Reputation, Goodwill, and Loss: Entering the Employee Training Audit Equation

Abstract

Organizations, like individuals, have reputations that create consequences. Six features of organizational reputations are reviewed. A model for how organizational reputation is created is presented, with special attention to the role of employee training in reputation formation. The effects of organizational reputation on a firm's financial performance are reviewed, particularly in terms of goodwill valuation. Employee training practices are identified as one way by which the risks of damage to organizational reputation can be reduced—or enhanced. Specific illustrations of how training enhanced reputation (Navy Seals, FBI, airport screeners) are noted, followed by examples of six different forms of employee training failures that can create negative reputational effects. Based on this analysis, a dozen assessment questions are listed that should be used in auditing the risks to organizational reputation from employee training.