On the minds of boards...

EisnerAmper's survey among 250 board members found reputational risk at the top of board concerns like last year. The survey was conducted in early 2014. What is surprising about the findings is the big jump in cybersecurity/IT risk and the decline in concern over crisis management and disaster recovery. Clearly, the Target data breach was very much on the minds of board members at the start of the year. And for good reason--Target even lost their CEO over the breach. In addition, the focus on hacking and Edward Snowden's disclosures of top secret information from NSA had to be of great concern about the damage to reputation from IT failures. Interestingly, board members may be worried about cyber-risk but the American public does not see these cyber-attacks as particularly threatening dangers and are actually fairly complacent about them says a report mentioned in the WSJ today from the commission members who worked on the 2001 terrorist attacks. 

CEO succession planning seems to be a middling concern to reputation-mindful companies according to board members. Apparently, nearly one out of every two board members surveyed think they have a heir in waiting. However, the other one out of two realize that they might not have the right candidate or one that is groomed and seasoned enough for the top job. As we have seen with Target, a CEO-elect was not in place. My bet is that they are looking for a wholesale change and the opportunity is right now to change the culture and get Target back on top. It can happen to the best of companies.

Countering Rumors that Harm Reputation

In an article today on the academic dream team that consulted with President Obama's team, a few lessons are shared that should be helpful for the public sector and CEOs or other executives. The group of behavioral scientists who were unpaid advised that voters focus on two characteristics in choosing a president or leader -- competence and warmth. This is especially good advice for new CEOs coming into office to hear. The article states that Romney had the competence factor working for him but less so the emotional warmth factor, particularly with all the negative advertising that many people saw. Clearly, CEOs have to project both factors to gain support from their followers. Another lesson to be learned that was shared in the article is useful for companies facing crises (who isn't?). The social scientists that made up the dream team advised the Democrats running the Obama campaign that when it comes to neutralizing rumors, it is best not to deny the charge but to affirm a competing one. The example given was how the rumors about President Obama being a Muslim stuck over the long term but their advice (and probably well taken) was to counteract that rumor by asserting that Obama is a Christian. I do recall hearing that. Good advice that can apply to corporate leaders faced with hearsay and wanting to deflect innuendos.