Right and Wrong, Wall St. Bonuses and Reputation

I have commented before (most recently here and here) about the reputational aspects of social media, recommending that firms should establish, at a high level, a social media monitoring function so that they can be responsive to the “buzz” that surrounds their company.

The news this week from Wall Street is centered on the size of bonuses that will be paid to members of the financial services firms.  Putting aside, for the moment all the arguments that relate to the bonuses, I wonder if the Wall Street firms are aware of the reputational damage that is occurring to them in the digital world?

A quick look at #goldmansachs or #wallstreet bonuses on twitter, or the comments on the Goldman Sachs pages on Facebook illustrate how damaging the issue of the bonuses has become.  One rule of thumb is that for every complaint you hear there are ten that you don’t.  Using this scale suggests that there is a significant populist movement against the bonuses and by extension the firms that are paying them and their management.

If the bankers on Wall Street read and understand the printed and the digital out-pouring, they are faced with two options:

  1. Ignore the public, continue with their plan under the assumption that this is what they have always done, and they need to continue to do it to maintain quality people.  If they choose this path they risk alienating a large, vocal segment, which may come back to bite them later in the form of decreased business, increased taxes, or stricter regulation.
  2. Recognize the reputational damage that they are incurring and make changes (they have done so slightly by announcing that the bonuses will be paid mostly in stock…which may be even more valuable in the long run).  Here the voice of the populace is heard, and the response, while never providing 100% satisfaction, begins to restore the reputations that have been shattered.

Five to ten years ago the print and TV press would be leading and/or interpreting the issue of the Wall Street bonuses.   Today their role has diminished as bloggers, tweeters, and Facebook fans have taken to the digital world to vent their frustration, communicate with others and form communities.  The long lasting aspect of the perception of these communities has yet to be quantified, but as the bankers on Wall Street know banking is built on confidence, and once you have lost it, you are done…see Bear Stearns and Lehman Bros. as prime examples.

The lesson here is to understand the power of the digital environment and to make sure, as the responsible Marketing person, you are plugged into it.   This then allows you to work more effectively with management in constructing your messaging and positioning your firm appropriately.

Have you reviewed what people are saying about you and your products today?

RHM  1/14/2009

1 comment to Right and Wrong, Wall St. Bonuses and Reputation

  • It is never a good idea to ignore the public. This could be one of the worst ways for a company to handle criticism or negative feedback. Yes, people are going to talk both good and bad about you, but you must be ready to talk back. By interacting with those who spoke negatively about you, it shows that you are ready and able to back up your claims and take action to correct it. This can then produce positive buzz that you are responding to customer complaints and making your business operations better.

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