That's because reputations stick.

Take the fact that Jetstar flights always arrive late, which some believe is due to the budget airline being stingy and having a fleet too stretched to meet commitments.

It's untrue.

All you have is your reputation. So why are some companies so keen to trash theirs?

Despite its reputation, Jetstar is on-time about the same amount as Qantas and Virgin. (ABC News: Keana Naughton)

The latest annual figures from the federal government's department of transport show Jetstar flights arrived on time 65.5 per cent of the time, only fractionally less than Virgin (66.2 per cent) and barely below that of its much better-resourced cousin Qantas (68.3 per cent).

Actually, the most reliable airlines in the nation are Cape York-based Skytrans, with 73.8 per cent on-time arrivals and recently semi-deceased Rex (73.6 per cent).

A recent Roy Morgan study found distrust of organisations and sectors has increased significantly since the beginning of the pandemic. The survey found a key driver of distrust was being too motivated by profit, commercial interests and greed.

Asked directly, 54 per cent of Australians said they distrusted corporate Australia more than they used to.

Despite that, it's worth remembering that good reputations stick, too.

Swedish car brand Volvo is synonymous with safety due to the early development of now-standard features like seatbelts and airbags — and advertising heavily on these facts.

Other car companies have safe cars too, some with more advanced safety features, but Volvo's deservedly good reputation continues.

The flame of negative public perception

Staff at PwC Australia looking for a new job in the past few years would be cursing their luck right now.

This is particularly because they're in a partnership model.

Are boards doing enough to stamp out bad behaviour?

Photo shows Richard White rings bell at the Australian Stock Exchange in Sydney.

All you have is your reputation. So why are some companies so keen to trash theirs?

WiseTech is not the only publicly-listed company to face allegations of bad behaviour. What's the role of boards?

Consulting firms are a bit like a multi-level marketing scheme — but for people with double-degrees (instead of physical items like cosmetics or plastic containers).

If you leave, you can lose the years you've put in trying to attain a higher, more profitable status up the pyramid.

Other large companies have put their staff in a similar spot: like when Rio Tinto blew up Juukan Gorge, destroying a culturally significant site that dated back 46,000 years, so it could get more iron ore.

Or when Qantas, having illegally sacked thousands of staff and had its legal bottom kicked all the way to the High Court, blamed customers for delays while it was busy losing bags and cancelling flights, made it near-impossible for people to use credits from COVID-cut flights and paid $120 million to settle a regulator's legal action about selling tickets on "ghost flights" it had already cancelled.

Other organisations have also felt the flame of negative public perception. Take Optus. Medibank.The CFMEU.

And in the latter half of this year, our supermarket duopoly: Coles and Woolworths.

How the big banks turned things around

But companies and brands can improve their reputation.

The most recent and rapid turn-around is with our big four banks.

Drenched in scandal, they were dragged into a royal commission five years ago that exposed even more gross and deceitful behaviour.

But they acted quickly at the start of the COVID-19 pandemic, as the then-government dragged its heels and initially ruled out income support payments (later known as JobKeeper).

The banks froze mortgage payments and moved to continue credit, trying to inject stability into the system.

Self-interest? Absolutely.

But their fast, calming actions worked — and paved the way for their reputations to be improved.

By 2021, less than three years after Commissioner Hayne's team was grilling their CEO in a witness box, the Commonwealth Bank was judged Australia's third-strongest brand.

CEOs in the spotlight

You'd think these lessons would have been digested by other large companies.

It's pretty simple.

  • Try to do good
  • When you fail, be honest about it

But Coles and Woolworths either ignored or thought they knew better.

As a cost-of-living crisis focused attention on unavoidable costs, the duopoly kept stumbling into conversations about their dominance.

For farmers, beef prices crashed about 60 per cent but the supermarket shelf price only slid about 8 per cent.

There's a fair argument there about supply chains, stocking and volatility — but most people understandably only see the huge gap.

Then the out-going boss of Woolworths, Brad Banducci, was captured making a goose of himself during an interview with the ABC, having a crack about a regulator and then a short tantrum about whether that crack would be shown on air — thereby ensuring it would.

Meanwhile, Nine Entertainment Group chair Peter Costello — in the middle of a storm of serious allegations about the behaviour of other senior Nine executives — had an altercation with a journalist in an airport that ended with the journalist on the ground.

No matter your take on what caused the impact of two moving objects, what Mr Costello didn't grasp was the gravity of the situation: the broad smirk of a man heading a company filled with journalists captured forever on video as a journalist lay on the ground below him.

In the days that followed, it was revealed by these companies that — in a coincidence unlinked to those recent events — they'd both been set to stand down and had flagged so internally.

These are listed companies subject to strict legal rules about disclosure, and those plans were on the statement issued by Nine and comments from the Woolworths chair to investors, so you have to believe them.

But do you?

ESG should be a core goal

There's a corporate principle called ESG that's been elevated from obscure governance academia to the core of what keeps CEOs up at night.

ESG stands for "environmental, social, and governance"and it is a framework for how companies are doing on each of those measures.

Importantly, it now features in "scorecards" of how executives are paid and what investors look at as they weigh up companies.

In recent years, the priority seems to have lurched, from the dominance of E initially to shortcomings in G and finally to an understanding that without S — a "social licence" to operate — companies aren't going to get very far.

Plenty have woken up that if you've got a bad reputation, you're holding up a "Kick Me" sign to the media, regulators and governments that understand the public's lack of patience with well-paid, profitable organisations that can't deal with obvious problems.

The clever ones have worked out that doing the right thing — and being known for it — is good for business.

Hopefully, in 2025 more big companies will work it out as well.

*(After filing this piece, I ran into Mr Williams near the lifts. He knew my bloody name and charmingly thanked me for my work. So basically everyone who asked me the question at the top of this article was correct to do so, just a little early.)

You may also like

Leave a Comment

About Us

Our website is your guide to the world of Australian finance and business. We deliver up-to-date economic news, market analysis, stock trends, and insights into property, investments, and banking.

Feature Posts

Newsletter

Subscribe my Newsletter for new blog posts, tips & new photos. Let's stay updated!

@2024 – All Right Reserved. ABC Australia – Australian financial and business news.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept No accept

Are you sure want to unlock this post?
Unlock left : 0
Are you sure want to cancel subscription?