ChangeMakers Reputation Index Reveals the Impact of Change Events on Corporate Reputation
Washington, DC, January 28, 2025 —The inaugural ChangeMakers Reputation Index highlights the powerful connection between change events and corporate reputation, uncovering the significant positive and negative impacts of how change is managed. The annual analysis examines 25 companies experiencing five types of change events, both planned and unplanned, and finds that immediacy – both of communication and strategy when a pivot is required – plays a critical role in shaping long-term reputational outcomes. Companies that handle change effectively often bolster their reputation, while those that falter under pressure risk substantial harm.
“In today’s environment, the highest value driver for any organization or individual is reputation,” says Mario Simon, CEO of ChangeMakers. “Preparing for, responding to, recovering from, and even harnessing significant change events is a top priority for any company. This exciting research clearly demonstrates how reputational impacts can and should be managed. Poorly communicated or delayed responses to change events can leave significant value on the table and, in extreme cases, be financially devastating. We have cracked the quantifiable code to manage that for our clients and achieve the best outcomes.”
Importantly, the study revealed that planned business changes—such as seemingly innocuous events such as brand changes and leadership transitions—can have reputational risks as significant as those stemming from unexpected crises.
Key Findings:
- Merger & Acquisition Transactions: While mergers and acquisitions often deliver a short-term boost to a company’s reputation, this positive impact tends to fade quickly among stakeholders not directly involved or affected.
- Brand Change: Contrary to expectations, brand changes frequently lead to both immediate and long-term damage to reputation. This is often a result of missteps in communication strategy, undermining the intended positive outcomes.
- Financial Change: Financial changes produce mixed reputational effects, with positive or negative impacts typically short-lived. However, significant mismanagement can exacerbate negative perceptions. Notably, the absence of proactive, targeted communication with key audiences often results in muted or underwhelming reputational outcomes, even when changes are objectively positive.
- Leadership Transition: The reputational effects of leadership transitions hinge significantly on whether the departure is planned or unplanned. How the transition is communicated and managed plays a critical role in shaping public perception.
- Public Crisis: The reputational impact of a public crisis is highly contingent on preparation and the company’s ability to respond swiftly and effectively. Organizations that demonstrate readiness and transparency are better positioned to mitigate both immediate and long-term damage.
The ChangeMakers Reputation Index establishes the new industry benchmark for measuring how companies navigate change events and underscores the importance of proactive reputation management. It is powered by the proprietary ChangeMakers Reputation Score©, which uses a wide range of sources to determine a numeric measurement of reputation in near real-time.
To explore the full findings and gain actionable insights from the study, download the report at https://thechangemakers.com/us/reputation-index-2024/.
About ChangeMakers:
ChangeMakers is a 400+ person independent reputation management, social impact and marketing firm with offices throughout North America. ChangeMakers combines deep business specialization with human-centered strategies, working alongside our clients to strengthen their reputation and succeed in a disruptive world.
About ChangeMakers Reputation Index:
It is the most extensive review of impact to corporate and organizational reputation before, during, and after significant change events. Depending on the circumstance, reputation-altering events can be planned, unexpected, or both. This is the inaugural release of this important research driven by the ChangeMakers Reputation Score©, a unique and proprietary tool that measures brand’s reputation in real-time—mainly when the stakes are high. It analyzes data sources beyond the digital and social media space to include the most important factors to corporate executives and boards. Organizations are chosen based on our independent analysis of publicly available sources, such as industry rankings, financial reporting and market intelligence, while also seeking sector diversity.
Media Contact:
Caroline DeSilva /Senior Vice President, ChangeMakers
caroline.desilva@thechangemakers.com
Reputation Index 2024
For 2024, we assess the reputation impact on 25 major brands across five high-profile change trigger events, both planned and unexpected.
- M&A Transaction (Planned)
- Brand Change (Planned)
- Financial Change (Planned/Unexpected)
- Leadership Transition (Planned/Unexpected)
- Public Crisis (Unexpected)
Using the technology of our proprietary Reputation Score we analyze how organizations navigate these moments of change – before, during, and after events unfold.
