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I came across this McKinsey Quarterly today, after reading a piece in on the increased need for reputation management since the recession hit. Indeed, the recession has escalated the public's distrust of corporations, in addition to corporations being more exposed to nitpicking by legislators and regulators alike.
"As governments respond to the financial crisis and its reverberations in the real economy, a company’s reputation has begun to matter more now than it has in decades," McKinsey states. With greater levels of exposure, it's up to companies to manage their reputation in the marketplace and protect their valuable brand, and also to reassure clients that they're in good hands. Ways to do that, the firm says, are by focusing more on stakeholders and issues that matter to them, and by boosting transparency. The firm went on to say that "in today's world, there are dialogues relevant to the long term success of any business taking place on mobiles, Web sites and blogs. You can either opt in, or opt out, but you can't control the message any longer." In short, people are going to talk about you regardless—so you can either jump into the conversation to try to steer their attitudes, or just sit back and hope for the best.
This is an interesting bit of advice from McKinsey, considering its primary tenet is confidentiality—and it goes to great pains to safeguard that. It never publicizes the names of its clients, nor does it tout successful engagements, leading many to cite the "McKinsey mystique," referring to the shroud of secrecy that surrounds the firm and its dealings. The advice is all the more interesting, of course, in light of the latest "scandal" surrounding the firm. I'm referring to the events of last month, when a senior McKinsey employee, Anil Kumar, was arrested by federal authorities for securities fraud and conspiracy, in conjunction with the Galleon/Raj Rajaratnam insider trading scheme. That Kumar was caught leaking information about one of McKinsey's clients shakes the firm's foundations and could lead to questions regarding its overall integrity.
If McKinsey were another firm, it would probably follow McKinsey's advice, as espoused in the McKinsey Quarterly piece. But the fact is, McKinsey is McKinsey, and I don’t' really see it throwing the whole confidentiality thing by the wayside very easily. I doubt we'll start seeing the firm send out press releases about its client engagements, nor will we see a new wave of media contact from company insiders. The firm practically lives and breathes secrecy, and prides itself on that fact. The way I see this all shaking down is that McKinsey will sail along on its good name, assuming that its longstanding reputation of being on top of the heap will carry it along. In the past, this likely would have been enough. But, as we have seen over and over again, what worked in the past doesn't always fly in these unprecedented times. Resting on its laurels may turn out to be a riskier course for McKinsey, but maybe the firm will surprise us all and take a taste of its own medicine.
For our part, we're certainly going to do our best to help McKinsey lift that veil. Forbes reported on Friday that Rupert Murdoch has hired McKinsey to work its magic at the WSJ, in hopes of making the institution more profitable. While the WSJ claims that it's not bringing in consultants to cut costs—"Our emphasis is on building and growing our products," a company spokesman said—if this engagement is anything like the experience at Conde Nast, Dow Jones should be ready for some reshuffling and box-packing.
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