ReputationXchange http://www.reputationxchange.com CEO & Corporate Reputation Sat, 25 Apr 2015 14:29:23 +0000 en-US hourly 1 http://wordpress.org/?v=4.1.3 Social CEOs arisinghttp://www.reputationxchange.com/social-ceos-arising/ http://www.reputationxchange.com/social-ceos-arising/#comments Sat, 25 Apr 2015 14:29:23 +0000 http://www.reputationxchange.com/?p=17215 MBACentral.org has developed this infographic on a favorite topic of ours, Social CEOs. And yes, they cite some of our research which makes sense since we’ve been tracking the emergence and now prominence of Social CEOs since 2010.  I do not consider them a rare species...

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MBACentral.org has developed this infographic on a favorite topic of ours, Social CEOs. And yes, they cite some of our research which makes sense since we’ve been tracking the emergence and now prominence of Social CEOs since 2010.  I do not consider them a rare species anymore. As we’ve found, employees want their CEOs to be social and take pride in working at a company where the CEO uses social media, whether it is one platform like LinkedIn or a few. It sends a signal to the workforce, customers and prospective candidates that the company is forward-looking and cares about building a reputation for being a great place to work today. Certainly a draw for those MBAs that everyone covets.

CEOs and Social Media
Source: MBACentral.org

 

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The time for CEOs is ripehttp://www.reputationxchange.com/the-time-for-ceos-is-ripe/ http://www.reputationxchange.com/the-time-for-ceos-is-ripe/#comments Mon, 20 Apr 2015 22:04:07 +0000 http://www.reputationxchange.com/?p=17191 CEO turnover ushers in vast uncertainty. CEO transitions disrupt the flow of information as company rhythms are in flux. When new CEOs arrive, there is heightened sensitivity to everything that is said and done. No one finds it easy, including CEOs.  For me, it is an opportunity to better understand how...

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CEO turnover ushers in vast uncertainty. CEO transitions disrupt the flow of information as company rhythms are in flux. When new CEOs arrive, there is heightened sensitivity to everything that is said and done. No one finds it easy, including CEOs.  For me, it is an opportunity to better understand how the CEO transition landscape might be changing and if there are any clues I can use to better counsel incoming CEOs.

The Conference Board just issued its new annual report on CEO turnover. They learned that non-voluntary CEO departures or dismissals in 2014 among S&P 500 companies declined to their lowest levels since 2005. In 2014, the dismissal rate was less than 16%, down from nearly 24% in 2013 and nearly 30% in 2012.  Alas, more CEOs are keeping their jobs and presumably more employees are sleeping better at night. Undoubtedly, the improving economy around the world has something to do with this stabilization at the highest levels. In the report, CEO Succession Practices, sponsored with Heidrick & Struggles, several trends are worth noting:

  • Joint CEO and chairman appointments are diminishing. Only 8% of 2014 successions had CEOs also named as chairmen, down from nearly 10% in 2013 and a large 19% in 2012. As the researchers point out, the model of independent board leadership seems to be gaining ground and ex-CEOs staying onboard for the long-term seems to be fading. Because most companies prefer to not have a new CEO coming in and being undermined by a departing CEO who is now a board member, the research found that policies surrounding departing CEOs staying on as board members is slowly diminishing. That is probably good news because it is difficult to make change happen when you have the prior CEO sitting on the board or looking over the new CEO’s shoulder. It is also a relief for senior teams who have allegiances with the former CEO and now need to establish ties with the new CEO.
  • Older CEOs are leaving at a higher rate than younger CEOs. A generational shift is upon us. CEOs who are 64 years and older were found to have a higher turnover rate — nearly 29% — compared to 6% of younger CEOs. Younger CEOs are also probably less social media-phobic which is good news for the social set.
  • CEO tenure is lengthening too.  Indicating that the economy is stabilizing and CEOs are performing better, tenure is getting longer. At the peak of the financial crisis in 2009, CEOs were losing their jobs at a faster clip (7.2 years), far shorter than the average tenure in 2002 (11.3 years).
    • 2014              9.9 years
    • 2013              9.7
    • 2011               8.4
    • 2009              7.2
    • 2002             11.3 years

CEOs should enjoy their CEO-ships while they last. Their predecessors are not sticking around like they used to, they are likely to be more youthful and their tenures are decidedly longer. It does not get much better than that.

