Bench Strength Reputation Counts Too

The CEO is not the only leader who influences corporate reputation. In our recent study on the CEO reputation premium, more than four in 10 global executives (44%) believe a company’s reputation is influenced a great deal by senior management other than the CEO.

The importance of the senior management team is even more pronounced in companies with strong reputations. More than half of executives in highly reputable companies (56%) believe a company’s overall reputation is greatly affected by the reputation of the senior management team, compared to only one-third of executives (30%) in companies with weak reputations.

It is important for companies to recognize that while the CEO wields tangible power over reputation, other top executives have considerable influence and can add substantial credibility to the company’s narration. Viewing other executives as a portfolio of storytellers can play a powerful role in the development of a strong company reputation.

You can tell how important that senior team is when you read media coverage about companies where executives are leaving. That is always a sign of trouble brewing. A stable and steady senior management team is critical to helping shape reputation and even the CEO's reputation. A good CEO can attract the best and it can speak volumes. 

What goes into corporate reputation?

In our new global research on CEO reputation that we just released, we asked several questions on corporate reputation in general.  How could I resist? Interestingly, nearly nine in 10 executives (86%) consider the reputations of their companies to be strong. However, fewer than four in 10 (38%) concede to a very strong reputation — hardly a cause for confidence in the ability to withstand a crisis or major threat. 

Company reputations are shaped by a variety of factors, with quality of products and services identified as the most important factor by 66% of global executives, followed by financial performance (57%). Leadership reputation falls among the top five drivers (49%). This did not surprise me. Quality of products/services has always led the list among both executives and consumers. And financial performance, as they say, is necessary but not sufficient. 

The CEO Reputation Premium: Gaining Advantage in the Engagement Era, Weber Shandwick, 2015.

The CEO Reputation Premium: Gaining Advantage in the Engagement Era, Weber Shandwick, 2015.

Importantly, a company’s industry ranks as the third most important driver of corporate reputation (50%) and is among the top five drivers of reputation for each industry represented in our study. This finding is quite different from earlier studies on reputation where industry classification was less importantThe reputational impact of an industry today ripples beyond a single company. As an example, the BP oil spill impacted the reputation of other oil majors, and sizable triage had to be applied to improving their collective reputation. The same goes for just about every industry today. For executives responsible for managing reputation, the adage about being “tarred with the same brush” rings true.

Particularly noteworthy is the high importance that worldwide executives place on marketing and communications in driving reputation. Perhaps the proliferation of outlets and new ways that reputation can be communicated today is elevating the influence of marketing communications. In today’s digital age, consumers have countless ways of finding out information about a company, and the more effective marketers and communicators provide organizations with better ways to leverage the conversation and be heard.  Additionally, whereas companies can easily imitate their competitors’ products and services overnight, how a company communicates and engages stakeholders can nowadays provide the differentiating and sustainable edge.

CEO Fears

I always wonder what makes CEOs scared. Who wouldn't? The impression they give is that they are always up to the task. This research from Vantage Hill Partners just appeared in HBR's weekly bulletin and describes what CEOs are most afraid of. It is based on interviews with 116 CEOs and other executives and provides some fascinating insights. Roger Jones who wrote the piece and is CEO of Vantage Hill completed 27 in-depth interviews and writes that the most frequently mentioned fears were "losing their reputation, underachieving, and dying, both literally and in their career, and how it inspires a fixation on status, appearing youthful, and making money." On the same day I read this I was on my way to work and read about Dennis Kozlowski, former CEO of Tyco, who was convicted and served time in prison for "looting the company." In the interview with Kozlowski who symbolized the Celebrity CEO era and who is now free, he admits "I was piggy. But I'm not that person anymore." His big luxury today is having a fresh avocado whenever he pleases. That's a big change from his days of "Deal-A-Day Dennis." The fixation on money does feed into the downside of CEOs and leads to big problems. 

However, stay tuned. We are coming out with some new research on CEO reputation and it's anything but celebrity these days.

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. 

