reputationXchange.com

   Interesting fact about BP CEO Tony Hayward’s departure and I have to agree with the WSJ here.  He is not departing the position with a huge payoff as many other big time CEOs do. Yes, he is getting a severance package but it is not even close to what we have seen over the years when troubled CEOs leave their offices. As the Journal says:  “While Hayward may, inwardly, be smarting, he is stepping down with dignity. A lesson other corporates would do well to note.”

I think that CEOs who act with dignity and integrity can help restore the state of CEO reputations today. Of course, as the Journal points out, there are many other reasons that this may have come to past but I think that the message is clear that BP now starts the recovery period of repairing their once-esteemed reputation and even a departing CEO can play a role beyond his or her tenure.

  Accenture just completed an impressive research study among global CEOs and other influentials around the world for the UN Global Compact Leaders Summit in 2010.  They say that it is the largest survey ever among CEOs on sustainability. Some of the key findings are worth thinking about as sustainability defines the corporate reputation landscape in a few short years to come:

1. Brand/trust/reputation is the strongest reason why CEOs say they are taking action on sustainability (72% say so). The next best reason lags fairly far behind at 44% –  potential for revenue growth and cost reduction. Reputation seems to be behind the motivation for many CEO and corporate actions these days.

2. CEOs recognize that the consumer is the most influential stakeholder on the issues of sustainability in the years ahead — 58% of CEOs say so and it is a perception that ranks even higher than employees (45%).  They believe that consumers are King despite the mixed evidence on whether consumers are demanding products that are sustainability-true (a word I just made up).

3. Collaboration is critical to the sustainability movement.  Here I have to agree since I am seeing a greater focus among clients on partnerships and coalitions in all areas, including CSR. As Accenture writes, “…global challenges are too broad and too complex to go it alone.” Multi-stakeholder partnerships are the new trend in corporate reputation building.

4. One of the more significant findings was that 81% of CEOs say that sustainability is now embedded into the strategy and operations of their companies — a big jump from 50 percent three years ago.  New to me was that sustainability is being built into executive compensation packages today.

5. CEOs believe that by 2015, sustainability will be fully integrated into company footprints. A large 80% believe that by then, this dynamic will be commonplace. That is not far away and it is about time. I was telling someone who interviewed me recently that although 2015 feels as if it is upon us, the truth is that this has been a long way coming. I recall back in 1990 when I first learned more about the Fortune Most Admired Companies survey how surprised I was that environmental/social responsibility was so low on the totem pole of reputation drivers. I thought there had to be a mistake. But that is what it was then. All in all, it has been a long progression to get to 2015.

What is the cost of reputational harm? The New York Times has a back of the envelope calculation from recent crises making the news. Here is what they say?

“It would be too crude to conclude from this analysis that reputation is worth 11 to 14 percent of market capitalization…” and concludes the following: “What is clear, though, is that reputation has huge value. Companies need to guard theirs vigilantly.”

Somewhere in my many investigations on reputation, I have seen a similar calculation that reputation (not reputational harm) places a 10 to 14% premium on a company’s market value. So the Times might just be right.

[By the way, back from vacation. Back to work.]

  It must be Saturday. My head is clearing after a short week’s work. Got some work done this morning which is why I can now blog guiltlessly. Wish I knew more about James LeBron so I could comment here on his reputational downfall on the streets of New York? Or I could move on to comment on the nuclear reputational fallout of Mel Gibson after a new domestic violence  incident circulated this week. Oh, I forgot Lindsay Lohan who I saw in a newspaper headline while on the subway crying about spending 90 days in jail for bad behavior. On the whole, celebrity reputation does not interest me as much as company and CEO reputation and there’s plenty to think about when it comes to that misbehavior. Seems like the heat wave has fried celebrity brains this week (wherever they were) or they are jealous of the corporate scandals grabbing all the attention.

Back to the real stuff. A new study by NYSE Euronext found that 3 out of 4 CEOs believe that they are doing a reasonable job protecting their company reputations. That’s a pretty confident group because if you asked me, I’d say that if that is the case, why are there so many reputation stumbles every day? I would need more than two hands to count how many major reputation disasters occur in a week’s time. And those CEOs would probably swap 90 days in the slammer with Lindsay Lohan if someone could tell them that there would be an end to all he scrutiny on their reputations. Reputation damaging headlines linger for far more than 90 days with the Internet’s neverending longevity of wrongdoing.

The study also found that the leading criteria of building positive company reputation are Honesty, Integrity, Ethics, Transparency and Leadership By Example. These qualities never seem to change (for good reason) although I would hasten to add that Integrity is making a comeback as a reputation driver. Certain words come and go and I have not heard Integrity for some time…so welcome back. Transparency, Ethics, Honesty, Transparency and Leadership have made their rounds for some time now. As many of you who read my blog know, I think that Effective Communications deserves more credit as well as anything to do with promoting a reputation for Safety. Post 9-11, safety as a reputation driver is key whether it is keeping food safe, our privacy safe, our shores safe, our medicines safe, our toys safe, our kids safe, and our skies safe.  I could go on and on.

   The new CEO at Nalco, Erik Fyrwald has this to say about being an outsider CEO and getting up to speed. I think that all this advice is right on target, especially his statement about thinking you have all the answers at the start and then unlearning those assumptions so you can learn how things really are. Fortune interviewed him about water and carbon but I liked the part about being a new CEO best. Most outsider CEOs come into a job knowing what the board has told them. As we know, the board is usually the last to know (so says Warren Buffett).  In my research, I have heard over and over from CEOs that their perspective 100 days later is usually 360 degrees different from what they thought day one. This probably goes for anyone starting a new job. If you want to build a good internal CEO reputation, try to keep your opinions to yourself for a couple of months until you REALLY know what you are talking about. First impressions are usually just that, first impressions.

