FIR #468: New Threats to Reputation

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While a company’s reputation doesn’t appear as a line item on a profit and loss statement or a balance sheet, it is nevertheless a critical intangible asset that significantly influences financial performance and long-term success. A strong positive reputation fosters trust among consumers and B2B customers, leading to increased customer loyalty, premium pricing power, and greater resilience in times of crisis. It also makes the company more attractive to top talent, reducing recruitment costs and improving employee retention. A favorable reputation can also enhance relationships with investors and partners, providing better access to capital and more advantageous business opportunities.

The public relations profession is in the reputation business. Yet there are new threats to reputations that aren’t yet on most practitioners’ radars — and if they are, they haven’t found their way into plans and strategies. For example, companies that succumbed to political pressure to back away from their DEI commitments have suffered reputational damage, while those that stood by them have seen their reputation scores increase. That may have something to do with general support for DEI, but research found that customers crave consistency from the companies they do business with, and the sudden U-turn away from DEI commitments leadership previously touted was viewed as a failure of integrity.

Add to that the surge of disinformation and job loss AI is already bringing to the business world, and it’s clear we’re facing a new world of reputation management. In this short midweek episode, Neville and Shel look at some recent research and reports to zero in on the newest reputation challenges and how communicators should face them.

Links from this episode:

• Culture wars and scandals drag down corporate reputations
• Companies that kept DEI commitments saw higher reputation scores in 2025
• New York State Updates WARN Notices to Identify Layoffs Tied to AI
• Is AI Damaging Your Professional Image?
• Musk and AI among biggest threats to brand reputation, global survey shows
• The disinformation storm is now hitting companies harder
• M&S is taking reputational damage from cyberattack: research
• The Reputational Risk Index

The next monthly, long-form episode of FIR will drop on Monday, June 23.

We host a Communicators Zoom Chat most Thursdays at 1 p.m. ET. To obtain the credentials needed to participate, contact Shel or Neville directly, request them in our Facebook group, or email [email protected].

Special thanks to Jay Moonah for the opening and closing music.

You can find the stories from which Shel’s FIR content is selected at Shel’s Link Blog. Shel has started a metaverse-focused Flipboard magazine. You can catch up with both co-hosts on Neville’s blog and Shel’s blog.

Disclaimer: The opinions expressed in this podcast are Shel’s and Neville’s and do not reflect the views of their employers and/or clients.

Raw Transcript:

@nevillehobson (00:02)
Hello everyone and welcome to for immediate release. This is episode 468. I’m Neville Hobson.

Shel Holtz (00:08)
And I’m Shel Holtz. We talk a lot on this show about brand and reputation, how to build it, how to protect it, how to recover when things go sideways. Reputation matters. A lot of brands make knee-jerk decisions based on short-term objectives, only to suffer reputationally as a result. Reputation isn’t fluff, it isn’t vanity. A good reputation builds resilience. It buys you the benefit of a doubt, ⁓ a bank of goodwill for when things go wrong.

It attracts talent, it boosts your stock price, it shapes policy outcomes and partnership opportunities. And increasingly, it reflects how well your organization aligns with societal values, not just what you say, but what you do. Lately, the rules for reputational risk have been changing. Traditional threats are still around, scandals, product failures, bad leadership decisions. But now we’re seeing new ones emerge, many of them tied to technology and politics in ways that communicators may not be fully pro-

prepared for, but can’t afford to ignore. Let’s start with the latest Axios-Harris poll on corporate reputation, because the shakeups there are dramatic. Tesla, which once topped the list of most admired companies, has fallen all the way to 60th. Boeing, with its safety mishaps and culture issues, and now the crash of an Air India 787 Dreamliner, well, Boeing sits near the bottom of the list. And what’s especially interesting here

is how much of this decline has to do with cultural alignment or misalignment with public sentiment. Axios points to companies being dragged into culture wars, and it’s not hard to see why. The Trump administration’s ongoing pushback against DEI efforts is having a reputational ripple effect. Companies that backtracked on their DEI commitments or tried to stay neutral are paying a price. Patagonia, Microsoft, and Costco, on the other hand, have increased their reputation scores

precisely because they stayed the course on equity and inclusion. They didn’t cave and the public noticed. This tells us something we probably already knew. Authenticity matters. People don’t expect companies to fix every problem, but they do expect them to be consistent and to have a spine when it counts. In 2025, wishy washy doesn’t cut it, especially with younger generations.

