A Reputation Recovery

The title of the article says it all, "Sailing through a scandal." Rupert Murdoch and his empire have turned the corner on reputation recovery. As you recall, News Corp was engulfed in scandal over the phone-hacking of a murdered schoolgirl's voicemails. According to The Economist where I found this fascinating article, the Murdoch family has recouped more than double their wealth since the controversy. And Murdoch's sons who are running the now split businesses of entertainment and newspaper publishing are doing just fine. 

What hit home was the article's truthful statement that "a loss can turn into an unexpected win." That is so true in reputation recovery. I've researched and studied the reputation recovery phenomenon for a long time now and if there is one clear thread, it is that crisis morphs into opportunity. There is nothing like a scandal or reputation disaster to make a company even better than it once was. Better leaders are put in place, tough decisions are made, humility returns to the C-suite, and less risky business behavior takes hold. No one wants any further embarrassment to harm the reputational equity of the firm.

The articles says, "The Murdochs’ happy ending is a reminder of how forgiving the corporate world can be if bosses at the centre of a crisis act swiftly and adopt shareholder-friendly policies." True. How a company responds to crisis is the ultimate test and like they say, first impressions matter. But as the article also points out, if Rupert had been a hired hand at an ordinary company, he would have been shown the door.

The Economist ends the article by saying, "Being enriched by scandal may occasionally happen once, but rarely twice." As it happens, that is not entirely true. Many companies stumble after a major crisis because of all the distractions that ensue. It is even more likely, not less likely, that a company will re-dent their reputation after a major crisis. Additionally, media scrutiny is more intense afterwards and journalists and pundits will pounce on any missteps. Granted, the stumble may not be as devastating as the first one but doubt gets raised and before you blink, there are no more do-overs.

Vulnerability as a CEO Asset

Someone recently said something to me that had me thinking. They were describing a CEO and said that they were amazed how willing he was to show his vulnerabilities. Leadership humility is very attractive these days because so many CEOs and leaders are being cut down to size as events careen out of control around them. A recent article in the Guardian echoed this same sentiment although the writer, Lynnette McIntire, referred to this trait as “humanity,” not humility. She says:  “But the most persuasive CEOs are those who show how their personalities, histories, values and feelings are aligned with company culture. I have been charmed and disarmed when CEOs talk about what they've learned from their children, how a mentor changed their lives, how a hard lesson from life knocked them into gear or how a frank comment by an employee reset a decision.” McIntire struck a chord with the examples she gave. One was about Tom’s Shoes which has a business model of “buy one, give one” whereby a free pair is given to children in need when a customer buys a pair. She pointed out how the CEO, Blake Mycoskie, spoke about how unprepared he was for the criticism the company received about providing free shoes. People were criticizing how this policy was hurting local shoe producers. Tom’s Shoes is now committing to having a proportion of these giving shoes made in Haiti. She also wrote: “Now, Tom's giveaway programs have a shoe replacement component, dispelling the in-and-out charitable giving image. For many children having black shoes – a school uniform requirement – means their education is not interrupted when their feet grow.” All very interesting to me because I did not realize that Tom’s Shoes’ reputation was being bruised by these criticisms. But also how the CEO listened, learned and began reshaping policy. And how the entire lesson made the CEO appear more human,vulnerable and teachable. [I should add that I also was pleased that they quoted our research on CEO reputation.]

Yawn-inducing CEOs

yawn20big20funny  

The pendulum is always swinging when it comes to CEO reputation. All of a sudden, there's more frequent discussion about empathy, humility and the softer side of things. I have mentioned this trend a few times already. Today there's an article in the WSJ about a new crop of boring CEOs in the financial sector. Boring with a small "b." Underneath it all is the desire for boards to hire CEOs that sport no controversy by how they behave. These boring CEOs don't necessarily command big bonuses (one CEO refused bonuses til 2015). They give eye-rolling, yawn-inducing presentations, focus on words such as integrity and stewardship, work well with regulators and are employee motivators behind the scenes.I bet that they also focus primarily on their company reputation and less on their own reputation.  I liked the example given of how one CEO had to play CEO-for-the-day as a final test. "The candidate had to give a webcast presentation and get ambushed by actors dressed as television journalists, among other tests." The article ended with a warning of what we can expect from our future CEOs: "Boring is the new black." I give it three years and we'll be back to the charismatic CEO winning the day. Maybe not.