Inside Safety (Australia) EP5: The cost of reputation

·27 min·2 clips

Shane Allison's research shows employee class actions cause a 25% share price drop, proving those who know you best do the most damage.

The episode begins with host Steve introducing Shane Allison, CEO and founder of Phronesis, a crisis management consultancy. Allison explains that workplace crises now encompass a broader range of issues beyond physical incidents, including executive misconduct and product safety. He distinguishes between no-notice crises and building crises, which are predictable but often ignored due to discomfort. Allison discusses his research analyzing over 100,000 ASX announcements to identify 179 reputation incidents among ASX 200 companies from 2020 to 2024. The research categorizes incidents into six groups: executive misconduct, litigation, regulatory enforcement, criminal action, product failure, and governance failures. Allison uses share price movement as an objective measure to quantify reputation costs, finding that incidents related to character, such as employee class actions, are more damaging than those related to capability. Employee class actions lead to a 25% decline in share price, while executive misconduct results in a 21% loss over about 45 days. The conversation shifts to governance, with Allison noting that accountability for reputation is often unclear in organizations. He compares reputation management to safety risk processes, advocating for systems to identify and eliminate risks. Allison emphasizes that reputation issues are foreseeable and preventable through preparation, such as stakeholder mapping. He also highlights emerging risks like cyber sabotage, urging organizations to prepare communication plans for worst-case scenarios. The episode concludes with take-home points on setting clear accountability, preparing in advance, and planning for black swan events.

As heard by us

A measured look at how employee experience can become market-facing reputation risk.

Reputation comes through here as a workplace, safety, and market risk, not just a communications problem. Shane Allison, CEO and founder of Sydney-based issues and crisis management consultancy Phronesis, gives the conversation a steady frame by linking the firm's name to…

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You want to know how workplace treatment can become a reputation problem for people outside the organization to judge.

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