The Power of Goodwill in Business

The Power of Goodwill in Business

  posted on   |    written by Tara Mulvany


There have been a number of occasions when I've had to defend the value of 'goodwill' in business. Goodwill is often seen as business 'doing good for good sake' and not having any real commercial value. It's true that 'goodwill' can't often be measured in the short term. It's not something that can be counted in terms of positive press cuttings and it doesn't appear on the bottom line. 

It's value is often only realised in accounting terms when one company is being acquired by another for a premium value. In this case, goodwill represents the value of a company’s brand name, solid customer base, good customer relations, good employee relations and any patents or proprietary technology it owns. But because it’s an intangible asset, it’s not easy to place a value on it in the normal course of business.

More often than not, Ryanair is used as the perfect example of how a company can operate successfully without worrying about who they rub up the wrong way or what people think of them. People continue to want to travel from A to B at the most affordable price and, up until recently, Ryanair has delivered on that promise. Personally speaking, Michael O'Leary can say or do whatever he wants and Ryanair will still be my first port of call when I'm looking to book my next trip for a family of four.  

But consumers are not the only audience that Ryanair or any business needs to consider. Sometimes, the most powerful audiences are the ones within your own organisation and your own industry circles. Canceling hundreds of flights on the consumer is one thing, but ticking off the pilots who transport them safely from A to B in an industry where pilots are scarce is quite another. Then there's the not insignificant matter of incurring the wrath of the UK aviation regulator. These two audiences alone have the power to ground Ryanair's business to a halt. And It's exactly at these moments, when the chips are down, that 'goodwill' is needed. 

Goodwill can also be called positive stakeholder or influencer engagement or reputation management and a host of other lofty titles. But it's basically a 'trust' that has been built on values and past behaviours and it’s intrinsic to brand equity.

Above all, having goodwill within your own industry means that when things go wrong you will, at the very least, be given a fair and unbiased hearing. And that's a valuable asset to any business. 

ENDS

@WalshPRireland


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