Highlights of the index include:
- A major global fashion retailer’s impressive recovery after a public crisis event.
- Why two similar brand changes produce strikingly different outcomes.
- Surprising misalignment between financial shifts and brand reputations.
- The critical role of proactive communication during leadership transitions.
- Lingering power of legacy in M&A transactions.
Dive into ChangeMakers’ Reputation Index 2024 to uncover how major events impact brand reputation and learn what it takes to protect your biggest corporate asset. Your reputation.
In this age of disruption, change is the only constant. It is critical in this complex, competitive environment, for brands, businesses, and executives to know exactly where they stand.
Navigate your corporate reputation in real-time.
ChangeMakers Reputation Score© technology assesses your organization, analyzes how competitors compare, predicts reputational risks in advance, and creates opportunities for future growth.
Let’s get R.E.A.L. lessons from Peloton
Let’s get REAL is a series where ChangeMakers provides quick and actionable insights for protecting your reputation in a rapidly-evolving risk landscape.
We’ll begin by evaluating a reputational RISK for businesses, exemplified through a news EVENT. Then we will provide an ANALYSIS of the reputational impact, citing findings from ChangeMakers Data Intelligence team and close with LESSONS (together, R.E.A.L.) that leaders and organizations should consider.
The pandemic caused a boom in at-home services – from streaming to food delivery to exercise equipment. Peloton, the machine and the company, may be the best exemplification of this phenomenon. It’s meteoric rise and fall has captivated our team which continually looks to it as a case study in self-inflicted wounds and reputational harm.
RISK
It should go without saying that consumer and public safety must be the top priority for companies, especially when safety is threatened. When the unimaginable happens, companies need to react and do so quickly, expressing genuine sympathy and regret, and putting safety above all else.
Companies who fail to apologize, who refuse to own it and fix it as an integral part of their strategies risk losing trust, reputation and in the end, market share.
Let’s look at how Peloton’s failure to do just that has impacted their ability to fully recover years after the recall of their treadmill.
Event
After a pandemic boom when many of us hopped online to order exercise equipment, including a few of our team members, reports were emerging of injuries related to the Peloton treadmill. This culminated in March 2021, with the tragic death of a young child.
On April 17, the Consumer Protection Safety Commission (CPSC), issued a safety warning and advised consumers to stop using the treadmill, sharing a disturbing video of a child being trapped under the belt. Peloton’s reaction was swift and aggressive, calling the warning ‘inaccurate and misleading’. There was no humility, self-reflection or nuance.
So, unsurprisingly, the outrage and the pressure continued. Finally, on May 5, Peloton announced the recall of 125,000 treadmills along with an apology from CEO John Foley, admitting not only the risk of the product, but also their “mistake in our initial response to the Consumer Protection Safety Commission’s request that we recall the Tread+”.
This continued Peloton’s painful 2021 which included a June security breach involving user information and the death of beloved TV character Big on HBO’s Sex in the City reboot.
Analysis
In the span of a few weeks, Peloton’s decisions completely altered the course of their brand’s reputation for years. From March to May, the volume of media coverage increased. Following their recall announcement, they saw an average of 1.3k daily mainstream hits, 85% higher than the 700 daily hit average they had in the first three months of the year. Needless to say, the coverage was overwhelmingly negative.
In the 18 months after the initial recall notice, mainstream and social media continued to trend high, souring the digital environment for this cult-like brand. Conversation has been consistently negative, and the brand has struggled to get back to their values and ethos of combining health+ wellness with community.
The impact has had a huge financial impact, with Peloton shares plummeting and never recovering.
Lessons
- Own it up front and put safety first. Peloton came out swinging, but ultimately looked extremely defensive. They then had to do a public about-face with an apology from the CEO and a recall – and let almost two months elapse in between. By failing to address some of the key concerns of consumers and aspects of the recall in the earliest days, the company prolonged its problems and caused potentially irreparable reputational damage.
- Don’t lash out at the regulators. Peloton came out looking heartless in response to the death of a child and the CPSC’s warnings. They were subsequently fined $19 Million for failing to report the hazard, reinforcing the impression that the CPSC was the body taking care of consumers and Peloton was the bad guy.