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Reputation risk is here to stayhttp://www.reputationxchange.com/reputation-risk-is-here-to-stay/ http://www.reputationxchange.com/reputation-risk-is-here-to-stay/#comments Sun, 19 Apr 2015 15:14:17 +0000 http://www.reputationxchange.com/?p=17182 It has been awhile. I was curious to see how mentions of “reputation risk” had changed, if at all, in the global top tier media since the year before. Every year we conduct a Factiva search of the term to track its progress over the years. As you...

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It has been awhile. I was curious to see how mentions of “reputation risk” had changed, if at all, in the global top tier media since the year before. Every year we conduct a Factiva search of the term to track its progress over the years. As you can see, the number of mentions has dramatically increased in the past decade, with over 800 in 2014 alone. It’s really fascinating to me to see how reputation risk continues to surge when it was barely on the horizon in 1990. It wasn’t until 2002 when the term truly emerged and for good reason. That is when we hit the wall with the dot com bust and the demise of WorldCom, Adelphi and Enron.

Reputation risk is a growing concern for corporations. According to the 2014 Deloitte global survey on reputation risk, 87% of executives rate reputation risk as more important than any other strategic risk.  In comparison to 2010, reputation risk was only at 26%. Why the dramatic increase in the popularity of the term?

In today’s changing world, reputation is more valuable than ever. Without a doubt, the rise of digital communications has created this preoccupation with losing reputation which can damage customer relations, share price, employee retention and partnerships. Everyone has their favorite example of what happens when a reputation goes bust and no one wants to be that company (think BP). It is true that it is increasingly difficult for companies to control what is being said about them which makes reputation risk even higher on the board and CEO agenda. However, being prepared for the inevitability of risk to reputation is the best solution to calming the nerves.

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Does public shaming of companies work?http://www.reputationxchange.com/does-public-shaming-of-companies-work/ http://www.reputationxchange.com/does-public-shaming-of-companies-work/#comments Sun, 12 Apr 2015 17:56:47 +0000 http://www.reputationxchange.com/?p=17153 Terrific article from Working Capital Review on research that has been done on how reputation ratings can get companies to change their behavior. As we all know, consumers use ratings all the time now to determine whether they should buy from particular companies depending on how...

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Terrific article from Working Capital Review on research that has been done on how reputation ratings can get companies to change their behavior. As we all know, consumers use ratings all the time now to determine whether they should buy from particular companies depending on how they treat the environment, treat their local communities, treat employees and behave in the aftermath of crises. This we know. Chris Riback who authored the article asked the right question — do ratings impact the companies as well and cause them to change their behavior for the better? He cites research that has been done on this exact question.  One conclusion from the study by Duke’s Aaron K. Chatterji and Harvard’s Michael W. Toffel, How Firms Respond to Being Rated, was: “We find evidence that firms initially rated poorly subsequently improved their performance more than two groups of comparison firms: those that were never rated, and those that were initially rated favorably. We find that this main effect was driven by firms in industries that face significant environmental regulations and by firms that faced less costly opportunities to improve.” Therefore, companies can be shamed into being better corporate citizens. Riback rightfully also mentions that many of these reputation ratings and scorecards are based on poor and missing data that come from companies and better statistics are required to fully evaluate corporate social responsibility.

Public shaming of companies is more widespread since social media arrived. I think you would agree that it has become even worse. I recall the furor over corporate inversions where companies were shamed into not moving their headquarters to non-U.S. tax-friendly addresses through mergers or acquisitions in order to save money. Even though these maneuvers are technically legal, some companies choose to stay put due to the potential consumer backlash and political blowback. The media called out many companies and helped to dampen several corporate moves overseas. Even Jon Stewart got into the act referring to the Invasion of the Money Snatchers!

Public shaming has become one way to create change and get companies to pay attention. If companies start out on the right foot in terms of behaving transparently and honestly, there would be no need for this last resort tactic.

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The importance of culture in transitioning executiveshttp://www.reputationxchange.com/the-importance-of-culture-in-transitioning-executives/ http://www.reputationxchange.com/the-importance-of-culture-in-transitioning-executives/#comments Fri, 10 Apr 2015 17:35:06 +0000 http://www.reputationxchange.com/?p=17139 I recently spoke to a journalist about the challenges facing new CEOs. We spoke about the usual things but I mentioned that I thought that companies, for the most part, do not onboard executives as well as they could. I was thinking about how executives...

