Page 95 - Crisis Communication Practical PR Strategies

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7 76 Crisis Communication

Sell-side analysts are critical third parties in building and sustaining
a company’s brand reputation. They are also as skittish as mares
and as memory-retentive as elephants. When a company makes
them look bad with a downside surprise, it may take a long time to
win back their full trust.
Declining stock may harm the morale of key executive employees,
whose compensation is often linked to some degree to the perform-
ance of company equity.
Finally, as illustrated in Figure 5.1, when a crisis drives down stock it
sets up a negative feedback loop in which the decline is taken as evi-
dence of corporate weakness or even guilt, which in turn further
depresses the stock, and so on.

Crisis

Declining
Stock Price
Declining
Reputation

Figure 5.1 The final crisis feedback loop

Stock price and corporate reputation are inextricably linked. For
public companies, most crises that impact corporate reputation
quickly reverberate in the stock price, which in turn further harms
corporate reputation.