Interesting Reputation Sidebars

Just a few bullets that caught my eye over the past few weeks on the topic of reputation.

  • In a wickedly well-written and snarky article in The Economist on CEOs living in glass houses (no kidding), especially in this new social world, a few things stood out. First, a mention about research among Wharton researchers that found that the most emailed articles among 7,000 articles from The New York Times over a three month period had to do with topics that evoked fear, anger and anxiety. As the author said, perfect click bait for “evil CEOs.”
  • From that same article mentioned above, a fascinating stat which I am saving for my folder on Why Crises Are Bad News? is this one: “The stock market is more sensitive to reputational disasters than ever before. In the two weeks after the 1989 Exxon Valdez oil spill in Prince William Sound, in Alaska, Exxon’s shares dropped 3.9% but quickly rebounded. In the two months after the Gulf of Mexico spill in 2010 BP’s shares fell by half (and have still to recover fully).”
  • The Hay Group, who conducts the World’s Most Admired Companies (WMAC) Survey for Fortune every year, reports that internal and external reputation management is the most significant factor in consistently enabling the WMACs to outperform their peers. And to add in another good proof point, 75% of these most admired companies worldwide regularly communicate the importance of their company’s reputation to their workforce.  
  • Also from the Hay Group article, a statement which surprised me. They say that the world’s most admired companies now have “much greater control over their reputations” compared to five years ago. I think that this is a perception that could be easily debated and I’ve be in several of them lately.  On one hand, companies might feel that they have less reputation-control due to the rise of the Internet, NGOs and the never ending media-frenzy but you could also say that with disintermediation, companies now have more tools in their arsenal to bypass the media to get their messages out and to listen early on to stakeholders before the conversation turns viral and damaging. A great topic for a debate. I might save it for a panel discussion.

Hope to add more to my collection of interesting reputation nuggets in due time.

 

Modi's FIRST 100 DAYS

I have been paying attention to new Prime Minister Narendra Modi of India and his first 100 days. There has been tremendous attention paid to him, similar to what we saw when President Obama was first elected back in 2008.  Modi won by a landslide last spring and vowed to bring change to the populous country in 60 months. Clearly, he does not intend to make huge wholesale changes in his first 100 days but there is a sense that there might be some directional winds blowing that begin to tell a narrative about who he is and what he expects to do. As we all know, the first 100 days is more symbolic than real but let's be honest, first impressions count. 

Modi has managed to provide some hints in his first 100 days although he has many more months to go before his first term ends. The first 100 days, a topic we often advise CEOs and other top executives about, is to hint at continuity and change. He has done that. The new prime minister has managed in this brief period to reassert the authority of his office.  It is clear from all his activity that someone is fiercely in charge of the nation. He has also showed determination laced with caution. I read in one article that he criticized some senior ministers for inappropriate dress and expects everyone to keep up with him as he burns the midnight oil. I was fascinated to learn that in his Independence Day speech, he talked about how women in his country needed to be treated better and proposed a return to more civic duty. 

Two things really fascinate me. One is his adoption of what I call an operational tenet. This is a call to arms from leaders in the first 100 days to help people (or employees) know what is expected of them. It is not a strategy but a thematic stamp. It is a single maxim that contains a practical directive that people (or employees) can follow in their everyday lives. It should be memorable such as Never Lose a A Sale or Low Prices, Every Day. I learned that Modi started a plan to provide "a bank account for every household" which would put an end to what he calls "financial untouchability." Definitely a theme that sends a powerful message -- an end to financial untouchability. Wow. A good one.

The second part which fascinates me is his adoption of a Twitter account -- @narendramodi. Apparently it has sparked lots of CEOs in India to get on the bandwagon and relate directly with their customers. Modi has 7.35 million followers. That's many. Richard Branson has 4.6 million, by comparison.  Some recent tweets congratulate people for cleaning up after firecrackers that were lit during their new year's celebration. He tweeted about the importance of Clean India, probably a campaign he is supporting. But Modi is definitely engaging his constituencies and letting them know what's important to him. 

Good start. 

 

 

CEOs and CSR: A Mismatch?