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I recently spoke to a journalist about the challenges facing new CEOs. We spoke about the usual things but I mentioned that I thought that companies, for the most part, do not onboard executives as well as they could. I was thinking about how executives are often derailed because they do not clearly understand company cultures as well as they could to succeed. Executives usually have a better handle on what is expected of them in terms of business impact and goals but far less on the watch-outs regarding cultural dynamics and nuances. A new McKinsey article on Ascending to the C-Suite appears to confirm this. In their survey of C-level respondents, they found that only 27% of executives believe that the companies they were hired into or promoted within had the right resources or programs in place to support their transitions. As McKinsey says, “Part of the challenges posed by culture is that many executives believe they don’t have accurate ways to measure or even describe it.” And this is even more true for external hires — 42% of outsider hires in the survey said it would have been very valuable to have more information on the culture during their transitions. The figure declines to 29% among insider hires but even so….nearly one in three insider hires want more information on the culture of the organization.

It would be helpful for companies to hire a cultural anthropologist to discern a company’s culture and report back to new hires on what to expect in their new roles, how people succeed or fail, what the basic beliefs are that guide employees in their everyday roles. These culture-doctors could impart meaning to a company’s rituals, myths and practices that are often invisible to newcomers.

I recall that when I joined Fortune, there was an inordinate emphasis on giving good toasts. The toasts could be for someone’s promotion, a new business win or someone’s departure. People would work extremely hard at what they said and how humorous, witty and heartfelt it was.  It was an art in itself and once you did it well, you were accepted into some inner circle that had no name and you knew afterwards if you had earned your stripes or not. Reputations were built on how well you toasted your colleagues. I learned that you had to write it down, rehearse it and deliver it fast. Luckily I succeeded in this culture-sport and learned never to take stand-up performances for granted. In fact, I transferred that part of Fortune’s culture to family events where my husband and I spend time on our toasts for different occasions and expect our kids to do the same when we get together.

This is probably not the best example for executives transitioning to C-level jobs but it does show that office culture extends across all activities and particularly to how companies celebrate. Getting an early read on company rituals and patterns would do all executives well.

 

 

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CEO public engagement gets realhttp://www.reputationxchange.com/ceo-public-engagement-gets-real/ http://www.reputationxchange.com/ceo-public-engagement-gets-real/#comments Tue, 07 Apr 2015 13:55:03 +0000 http://www.reputationxchange.com/?p=17132 Our new CEO Reputation Premium research found that public engagement is the new CEO mandate. Over eight in 10 global executives (81%) said this is important for CEOs to do. This one figure does not waver in the 19 markets we surveyed. Clearly it is imperative. Just...

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Our new CEO Reputation Premium research found that public engagement is the new CEO mandate. Over eight in 10 global executives (81%) said this is important for CEOs to do. This one figure does not waver in the 19 markets we surveyed. Clearly it is imperative. Just now I read an interview with Howard Schultz, CEO of Starbucks, on LinkedIn and he is quoted saying exactly what our research describes:

“I’ve never tried to preach to other business leaders about what they should or should not do. But I do feel strongly that the rules of engagement for a public company’s responsibility have changed dramatically.”

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How management impacts recovery in mass fatality disastershttp://www.reputationxchange.com/how-management-impacts-recovery-in-mass-fatality-disasters/ http://www.reputationxchange.com/how-management-impacts-recovery-in-mass-fatality-disasters/#comments Sun, 05 Apr 2015 20:00:06 +0000 http://www.reputationxchange.com/?p=17107 Like many people, I’ve been following the Lufthansa crisis non-stop as more information continues to surface. A recent article in Quartz on the horrific tragedy reminded me of the excellent work that comes out of Oxford Metrica, an analytics and advisory firm on reputational issues. I...

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Like many people, I’ve been following the Lufthansa crisis non-stop as more information continues to surface. A recent article in Quartz on the horrific tragedy reminded me of the excellent work that comes out of Oxford Metrica, an analytics and advisory firm on reputational issues. I have written about them before and am pleased to write about them again in the context of the Germanwings crash because their analyses of crises and leadership are always illuminating. I first learned about them when I wrote my first book, CEO Capital, and was interested in explaining how CEO and company reputations  are shaped when crisis strikes. Oxford Metrica’s first report uncovered the fundamental truth that during crisis situations, investors get to see the CEO upfront, close and personal and any insights they gleam at that time into management’s character gets factored into the long-term shareholder value of the company.  Rory Knight and Deborah Pretty, principals of Oxford Metrica, posit that companies fall into two camps when crisis hits and the recovery begins — Recoverers and Non-recoverers. Strong and honest communications from the top are paramount to recovery according to their diligent work.

