Presidential Apologies

Lately, it seems to me that every day brings a different teachable moment to those of us worrying about reputations and communications. Recently I had been following the heartfelt tweets of CEO Tony Fernandes of AirAsia. 

Yesterday's acknowledgement by President Obama about not sending someone more senior to the Paris peace rally last Sunday was the right thing to do. I had wondered myself about how this could have happened while being glued to the television set. It made me wonder about the discussion the communications team must have had with the President about sending a higher-ranking individual to attend the march while all those world leaders were taking center stage. Do you say something that you think can potentially harm a boss's reputation or do you let it just slide (hoping nothing harmful happens in the end)? Hopefully the former. President Obama's spokesperson Josh Earnest took the message to the people yesterday by saying, “It’s fair to say that we should have sent someone with a higher profile to be there." Although I assume that he was talking about the royal "we" and that the President approved the statement, it was not an outright apology which would have started with "We regret..." Instead, what we got was more a statement of fact. Despite the misstep, the acknowledgement was honest and swift and may have slowed the criticism to some degree. I thought it was good that the President admitted he erred and showed he could be wrong and could change course. Some leaders would have been insistent that the individual sent was high enough and what was all this commotion. I also learned while reading about the error that Obama had visited the French Embassy in Washington DC last Thursday to sign  a condolence book which made me feel better in the end.

Why reputation continues to matter

We all know that bad reputation costs and good reputation pays. Thought this survey of more than 1,000 people in North America demonstrated those attitudes once again.

  • Nearly half of employees say they would need a 50% increase in compensation to join a company that does not have a good reputation. Women would require more than men in terms of pay increases to make such a leap.
  • Nearly everyone (93%) would leave their jobs today to work for a company with a good reputation. To do so, they’d need an approximate 33% increase in pay.
  • And wow, slightly more than three-quarters (76%) would not take a job – even if unemployed – from a company with a poor reputation. That’s an argument if ever there was one for reputation-building.
  • And a hefty 72% consider it important to work for a company whose CEO cares about societal or environmental issues. This is even more important to women than men (75% vs. 69%, respectively). In research we’ve done over the years, we consistently find that corporate citizenship is more important to women than men in their employment preferences.

Another powerful argument for why reputation matters.

 

 

Society Brand Reputation

A Society Brand. That's an interesting way of phrasing the importance of corporate responsibility for companies and its impact on stakeholders. An article in PRWeek described a study by StockWell where they interviewed 26 financial leaders in the UK -- financial analysts, investment bankers,  investors, brokers, risk officers and IR directors -- about corporate reputation today. Interestingly, they learned that financial performance is not the end-all be-all of what drives a company's reputation. Although financial value is fundamental to a company's reputation, the relationship with the wider community is now recognized as having the potential to put that reputation and financial value at risk, especially if tampered with. The moneyed group now strongly believes that reputation is more important than ever and that a strong "society brand" is critical to a company’s long-term commercial future. As the report says, "...non-financial performance factors now have a significant bearing on corporate valuations and investment decisions."

However, this group is very sceptical of CSR initiatives and CSR reports and do not see them as solving reputational challenges. Yet, that does not surprise me when it comes to financial perspectives on CSR. Although they may be perceived as window dressing, CSR is not. It focuses leadership and as government directs fewer resources towards citizen well-being such as health and education, companies have a critical role in safeguarding families and communities in these areas. What surprised me was that nearly half of these financial leaders could not name three companies that had reputable Society Brand reputations and 12% could not even name one company that fit this bill. Paltry to say the least.

  • Almost all (96%) saw reputation as having increased in importance over the past few years.
  • Over two-thirds (69%) considered reputation a critical area for corporate risk management.
  • Four-fifths (80%) agree that a strong Society Brand is critical to a company’s long term commercial future.
  • More than half felt there was too much emphasis on the Financial Brand.
  • 81% saw Society Brand as relevant to all investors, not just SRI funds.
  • 46% felt that a Society Brand was reasonably or very relevant to investment decisions.
  • 46% couldn’t list three companies with a good Society Brand.
  • 61% agreed that companies with a poor Society Brand trade at a discount as markets and analysts build in reputational risk.

 

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.