Roanoke Times, May 6, 2006, Saturday

Roanoke Times
Saturday, May 06, 2006

Difficult road ahead for GM to recapture reputation
http://www.roanoke.com/editorials/letters/wb/63895

Carl H. Tong and Arthur C. Wheaton
Tong is a professor of marketing at Radford University.
Wheaton is an industry education specialist at Cornell University.

Corporate reputation refers to the public's perception of a company or its distinctive characteristics.
Think about Disney or Southwest Airlines, for example.
The Disney name suggests wholesome children's entertainment, and the Southwest Airlines name implies no-frills, convenient flight schedules and low prices.
Corporate reputation resides in the minds of people and results from what they have seen, heard, felt, experienced and learned over time.
Business gets a little easier after a company develops a good reputation.
A company's reputation in the minds of the public can be affected, positively or negatively, by firsthand personal experiences as well as multiple sources of information, including word of mouth, newspaper/magazine articles and TV/radio news.
Highly reputable companies typically offer innovative, high-quality goods/services, serve customers right and well, conduct business ethically and socially responsibly, have first-rate leaders and dedicated employees, provide a good work environment and are financially successful.
Unfortunately, General Motors' reputation is not all that good right now.
Fortune magazine's editor-at-large Carol Loomis reported this past February:"In recent months, both Moody's and Standard & Poor's have made increasingly grim statements, bald in their talk of bankruptcy and laden with doubts that GM can turn around its reeling North American auto operations, now reduced to an embarrassing market share of 26 percent. ... Its product mix in the U.S., heavily weighted toward trucks, pickups, and SUVs, is on the wrong side of gas prices. ... It is inextricably entangled in the bankruptcy of its biggest supplier, Delphi. In that imbroglio, as in countless others, it is up against a formidable and sometimes militant union ... The company is even under investigation by the SEC for accounting sins, as yet unrevealed."
GM lost $10.6 billion last year. GM is currently facing very serious challenges.
To survive and rebound, it must cut costs to pare losses and rebuild its reputation to increase its pricing power and sales revenue.
The company has recently announced plans to trim executive salaries, cut white-collar pension and health-care expenses, reduce the dividend, close 12 facilities and let go 30,000 hourly employees by 2008.
In today's highly competitive marketplace, a good reputation gives a company two distinct advantages.
First, a good reputation leads potential buyers to consider the company's offerings acceptable or attractive.
Second, many customers are willing to pay higher prices for goods and services provided by a reputable company.Presently, GM needs to both attract more auto buyers and get customers to be willing to pay higher prices.
Here are four important things that GM should do in order to rebuild its reputation:
• Analyze the company's situation thoroughly, formulate a workable turnaround plan, and communicate this plan clearly to all the relevant people inside and outside of the company.
• Develop a system to identify all the gaps between the realities and the perceptions of the company, and then take appropriate actions to close such gaps.
• Involve Richard Wagoner Jr., GM's CEO, as the champion of a reputation-rebuilding initiative. He needs to seek support and cooperation from not only employees but also suppliers, dealers, customers, investors, creditors, media and governments.
Business consultant Dov Seidman has pointed out, "Companies do business in an ecosystem. Ultimately you can't have a great reputation unless everyone who comes in contact with you trusts you. And people don't trust you unless they think you do the right thing."
• Track the changes in GM's reputation and act to improve it continuously.

Repairing a damaged reputation is a long-term process. GM needs to begin the process as soon as possible.One of the best ways to restore trust and reputation is to promise only what the company can deliver and deliver all that is promised.
Marty Pichinson, cofounder of Sherwood Partners, puts it this way, "Making a series of promises on which you are certain you can deliver, and then communicating your progress on an ongoing basis, goes a long way toward re-establishing corporate believability."

Source: http://www.roanoke.com/editorials/letters/wb/63895