I had not realized that they had researched crisis recovery impact from “mass fatality events” until I saw the Quartz article. Here is the pdf. They’ve looked at a wide range of disasters where many people have died  — from 9-11 to the tsunami in Asia to hurricanes, airplane crashes and fires. In fact, they dedicate their report to the “234,339 people who lost their lives in the tragic events reported herein.” That gave me a chill.

Their findings are fascinating in light of the Lufthansa disaster. They looked at 22 aviation disasters from the last five years where 1,886 people lost their lives. Again, they saw the same pattern between Recoverers and Non-recoverers. “Beyond the obvious moral rationale for good behaviour by management, it is clear that the markets respond positively to firms which demonstrate essential human qualities; sensitivity, compassion, honesty and courage. The managerial awareness of what is required, and the courage to act accordingly, sends a strong signal of skill to investors.” As the researchers say, handling a disaster such as what Lufthansa is now facing matters even more to long-term shareholder value because of the enormity of the tragedy.

Interestingly, they found that the market reacts with an initial drop in share price during airline disasters but ultimately takes about three months for the market to discern between the two distinct recovery groups. As they say, “In some cases, it is difficult to discern objectively how compassionate or honest or courageous a management team has been in responding to extreme and tragic circumstances. In other cases, it is either humbling or painfully clear.” With regard to Lufthansa’s response to the purposely crashed flight in the Alps on March 24th, we might not be able to tell just yet whether their reputation will fully recover and whether their share price will suffer or bounce back over the long-term. My sense is that they will succeed over the long-term.

Also fascinating to me was what I learned about the impact of specialist service firms to recovery, something I know very little about. These firms specialize in mass fatality disaster management which includes “contingency planning, disaster management response and recovery, identification of human remains and personal effects, training, family assistance, call centres, memorials and humanitarian services.” One of the leaders they cite is Kenyon International who has ben around since the 1920s. Oxford Metrica found that there is a 40% value premium when these types of specialist firms are engaged. Rightfully so. It is hard to imagine how can a CEO and management team can handle the shock and chaos resulting from a mass fatality and simultaneously manage the complex process of emergency response. Just thinking about what Lufthansa is going through makes me wince when I think about all the media scrutiny and details regarding the families and victims. As much as a company and CEO are prepared, reality has to be something quite different.

The Oxford Metrica report is definitely worth reading. I’m so pleased that I learned about this report. It can help a CEO and management team remember what they will be judged on and what matters when so many lives are lost, often unexplainably. As Knight and Pretty say, recovery depends to a larger extent on how the crisis is handled by the CEO and team than the direct financial financial consequences of the loss.

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Being influentialhttp://www.reputationxchange.com/being-influential/ http://www.reputationxchange.com/being-influential/#comments Sat, 04 Apr 2015 15:57:28 +0000 http://www.reputationxchange.com/?p=17098 This week brought a big surprise. I should be paying more attention. I received an email asking me if I wanted a plaque in honor of my placement on Ethisphere‘s 100 Most Influential in Business Ethics list. The email surprised me because I did not know...

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This week brought a big surprise. I should be paying more attention. I received an email asking me if I wanted a plaque in honor of my placement on Ethisphere‘s 100 Most Influential in Business Ethics list. The email surprised me because I did not know I was on the list which was issued at the end of 2014 for the 2014 winners. I could not have been more delighted. I sincerely admire what Ethisphere does and follow the companies that make the list closely. If you do not know, here is a good description of them from the web site:

The Ethisphere® Institute is the global leader in defining and advancing the standards of ethical business practices that fuel corporate character, marketplace trust and business success.

Pretty cool to be on a list that also ranks Pope Francis, Tim Cook and Elon Musk. Best of all, my rank (#77) was a few notches above Angelina Jolie (#79). It is not every day that I can make such a comparison.

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Company behind the Brand Mattershttp://www.reputationxchange.com/company-behind-the-brand-matters/ http://www.reputationxchange.com/company-behind-the-brand-matters/#comments Fri, 03 Apr 2015 15:28:47 +0000 http://www.reputationxchange.com/?p=17075 As you may know, I’ve been interested in the topic of corporate vs. brand reputation for a long long time. With all the choices that consumers have today when selecting products and services,  a changing roster of criteria now factor into purchase decision-making. In addition to price and...