Last week I was in Berlin speaking at Humboldt University's Conference on Corporate Sustainability and Responsibility. It was the 6th annual conference convened by the very admirable and scholarly Professor Dr. Joachim Schwalbach. I was a little embarrassed because he kept telling me how well-known I was my reputation work and how people were attending to see me!

I had been asked to keynote a morning session on CEO Reputation, CSR and Thought Leadership and participate in the panel discussion afterwards. The panel focused on the importance of CEOs in the world of CSR and sustainable practices. If you want to read more about the conference, please read Elaine Cohen's synopsis which does a terrific job summing it up. She is a much better note-taker than me. Elaine was the moderator for two of the panels I was on and she did an excellent job making them compelling, stimulating and useful for attendees.  She blogs and runs her own social and environmental business consulting firm, specializing in CSR strategy, reporting and assurance. 

For my part, I spoke about the importance of CEO reputation when it comes to CSR. As I see it, CEOs are responsible for assigning their resources to different strategies and pathways. If the CEO wants to commit to sustainability and make the resources available, it will happen. If not, the CEO might just make sure that a CSR report is written and distributed and call it a day. 

The panel that followed my keynote was lively. One of our panel members was a senior executive from Egon Zehnder, the highly reputable executive recruiting firm. We all gasped when she told us that CSR capabilities, expertise, and interest are not qualities that companies ask for when looking to hire CEOs. As Elaine quoted her in her round up, "Instead, CEOs are hired for traditional qualities such as decision-making, P&L orientation, experience, profit maximization etc." It was a rude awakening to a CSR-fest audience and unfortunately, I do not doubt what she said. My sense is that boards spend more time focusing on what the CEO candidate can deliver to the bottom line than how many CSR reports they've signed their name to.  I am not that naive to think that financial performance is less important that CSR. However, the stark realization that CSR is not on board agendas when looking for new CEOs was crushing to a room full of do-gooders (hate the word but you get my drift) and believers.

To my disappointment, CSR has always been a laggard when it comes to what drives corporate reputation. For the many years that I have studied corporate reputation and CEOs, the leading criteria are quality products and services, financial performance, management quality, the ability to build and lead teams and having the right stuff to motivate others. Honest and ethical conduct also figure high in the list of what matters. CSR usually falls in the bottom tier of drivers no matter how important it has become over the past decade and how important it should be considering that the planet is spinning on borrowed time. 

Here is what I think. It still might not be at the top of the list of drivers for executives, boards and other influentials but it is becoming critically important to future consumers. Responsible consuming or buying products and services based on being a good corporate citizen is only going to increase over time as our resources stop replenishing themselves and the younger generations begin populating our ivory towers. The Millennial generation will have to see to it.  When that happens, it will matter to boards of directors and subsequently to those in the CEO consideration set. Time will tell. 

 

CEO performance, Best in the world

Harvard Business Review just released their 100 Best-Performing CEOs in the WORLD list. As the editor in chief says, "We approached the task scientifically, basing the ranking on hard data, not on reputation or anecdote." I was surprised to read this because it somewhat dismissed the importance of reputation and grouped it in a category of hearsay. Oh well. But then later in the press release I read on the ranking, there is an unattributable statement that since the best CEOs are not only those who are high performers investment-wise, they asked Reputation Institute for the top CEOs based on "workplace, CSR, governance and leadership." Of RI's top three reputation-bearers, none are Americans. Seems to me that HBR doubled back on their earlier statement to cover all bases because as we know, CEO reputation accounts for something and perhaps gives CEOs the permission and confidence to perform over the long-term. 

A few noteworthy stats appear in the study findings which I want to list here:

  • 24 of the CEOs have undergraduate or graduate degrees in engineering and 29 have MBAs. Curious how many were philosophy or liberal arts majors. Few I imagine.
  • Only two women make the list -- Debra Cafaro of Ventas and Carol Meyrowitz of TJX. Good for them. 
  • 13 are of nationalities that differ from their companies which is an increase from 2013. Progress is being made in terms of bringing true outsiders in. 

Hope to spend more time reading the full report but that was my first impression. Check out their interactive tables for even more.