Now, let’s add technology to the mix because it’s getting harder and harder to talk about reputation without AI finding its way into the conversation. Case in point, New York State just updated its Warn Act notices. These are the documents companies have to file when they plan a mass layoff. Now, if you’re laying people off because of AI, you have to say so. It becomes public information. So not only do you risk headlines like, Company X replaces workers with AI,

You’re also potentially triggering employee backlash, customer concern, and stakeholder scrutiny. All of that’s in the reputation column. Think about that for a minute. Laying off people because of a merger or a downturn is one thing, but layoffs tied directly to AI? That’s a reputational landmine. And I’d argue it’s a signal to communicators to get involved early. Make sure there’s a story ready to be told, one that frames the decision in terms of responsibility

future readiness and long-term growth, not just cost cutting. Lay the groundwork with your stakeholders on your company’s strategic approach to AI so nobody’s surprised when hiring takes a dip or layoffs are announced. And AI’s impact isn’t just organizational, it’s personal. A piece out of Duke University’s Fuqua School of Business explores how your AI tools at work could actually hurt your professional image.

If your coworkers or managers see you using AI to generate ideas or speed up tasks, they might assume you’re less competent or less committed, even if the output is amazing. We’ve been telling people to embrace AI, to use it to be more efficient. But if the perception is that you’re cheating or cutting corners, then your individual reputation could take a hit, even if your actual work improves. Now this creates a tension.

Organizations want employees to be innovative and tech savvy, but our workplace culture hasn’t caught up. Consequently, we need to help employees not just use these tools, but frame how they use them. Communicators can play a key role here in educating both employees and leaders, especially managers, about responsible AI use looks like and why it’s not a threat to human value. The threats to reputation are evolving.

culture wars, political pressure, layoff transparency, AI ethics, it is not the same game that it was a decade ago. And if communicators don’t help organizations see it, prepare for it, and respond to it, we’re going to be stuck playing defense. So be proactive, let’s help our organizations walk the talk, and let’s remind leaders that in 2025, reputation isn’t just a brand asset, it’s a survival strategy.

@nevillehobson (05:16)
summary there, Shell. I mean, there’s so many statistics to pay attention to, to get a sense of what’s going on. I asked the question to myself, is reputational damage on the rise? And I’m kind of guided by some things have been happening recently here in the UK, which I’ll mention later. The short answer, yes. And you’ve explained it, reputational risk is increasingly volatile and high stakes. So ⁓ we’ve got a Canadian survey, and I don’t have the name of the

survey company right to hand. That was done in February. Nearly one in three companies reported reputational harm in the past year. They’re citing inflation, geopolitical uncertainty and strikes as triggers. The Exos-Harris poll you mentioned, that’s kind of interesting. found some other statistics to add to what you said. That poll shows 46 % of companies experienced lowered reputation scores and that’s up from 37 % the year before.

consumers under pressure and rising costs and price quality concerns are the main reason for that. What’s driving it overall? That’s a huge answer for that could take us hours to get through everything. It’s so wide ranging economic stress, digital age, disinformation, you touched on that cultural, political polarization, ethical failing, cybersecurity. I’ve got something to say about that in a bit. But the interesting thing too is that ⁓ the ⁓

The Reputational Risk Index Q1 2025 report that just came out has a really interesting list of the top reputational risks. And what struck me was how three new ones are at the top of this list and the rest of the top 10, the seven, they’ve been around for years. But these risks are fast moving and they’ve replaced what was there before. Those top three won’t surprise you.

Number one is AI misuse, harmful or deceptive use of AI, including deepfakes, misinformation, biased decision making or unethical applications that cause harm or manipulate public perception. Number two, this kind of made me, my goodness, association with Elon Musk, instances where an individual company or entity is associated with, targeted by or publicly criticized by Elon Musk.

So it kind of rubs off on you that kind of social like he insults you on X for instance, or does something that brings your name into association with him. That’s not good at all. So that’s number two, that’s the interesting thing. Number three, this.

Shel Holtz (07:54)
And that one is interesting because it’s kind

of damned if you do and damned if you don’t, right? Whether you’re on his good side or his bad side is just the connection to him.

@nevillehobson (07:58)
You got it. You got it.

No.