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As you may know, I’ve been interested in the topic of corporate vs. brand reputation for a long long time. With all the choices that consumers have today when selecting products and services,  a changing roster of criteria now factor into purchase decision-making. In addition to price and convenience, increasingly more consumers are choosing brands based on the reputation of the company behind the brand. This single buying factor has increased substantially over the past several years as corporate reputation has risen in importance and the Internet makes us privy to everything a company does. In a recent study by Nielsen, they found that Opinion Elites in 16 countries seriously care about the behavior of the companies that produce the brands they are buying. These business influentials are deciding what to buy because of the sustainability efforts of the parent brand, its transparency or its labor practices. Or these Opinion Elites may be deciding not to buy certain brands because of how a parent company handled a crisis or treats its employees. And they do not keep their opinions to themselves — 37% said they actively tried to influence their friends’ and family’s perceptions about a company because of something they learned about how it conducts itself.

In our research on this topic, we found consumers in emerging markets to be even more attuned to how companies behave. In emerging markets, consumers want the assurance that the products they are buying are manufactured by reputable companies that don’t take short cuts on quality and will be around for the long-term. I was therefore pleased to find this chart (above) on the Nielsen insight blog that showed that a fairly large segment of opinion shapers in emerging markets care as much as they do in the U.S. and Canada about the parent brand and how it behaves.

 

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The Great Workplace Era Has Arrivedhttp://www.reputationxchange.com/the-great-workplace-era-has-arrived/ http://www.reputationxchange.com/the-great-workplace-era-has-arrived/#comments Wed, 01 Apr 2015 14:11:42 +0000 http://www.reputationxchange.com/?p=17064 The Great Place to Work Institute has officially declared the arrival of the Great Workplace Era. Their research director, Ed Frauenheim, wrote about it in Workforce and I’m all ears if it is true. As they see it, “Increasingly, workplaces will make the world better...

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The Great Place to Work Institute has officially declared the arrival of the Great Workplace Era. Their research director, Ed Frauenheim, wrote about it in Workforce and I’m all ears if it is true. As they see it, “Increasingly, workplaces will make the world better by making people’s lives better.” They should know I guess. The Great Place to Work Institute features the best places to work every year in Fortune and if anyone should know the trends surrounding the changing work place, they should. They cite various indicators such as more people trusting their leaders, liking their colleagues and being proud of what they do. They quote the new CEO of Microsoft, Satya Nardella, as saying, “More than ever before, today’s top talent is not just looking for great work, they’re looking to create a great life and a better world — and their work is part of how they achieve that.”  Despite all this optimism, Gallup has provided evidence that only 13% of employees are engaged at work or our own research which found that only 30% of employees around the world are “deeply engaged” in their jobs. We also found that close to 60% of employees have had to defend their employers from criticism from friends and family. So as rosy as it may seem, we have a lot further to go.

Despite some of these pessimistic signs, the Institute’s report on the new workplace shows how workplace trust has risen in many of the countries where they regularly measure work satisfaction and trust. You can’t argue with that rising tide. They also provide evidence as to why the Institute believes we have finally arrived at the great workplace in the sky. Here are several that call out to me:

  1. CEOs care. I wholeheartedly agree that CEOs now view the workplace as their most competitive asset. When I talk to CEOs, they all realize that their culture is what will deliver their bottom line and help them realize their goals. It is palpable. Reputations are increasingly being built on being a best place to work.
  2. Good workplaces deliver good results. Higher satisfaction cultures lead to higher stock market performance. In the U.S. Best Companies to Work for List, the winners just about doubled their stock market value from 1997.
  3. Millennials care a great deal. Universum’s excellent reporting on this age cohort found that companies with good work-life balance and attention to a greater social good are what matters and where they will seek employment. Today, good workplaces are driving corporate reputations like I’ve never seen before. This generational tide will yield better workplaces for all generations in the near future. If it matters to Millennials, it now matters to us all.
  4. Transparency will keep us all honest. Due to social media and how there is no such thing as a secret anymore, companies have to be transparent. They cannot fool around with poor labor relations and weak environmental impacts. Today’s scrutiny on company practices will only produce better companies for everyone. There is no getting away with bad practices.

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