- Stay true to your brand values. The response was a complete contradiction against Peloton’s brand – community focused and wellness-oriented. The contrast between the company’s values and how the recall was handled compounded reputational damage.
- Turning the tide gets harder over time. Peloton is now faced with a digital environment, largely driven by direct consumers, that has been mostly negative for a prolonged period of time. Even years later, righting that ship to reactive brand champions and advocates is still difficult.
- The pile-on-factor can hurt your brand. Peloton was not ready for the next wave of negative events, putting itself in a deficit position for the other incidents it faced including the data breach and SITC, both of which would have been manageable issues if it were not for their response to the treadmill recall.
- Stay Humble Peloton was on such a meteoric rise due to their market-leading product that they fell into the trap of thinking they were the only game in town. Peloton faced these issues as newer, cheaper competitors were coming online, giving consumers choice yet they were still acting like they were the only option for interactive, live streamed fitness programs. Just as we’re seeing Netflix struggle with the same attitude, brands who feel impervious to losing equity will soon come face-to-face with the hard truth.
Are you ready for the next crisis?
In our rapidly shaping and shifting world, there is nothing more important than strong leadership. An organization can get along without it in a status quo environment – but the moment crisis rears its head, leaders are needed. Leaders who project strength, communicate clearly and show empathy.
There’s one thing we can be sure of in volatile times: it’s not a question of “if” the next crisis will come, it’s “when”. So, building competency in crisis communications should be a priority for every company and every leader.
Understanding crisis communications management
Crisis was once a term reserved for headline-grabbing events such as oil spills, plane crashes, large corporate scandals or major economic volatility. But in today’s deeply interconnected world, information is available to many different audiences, each with their own priorities. This means something that was previously a minor issue – only of interest to people inside or close to a company – can now be disseminated worldwide in an instant, finding that audience to whom it matters most. A small slipup can impact a company’s reputation and do lasting damage, sometimes more than a major event. Accounting mistakes, social justice issues, supply chain disruptions, privacy and cybersecurity, geopolitical events and workplace dynamics are just a few issues leaders need to navigate today. And they must navigate very quickly and very publicly.
Key elements of crisis communications and management
At ChangeMakers, we focus on five key elements that leaders need in a crisis:
Vision: Communicating a clear and compelling vision for your organization. Your stakeholders – the public, employees, shareholders – need to know your continued purpose and motivation regardless of the circumstances.
Agility: Adapting quickly to ever-changing circumstances and making decisions based on incomplete or uncertain information and communicating well.
Empathy: Showing an understanding of the lived experience and responding to the needs of your employees, customers and other stakeholders. Empathy and compassion should be visible in all communication.
Resilience: Demonstrating you can manage these setbacks and maintain a composed and calm demeanour throughout, while supporting others through transparent and open communication.
Collaboration: Working quickly to use your networks to find solutions to complex situations.
With so much at risk, more should be done to prepare.
A recent poll of executives* who’ve experienced crisis events shows that:
- 38% had not anticipated the risk.
- 24% anticipated the risk but weren’t prepared.
- 64% reported the crisis set their company back financially.
- 35% reported it impacted their ability to retain and recruit talent.
Clearly, more can and should be done to prepare leaders for a crisis – before it hits. Though we can’t know specifics of tomorrow’s crises, we can strengthen our vision, agility, empathy, resilience and collaboration through rigorous and data-informed training.
ChangeMakers Training Academy
The ChangeMakers Training Academy was created to answer this very challenge. We help leaders identify and strengthen the skills needed in crisis… skills that enhance and protect your reputation and maintain and build trust throughout any crisis.
We will help you prepare for any situation through:
- Risk audits
- Rigorous simulations
- Understanding your stakeholders and issues
- Data-driven tools focused on protecting, promoting and evolving your reputation
- Communicating with empathy and transparency
Reputation capital matters more than ever. ChangeMakers Training Academy prepares leaders and their teams to step up when it matters most. Change is always coming – don’t wait for it to tap you on the shoulder. Be prepared to face it with readiness and determination.
*Source: https://senateshj.com/campaigns/crisis/