Yeah, exactly. So he’s now departed the White House apparently and has gone back to look after his business interests. Does that mean this will change? Unlikely, I would say. But the third one doesn’t surprise me. ⁓ DEI backtracking. The rollback of regulations, policies or initiatives designed to promote diversity, equity and inclusion, which aim to ensure fair treatment of full participation for all individuals. If you backtrack on that after you said this is what you’ve implemented.

that will hit your reputation. And that’s your damned if you do or damned if you don’t, I think in light of what the US government is trying to do. So those three are the top reputation risks. The others, anti-competitiveness, defamation, breach of contract, copyright infringement, whistleblowing, price fixing, opioids crisis have been around for a while. But that illustrates, I think that kind of complements ⁓ what we’ve said so far in this. And it’s really quite interesting.

I think this I mean, there’s so much that we could talk about on this show. It’s it’s kind of hard to, you know, keep a keeper, keep it focused on on what we need to say. But I think you mentioned communicators. And that’s my focus to what is the role of communicators of this. And, you know, there’s four things that struck me what can companies do and the communicators working for those companies defend against disinformation, ⁓ rapid monitoring of online discourse.

lead with ethics and transparency in your business. ⁓ No longer optional, some of these things, including DEI, and that’s going to be difficult for some organizations, I suspect. Value-based pricing and quality, as inflation bites companies seen as fair in pricing and product, remain trusted. Crisis preparedness, from digital AI enabled threats to executive misconduct, layered crisis and reputation defense plans are vital.

And I’ve seen people talking about that in the last week, actually, that kind of layered approach to it all. I mean, there’s lots more we could talk about there, but there’s so much happening that can be damaging. And the one that I do want to mention, which I’ll do in a minute, is ⁓ an event that happened here in the UK that I wrote about. I’ve talked about it quite a bit online, as many others have. It’s a global story, even though it’s a British company, Marks & Spencer, the big retailer.

that was hit by a cyber attack in April and it’s still ongoing. ⁓ We’ll talk about that in a bit if you’d like, but they are looking at a cost estimated by experts about 300 million pounds as the cost for not paying the ransom to the hackers. But the consequences have been severe. Interesting though is what was the reputational damage? And there is no single answer to that. So I’ll talk about it a bit, but…

All that stuff about the top three and anything surprising there to you about the fact that these are the new ones that are the big deals for people now?

Shel Holtz (10:58)
Well, I have to admit that I was surprised to see association with Elon Musk so high on the list. That is such a tremendous reputational risk that it’s number two. How many people, how many companies in the grand scheme of things are at risk of association with Elon Musk? So I found that interesting. But other than that, no. And, you know, the whole

@nevillehobson (11:04)
You

Shel Holtz (11:25)
discussion around disinformation, think is one that we, that’s a drum beat we need to keep up because I don’t think most organizations have even started looking at the methods they will use to identify it ⁓ when it strikes them. So this is one, think it’s going to become a bigger problem really fast. And I think a lot of companies are going to get hurt before we start to see, for example,

consulting organizations with disinformation practices. Have you heard of one yet? A PR agency or a marketing agency with a disinformation practice or a disinformation center of excellence? I haven’t. So.

@nevillehobson (12:06)
No,

I haven’t. haven’t. But that’s an interesting one, because I think it’s quite complicated for organizations to realize, partly because I think some of the things that you hear about, and there’s a really good story I’m to mention in a minute that was in the Financial Times the other day, that talked about, as the headline called, the disinformation storm is now hitting companies harder. And much of it is

appears to be kind of opportunistic by bad actors to quote that euphemism of people who do things and say things and take actions that can damage you with surprising velocity that come out at you that completely unexpected and in disinformation largely untrue yet the stories out there. Good example, we see FT quotes, a company called Aalef Foods, Danish company.

the UK’s biggest dairy cooperative. have tankers going around all the farms collecting the milk to make butter and so forth and so on. They learned this the hard way after recently announcing a trial of a feed additive aiming to reduce methane emissions in dairy cows. Some customers pushed to boycott milk products. A social media storm ensued featuring unfounded and bizarre claims that the additive was part of a plot to depopulate the world by creating fertility issues. ⁓

That’s in line with, you know, 5G is a conspiracy of Bill Gates to and, you know, all that stuff went on and it sticks with something like he still see reference to this. This is all the foods, though, is illustrative of that type of fast moving event. And social media plays a huge role in this is is is not can be is very damaging. And they suffered damage as a result of this. There’s other examples I mentioned, too. And it includes a survey by Edelman, they say.

of 400 top communications and marketing execs found that 1810 worry about the impact of disinformation on the businesses. So 80 % fewer than half feel prepared to tackle those risks. What we just talked about.

