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Beyond simple damage control: Brands involved in the Galleon Group scandal

Posted by: Maryann Stump on May 13, 2011

"Keep your friends close, but your enemies closer," goes the famous line from The Godfather Part II. It's good advice for a mafia don, but not so good for a brand. What happens when high profile employees' friends turn out to be enemies of your brand's reputation? That's the challenge facing blue chip brands Berkshire Hathaway, Goldman Sachs, IBM, Intel, and McKinsey & Company in the wake of Raj Rajaratnam's conviction for insider trading.

The potential damage to the brands is serious for all. The nature of the damage is varied. For IBM and Intel the allegations that employees shared insider information hits directly at shareholders. For the press' favorite whipping boy Goldman Sachs it adds to the perception that the firm's aggressive style leads it to play close to the edge of the rules. McKinsey's business as the quiet, trusted advisor will take a hit if CEOs hesitate to confide in the firm. The damage to Berkshire Hathaway and Warren Buffett could be worst of all if investors wonder why the Oracle of Omaha didn't see this coming.

All five brands need to get out in front of this. Don't talk about generic ethics policies. Show clients, partners, and investors why they can and should believe in you. Trust is a table stake for every brand but when it is damaged, nothing else the brand does matters. It is a lesson these brands—and a host of others—should take to heart.

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