 

Saving your reputation

I am always looking for quotes and just found two today. They appeared in an article in The Guardian about how charities or non-profits can manage crises. Here they are:

"The 17th century bishop Joseph Hall shrewdly noted that 'a reputation once broken may be repaired, but the world will always keep their eyes on where the cracks were.'"

"Brand is a promise to your stakeholders. It embodies what you want them to believe about you. Reputation, on the other hand, belongs to them. In short: brand is how you talk to the world, reputation is how the world hears you."  Vicky Browning, director of CharityComms

The article was based on a panel held in London and the key advice about managing a media crisis for charities who are caught up in the public glare when crisis strikes:

  1. Understand your risks
  2. Respond proportionally to the intensity of the crisis
  3. Be prepared
  4. Know what you can control and what you can't 
  5. Monitor and measure perceptions
  6. Become the expert and authoritative source on the issue 
  7. Respond quickly and with sensitivity (empathy!)
  8. Involve your employees, keep them informed
  9. Invest in reputation before you need it
  10. Stick to your messages

These reputation remedies could apply to any crisis -- be it a for-profit or non-profit. The one that struck me as an interesting nuance which I had not thought about in a while was reacting in proportion to the crisis event. Sometimes just a statement on a website will suffice whereas sometimes the CEO needs to call a press conference and provide regular updates. Knowing when the CEO should visit the site of a crisis and when not to requires good judgement and good counsel from crisis experts. Over-reaction can intensify a problem.

The nature of the response reminds me of an incident that occurred this week. Chairman Rupert Murdoch of 21st Century Fox made an $80 billion takeover bid for Time Warner and Time Warner's CEO Jeffrey Bewkes responded. Instead of a media statement, no comment, CEO email or other response, he chose to produce a three minute video directed at his employees using the medium that the company has excelled in during the past few years -- digital media. The video begins with “Hi everyone. I wanted to speak directly to you about the news you’ve been hearing today about our company.” Short and simple and appropriate to the situation. Here's an example of taking control of what you can when your company is in the public eye. Bewkes got his points across, took little time out of employees and other stakeholders' time and was personal, conversational and direct. In a way, he discounted (dissed?) the takeover bid by appearing on the small screen. Good choice. 


Leadership presence in 3D

Sylvia Ann Hewlett has written a new book on executive presence. I've always been very impressed with her work and how in-depth and comprehensive it is. As an economist, she has written about female talent, finding sponsors or mentors for your work, career on- and off-ramps and mixing motherhood and work. Her new book is titled Executive Presence: The Missing Link Between Merit and Success.  There's a good interview with her in Forbes written by Moira Forbes where I read what she had to say on the topic of what leadership material is. Hewlett's research among senior executives, particularly women, found that executive presence is critical to success and the three factors driving that climb up the ladder are appearance, communications and gravitas. This makes perfect sense although I believe that a great deal more goes into earning the top spot, the CEO position. I have met a CEO or two that does not have executive presence in the full sense but runs their company famously well. All three drivers, whether we like it or not, do matter today for executives because we are all now public figures. 

Nearly two-thirds of executives say that gravitas (love this word) is critical because it causes others to follow you and trust your vision and leadership. This is why there is an entire industry of executive coaches.  Gravitas can be learned I suppose.

I spend a lot of time thinking about what it takes to drive an excellent CEO reputation. I think it is a combination of strategic smarts, ethical conduct, ability to inspire and motivate others, solid communications skills and an eye on the future. A sense of optimism and humility also go a long way because it is a job with lots of twists and turns that can easily derail confidence. 

Talking about executive presence, here's one for the books. Narendra Modi, the new prime minister of India, used quite the new channel to communicate with the world's largest electorate and rally support. He sent a 3D-hologram to nearly 1,500 remote locations in India to earn their votes at election time and get his messages across without being physically present. His presence was "greeted with a mix of awe and disbelief. Many poorly educated voters had stayed behind after rallies to check behind the dais to see if he was really there, officials said." You could say this is the opposite of gravitas, it is pure lightness.