Shel Holtz (14:10)
Mm-hmm. And I suspect that some of those who feel prepared actually aren’t.

@nevillehobson (14:16)
Yeah, exactly. So let’s talk, let’s talk a bit about impacts then on all of these things. And I can use the Marks and Spencer example, because it is very illustrative. Yeah, it’s very illust… No, it’s very illustrative.

Shel Holtz (14:17)
So, yeah.

I was actually hoping you would because here’s something that wasn’t, other than not

having a robust ⁓ defense in place to prevent the hack in the first place, this is something that was done to them.

@nevillehobson (14:38)
Well,

yeah, this is at the heart of it because it was a cyber attack that began towards the end of April and severely disrupted their operations to the extent that everything you could do before as a customer with online purchasing, the so-called click and collect, looking up your orders, seeing something in stock, reserving it or that was gone. You couldn’t do any of that. Worse, I suppose, for those folks who don’t do online, they go to the stores, you couldn’t use

contactless payment at all. The machines are all offline because of the risks and there were horror stories emerging of ⁓ people, know, pen and paper to write down orders and take stock from one warehouse to another in their own cars so they could keep stock levels going stuff like that. No deliveries. They were halted. Some stores went cash only wouldn’t take anything you could manually do your cars, but they wouldn’t.

The loyalty apps, 18 million members was not working. Recruitment systems and internal logistics were severely impacted by this. Staff, as I mentioned, staff reported manual workarounds like checking freezer temperatures due to IT shutdowns. I the systems were all shut down. So the hacking group behind it, apparently called Scattered Spider, is known for using social engineering and targeting major corporations with ransomware.

I’ve not seen anything new on this since it was first mentioned about three weeks ago, but the speculation is that they got access to Marks and Spencer systems through a supplier, through an employee they tricked into getting them to log in and that then gave them access to all this. Here you’re not allowed to pay ransoms for things like this is illegal, so they didn’t, but they were quite robust in not doing yes, we’ll weather this storm. That is a pretty

bold move and attracted serious criticism. I wrote a post not long ago that was very critical of Marks and Spencer and their communication with customers. Now knowing what I do know from the latest developments, I don’t really feel that I would change that. I might tone it down a bit because they did communicate, which I didn’t disagree with. I just said it wasn’t very effective. They were following a plan they didn’t communicate to anyone. So how would you know even what was happening?

Here’s a reputational impact they have suffered already. It’s actually interesting, in one sense is nowhere near as bad as many people were speculating. There’s a damn good reason for that. But let me just run down the list of some of these things here. So the reputational impact, according to research from the Maru consumer research firms, big, big in the UK here, and obviously, Marks & Spencer is a big client, brand advocacy dropped. So those who would recommend Marks & Spencer

fell from 87 % to 73 % during this period. Trust erosion. Those who would definitely give Marks & Spencer the benefit of the doubt in future issues dropped from 39 % to 32%. Shopping decisions were affected. Between 25 % and 32 % of consumers said they’d shop elsewhere due to the disruption. But broader trust remained more stable. Overall trust, so people saying they’d either definitely or probably trust Marks & Spencer,

dipped only slightly from 84 % to 82%. That’s quite telling. what that means is that that trust, people are still willing to kind of lend them that trust in spite of all of this. So experts analyzing all this, including Maru itself, talking about the incident shows that even long established trusted brands are vulnerable to cyber attacks. That’s the number one takeaway, they say.

Shel Holtz (18:27)
Well, yes.

@nevillehobson (18:28)
They also say Marks & Spencer has significant reputational credit in the bank, but must act decisively and communicate clearly to recover the trust they have lost. And I see lots of people giving them unsolicited advice on that on social networks, which I think is not helpful at all. They’re not stupid. mean, they know this. Don’t need people doing that kind of thing. Give them something new. But I think the implications that

Maru concludes in their reporting is that this particular attack underscores cyber risk as a growing reputational threat, especially when it disrupts core services and affects logic schemes, as this one did in a way that you honestly couldn’t imagine. They were offline for six whole weeks. You couldn’t do anything at all. And my wife, Laura, for instance, buy stuff from Marks & Spencer online. She went somewhere else to get a blouse she was interested in. Not the same.

