Workplace Expectations Increase Reputation Risk: Lessons Learned From Disney


 

Recent allegations by family heiress Abigail Disney of poor working conditions and inadequate wages at Disney have not only grabbed national headlines but also added to the ongoing debate around fair worker compensation. 
 

Ms. Disney, who isn’t involved in the company, is taking the brand to task after talking to park workers in Anaheim, California’s Disneyland. They claim they aren’t making a living wage, according to The Washington Post.
 

The company quickly dismissed the accusations, pointing out the $19.50/hr average pay for its employees (which is indeed much higher than the California and national minimum wage levels, but falls short of meeting living wage thresholds set by MIT’s living wage calculator, as well as a variety of educational, childcare, and health benefits. 
 

How are the accusations and the company’s response likely to resonate with the general public and their existing perceptions of its workplace conditions? If they get enough bad publicity, how will negative perceptions about employer performance likely impact the company’s reputation and support? And can other companies learn from Disney’s workplace woes to avoid hits to their own reputations?

Let’s take a closer look at The Walt Disney Company to understand just how important perceived workplace conditions are to a company’s reputation.

How Reputable is The Disney Company in the eyes of the U.S. informed general public?

Reputation Institute has been measuring Disney’s reputation since 2006. According to our data and insights, the iconic American company has consistently received either strong or excellent reputation ratings. As of early 2019, Disney was ranked #15 in our annual ranking of the most reputable companies in the U.S., and is seen as one of the most caring corporations, from a perceived personality perspective. 

How important are perceived workplace conditions to the reputation of a company like Disney?

Our RepTrak system allows us to determine the importance that each of the seven drivers of reputation, including workplace performance, has in driving the emotional connection (i.e. reputation) stakeholders have with a company. The higher the percentage associated with each driver, the more important it is in enhancing reputation, relative to the other business areas

 

The figure on the left shows that the three most important drivers of reputation for companies like Disney are Products/Services, followed by Governance (i.e. fair, ethical and transparent actions) and then Citizenship (societal and environmental impact). While Workplace (equal opportunity, fair pay and concern for employee health and well-being) doesn’t appear at the very top, it's as important as business areas like Leadership, Innovation, or Financial Performance

 

 

The fact that the Workplace driver usually carries a relatively lower weight, no matter the industry, doesn’t mean that workplace-related issues aren’t as important in building reputation. The fact is, employee well-being goes above and beyond immediate perceptions of Workplace performance
 

It also plays into Citizenship credentials, especially the expectation that companies make communities and society a better place. In short, companies are wise to continue to pay attention to all drivers of reputation, including Workplace and Citizenship, to build and retain their reputation.

How well is Disney meeting expectations on workplace and community support?

When you look at how the informed general public judges Disney on key attributes related to Citizenship and Workplace in the U.S. (as of the second quarter of 2019), you see a mixed picture. 


 

While the company is deemed to have a strong performance on making a positive impact on society and offering equal opportunities as an employer, it is perceived as only average in caring about its employees and rewarding them fairly — two areas that have been singled out by Abigail Disney. Moving forward, we would expect our data to reflect the general public’s sufficient exposure to her narrative.

How significant of a reputation impact could negative Workplace publicity/allegations have on corporate reputation?

Recent insights on reputation risk impacts give us some indication regarding how detrimental poor workplace conditions and income inequality can be. The table below shows the predicted reputation impacts based on a variety of hypothetical risk scenarios.

Risk

Reputation Score Impact

1. Unequal pay by gender

-17.2

2. Deceptive sales practices/open illegitimate accounts

-17.2

3. Unequal opportunities for employees due to race, gender etc.

-16.2

4. Inappropriate behavior by management/sexual harassment

-15.8

5. Fires/punishes an internal whistleblower 

-15.7

6. No transparent disclosure of customer fees 

-15.5

7. Employee steals money from a customer account

-14.6

8. Products/services disadvantaging lower-income/minority customers

-13.5

9. Employee(s) steal(s) customer information for personal gain

-13.3

10. Promotes discriminatory business practices (ethnicity, gender etc.)

-12.7

11. No active support of employee minimum wage

-12.5

12. Security breach leads to stolen personal data/financial information

-11.3

13. Targeted promo offers based on customer banking activity

-10.3

14. Bank’s data security compromised due to retailer hack

-9.4

15. Bank does not take public stand on human interest or social issue

-8.7

16. No customer access to funds for 24 hours due to system failure

-8.1

17. CEO and senior leaders receive large bonuses

-8.0

18. Has companies who promote/manufacture firearms as clients

-7.0

19. Celebrity endorser involved in wrong-doing

-4.2


 

As you can see, two of the top three most detrimental risks are related to discriminatory workplace practices, issues that were not brought up by Abigail Disney, and ones that the company has favorable perceptions around. A lack of support for the minimum wage as well as pay discrepancies between the C-suite and other employees also have negative reputation impacts, though to a lesser degree — and are closest in nature to issues highlighted by Abigail Disney. 
 

From this particular view of the data, from a risk perspective, Disney seems to have avoided the most reputationally damaging, workplace-related risks, but may not be left totally unscathed based on the insights shown above.

Lessons Learned from Disney

As activism around corporate behavior increases, targeting companies’ records on corporate responsibility, even reputable companies like Disney are facing new expectations when it comes to societal and environmental contributions, ethical and fair behavior and workplace conditions. What are some of the lessons learned from Disney's experience?
 

First, since public perceptions about companies' workplace performance is one of the drivers of reputation, companies need to understand just how important it is in their industry and where their perceived strengths and weaknesses are. 
 

That understanding will allow companies to leverage existing favorable views and address the more negative perceptions of the company.
 

Second, companies have an opportunity to both educate stakeholders about their employment practices and change perceptions around their Workplace performance. For Disney, 20% of all respondents are not sure about workplace conditions at the company and 37% give them an average or poor rating
 

Unethical workplace behavior is one of the most detrimental risks for companies' reputations. By building workplace credentials proactively and prioritizing a rewarding working environment, companies can both avoid and reduce reputational risk. They can also leverage their workplace performance to build goodwill and trust among the general public and turn employees into active ambassadors.

Learn more about how Ri helps companies measure and manage their workplace to improve talent acquisition and retention with Employer RepTrak.

 

Sven research riSven Klingemann, PhD

Research Director
Reputation Institute
sklingemann@reputationinstitute.com

 
 
 
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