The Year's Biggest Corporate Blunders

by Elaine Wong
Tuesday, November 16, 2010

From BP to Google, shabby behavior by companies dominated headlines in 2010.

Corporate reputation is very fragile. What takes years to build can be ruined overnight. Just ask BP, Toyota or Goldman Sachs.

This year some of the nation's biggest companies and corporate brands faced disasters, privacy breaches and product recalls that underscore the fragility of corporate reputation and consumer trust in big companies.

Toyota (NYSE: TM - News) was once known as a company that led the way in listening to customers. It was fanatical about improvement processes and determined to create quality vehicles. "No one in their right mind would have said 'Toyota'" if asked which auto company had been affected by major safety and mechanical issues, says Helio Fred Garcia, founder of crisis management firm Logos Consulting Group and an adjunct professor at New York University.

That, of course, was before the automaker's sticky accelerator pedals and floor mat problems were discovered this year.

Indeed, 2010 was a banner year for corporate blunders. BP's (NYSE: BP - News) oil spill tops our list of disasters. Hewlett-Packard (NYSE: HPQ - News) was awkward in its ousting of CEO Mark Hurd. And Google (Nasdaq: GOOG - News) came off looking pretty shabby when it inadvertently collected user data sent over wi-fi networks.

Not only that, but there were plenty of company and executive gaffes. Steve Jobs' response when Apple's (Nasdaq: AAPL - News) iPhone 4 was found to have antenna problems was to blast the media. That incident is one that demonstrates how simple actions and throwaway statements can turn a ho-hum happening into a reputation-bruising incident.

"What causes reputational harm isn't the severity of the event but the timeliness and the quality of that response," says Garcia.

Social media missteps tripped up some companies. Nestle, seemingly oblivious to the way social media works, tried to get Greenpeace to remove an anti-Nestle image from its Facebook page. And Gap (NYSE: GPS - News) looked wishy-washy when it rolled out a new logo online and then, when consumers complained about it, asked for their feedback before scrapping it in favor of the original look.

[Apple Lets Big News Slip Out Early]

Everyone keeps saying the consumer is in control, but these incidents -- and companies' reactions to them -- show that the power of public opinion is still unrecognized, or often forgotten. "Consumers, bloggers, reporters, plaintiffs' lawyers and government legislators" are among the many "insurgents" who can take a bit of news and run with it, says Eric Dezenhall, CEO of crisis management consultant Dezenhall Resources in Washington, D.C.

Complicating matters is the fact that consumers expect companies to bungle things. Says Dezenhall: "These days it's not enough to manage a crisis; you also have to manage the perception that management is mishandling it."

Dezenhall and Logos Consulting's Garcia were among five experts who helped Forbes identify the year's biggest corporate blunders. Others: Columbia University professor Peter Hirsch; Irv Schenkler, director of New York University's Stern School of Business management communication program; and Ian Mitroff, a crisis management expert and consultant.

©Alex Wong/Getty Images

The British oil giant spent years building its image as an environmentally friendly company. That went up in smoke on April 20, 2010, when an explosion aboard the Deepwater Horizon drilling rig killed 11 workers and released a massive flow of oil into the Gulf of Mexico. At times the company seemed more exasperated by the problem than sorry about it. Then-CEO Tony Hayward resigned after making remarks the public found insensitive, including: "I would like my life back."

©Alex Wong/Getty Images

Toyota

The Japanese automaker has earned a reputation for safety and quality among U.S. consumers, but those credentials took a hit when Toyota became mired earlier this year in a series of recalls involving sticky accelerator pedals and floor mats. In October Toyota also announced it was recalling another 740,000 cars due to unsafe brakes.

Johnson & Johnson

In April the company's McNeil Consumer Healthcare division yanked 136 million over-the-counter liquid children's medicine bottles off the shelves for problems including trace metal elements and too much of an active ingredient in its children's Tylenol. It also came under fire for hiring contractors to pose as consumers to buy back faulty bottles of Motrin. Faced with a government probe and faltering consumer trust, longtime company vet and head of J&J's consumer unit, Colleen Goggins, has announced that she will retire next year.

Goldman Sachs

The investment bank's practice of rewarding employees with hefty bonuses and engaging in a form of reverse trading known as "shorts" -- all to the firm's benefit, at a time when consumers were scrambling to make ends meet -- still dogs this giant. CEO Lloyd Blankfein gave Goldman an even bigger black eye when he described the company in a press interview as "doing God's work."

Hewlett-Packard

Does the board at Hewlett-Packard really know what it's doing these days? First it ousted Mark Hurd, the highly capable CEO credited with turning around this behemoth. Its chief executive had violated "standards of business conduct," HP said, after a former HP contractor brought sexual harassment charges against Hurd. News reports say Hurd was really kicked out for prematurely leaking acquisition plans to the contractor. Its new CEO? Leo Apotheker, who is under fire for the alleged theft of Oracle software on his watch.

Click here to see the full list of The Year's Biggest Corporate Gaffes

http://finance.yahoo.com/career-work/article/111325/biggest-corporate-blunders-of-the-year?mod=career-leadership