So does that mean she’s now tempted by this other firm? I hope not, because it was even more expensive than Marks & Spencer. So go back to Marks Spencer. But you know, the point is that even loyal customers may waver when trust is tested by operational failure. And that was a thing that the communication, I remember getting the customer emails and the messages pop-ups in the app, we’re all about we’re on it. We’re on it. We’re sorting it. Don’t worry back soon. I mean, that was a kind of soft messaging that, in my opinion,

waste of time that doesn’t help you at all. Although, is that really true, given the metrics that Maru has come up with in terms of the overall brand trust? Maybe they’re banking on that, they’ll weather this through until the £300 million hit is showing on their account books, and they put in place ways to deal with customers. One suggestion I saw a lot, which I thought would make sense is they need to offer something to customers as a kind of a

recompense, if you will, as a gift of some kind, and don’t try and, you know, layer it all with marketing talk or any kind of thing, just a selfless gift as a way of saying, thank you for your support and your trust or whatever it might be. I don’t know what that would look like via the loyalty program wouldn’t be a bad idea. Some of the stuff they do with that loyalty program is called sparks are pretty lame, must admit, you know, free donuts in the food stall, if you spend two pounds, that kind of thing, do something bit more meaningful. So that might help.

Shel Holtz (20:53)
Yeah, socks, underwear,

you know.

@nevillehobson (20:55)
the stuff that Marks and Spencer are renowned for, I tell you. yeah, so transparent crisis communication, swift action can mitigate long term damages, they’re concluding, ⁓ employer, I suppose. I mean, these make total sense to me. They seem that way to you.

Shel Holtz (20:58)
That’s exactly right.

Well, they make sense. mean, this was a crisis communication. And if ever there’s an opportunity to take a reputational hit, it’s during a crisis. And they did not behave like a company in crisis. They showed little empathy for the customer telling you we’re on it ⁓ doesn’t make me feel better about whatever it is that I’m dealing with as a result of this, whatever it is I plan to do that I can’t do whatever.

inconvenience or difficulty it creates for me. ⁓ I don’t want to be one of those people giving Marks and Spencer advice, but I would have ⁓ flooded the zone with empathy for one thing. And I would have turned the spotlight on frontline employees who were dealing with this every day. So you could see, more than just we’re working on it, to seeing somebody actually working on it, somebody dealing with taking cash and saying,

We’re trying to serve as many customers as we can as all this gets sorted out. But I would have really tried to shape the reputation through content marketing as this was going on, rather than just popping up messages saying, we’re still working on it.

@nevillehobson (22:28)
Yeah, I mean, that is interesting what you say about employees and my experience, which could be throughout the whole chain, but it was certainly in one store that I visit near where I live. I went in there to buy something because I couldn’t do it online. So I went in there and I talked to one of the employees at the cash point where you pay and said, how are things going with all this and what I was left with. She was very reassuring and all that.

It seemed to me highly scripted. It’s like they’d had a presentation, she’d memorize the top three things to say with a smile. Now, I don’t want to imply that it’s fakery, not at all. Was that enough, though? I don’t know. It didn’t really sit well with me, I must admit. But then again, I may not be the best kind of typical customer for that point of view. They were doing something in that regard, but none of it seemed like it was a plan almost. It seemed to me anyway, just looking at what I saw in communication, what I saw being reported.

the press what I saw about the CEO interviewed saying he and his team are working night and day constantly 724 to fix all this that to me did not sound right

Shel Holtz (23:37)
Yeah, next

thing you’re going to expect is the CEO to say he just wants to go home. ⁓ Like like Hayward during the BP golf spill. ⁓ Yeah, I guess the bottom line for all of this, though, is I’m as we’re talking and I’m seeing all the threads pulled together is whether it’s a crisis as Marks and Spencer experienced that was a cyber crime or

@nevillehobson (23:42)
Yeah.

Right, exactly.

Shel Holtz (24:05)
a behavior like all of those companies that clawed back their DEI plans because Washington made it clear that it was going to make life hard for them if they didn’t. The companies that are suffering are the ones that are not standing by their values. And I think ultimately that’s what it comes down to, along with developing new plans and new workflows and new thinking.

around how to deal with this, because certainly with AI and the ability to create fakery that is hard to detect, we’re gonna need to have those new plans. But I think if organizations are consistently true to their values and show that they have a spine when those values are challenged, they stand to do pretty well reputationally. Those that don’t, don’t. And that’ll be a 30.

@nevillehobson (24:59)
Exactly.

Shel Holtz (25:00)
for this episode of Four Immediate Release.

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