You came into Nalco as CEO from the outside. What was at the top of your to-do list?

I spent the first weeks and months listening a lot — to the leadership of Nalco, talking to people across the organization. Traveled a lot. Got out there with customers all over the world trying to understand what we do well, what we didn’t do well, where they saw the opportunities. Spent time with my leadership team, getting their view on what we needed to do and also assessing the leadership and who we really needed, and what other capabilities we needed to bring in.

A lot of people in your position, coming in as CEO, have told me that focusing on the team is critical …

Step one.

… and in many cases focusing on the culture. From the outside you’ll see that it needs to be steered a little bit. Was that the case?

Yeah. The positive is, we had a great culture to build on, a culture of service, customer comes first. But we had not been nearly aggressive enough going after the growth geographies and bringing more of the water system solution to the customer. Talking to the leadership, it was very clear that that was a huge opportunity.

You only get one chance at those first few months. When you look back, what did you learn?

I learned that as you get into the job and start to think you know the answers, don’t get locked in. You haven’t been in the company that long. You think because you’ve been in other places that you can figure it out quickly, start to form a theory of what the right answer is. Keep testing that theory, because it does two things. One, it gets the management team aligned. And two, you can get deeper into the organization, you can get customers connected to it, and then you get a much better answer. So don’t make conclusions too quickly. At first I thought I knew the answers, but then the answers got much better as we dug deeper. That was very important.

Weber Shandwick just issued a research report on Civility in America. We did it with Powell Tate and KRC Research. There is an abundance of interesting information such as the fact that 94% of Americans think that civility is a major problem in the United States and has become worse since the recession. Seventy-two percent of Americans view the political world and government as the most uncivil – the highest percentage recorded in the poll – and the absence of civility appears to be having an impact on participation and interest in the political process among broad swaths of the public.

Nearly half the American people (49%) are “tuning out” of government and politics, and almost two-thirds of those people (63%) cite the general tone and level of civility as a major factor in their decision. A fairly large 46% of people are tuning out opinion pieces and editorials in the media, and 45% cite incivility as a major factor. Over one third (38%) are tuning out news coverage and reporting and half of them (50%) attribute their actions to the lack of civility. How can we be an informed public when growing numbers of us are turning away from what makes America tick?

This is bad enough but what got me is how the public is turning away from companies who desperately need their business to rebuild our economy. A full three-quarters (75%) of Americans believe that companies that are uncivil should be boycotted. In fact, 64% of Americans report that they have advised others not to buy products or services because they felt the company or its representatives were rude or uncivil. Companies clearly need to be closely monitoring and listening to their “badvocates” or critics to make sure they are not overlooking poor customer service or improper commentary. Reputations can be damaged quickly when customers perceive they are not being treated properly. When you think of companies that are extremely courteous, helpful and patient such as Zappos, you realize how important “tone” can be and what drives reputation in some industries. I sure hope you have seen their puppet commercials which take civility to new heights.

Business leaders also have considerable influence, since they are expected to set an example for behaving civilly. Nearly every American (91%) believes that business leaders should set an example for behaving with civility. Not only are business leaders expected to act with civility, but the majority (82%) believe that companies should not tolerate uncivil behavior in the workplace. I always find it remarkable how CEOs are held responsible for everything that goes wrong (as they should often be but not for everything!) and realize that incivility is now being added to their plate.

All in all, how a company and its leaders communicate and engage says it all and with the Internet and 24/7 media, companies must be extra careful. The recent events with Gen. Stanley McChrystal are just a recent example of how the wrong tone and poor choice of words can get you into hot water.

[If you are interested in this topic, you might want to visit Civilination.]

As I mentioned in my last post, our new research on executive placement at the right conferences covered some interesting information on social media. It would be difficult not to explore how executives were using or not using social media to tell their company story in addition to taking the podium.  Not surprisingly, the results show that online channels are not being used as effectively as they could.

• The tool most widely used to communicate externally by the C-suite is posting written messages on the company web site (66%). And that is a big step from a few years ago, so this is good news. Despite its widespread usage, executive communications professionals surveyed do not regard C-level web statements to be among the three most effective ways to communicate externally. Instead, the #1 most effective channel, according to respondents, is recorded video on the Web site, followed by live webcasts and blogs.
• Among the social networking tools, Twitter is considered more effective (25%) than Facebook (19%) and LinkedIn (16%) for external C-suite communications. Yet Twitter is woefully under-utilized by executives as a way to connect or communicate. It is reported by only 6% as a means that the C-suite uses to communicate now with external audiences. There is alot of debate about whether execs and CEOs should spend time on Twitter and Facebook. The best answer to the question is “Depends.” It depends on the industry, the regulations governing the industry, whether the company is customer-facing or not, and whether the executive has the time. Few execs have the time to commit and after talking to CEOs, they do not usually have the time. I keep wondering if there is an in-between but have not found one.

Video, on the other hand,  is a preferred communications channel today because of its ability to viscerally humanize executives. Right now, video of CEOs or other execs talking, interacting, and engaging can go a long way to attracting candidates, putting a human face on the company and just saying, “I’m showing up.”

  We at Weber Shandwick just issued a new report on placing senior executives at conferences. As you know, one way of building reputation is to get your senior people, including your CEO, out on the conference trail. Not only is it important for CEOs to be visible in times of economic recovery but the same goes for the senior management teams who can individually support the overall positioning of the company. Years ago I used to refer to the CEO job as that of the narrator CEO — communicating internally and externally about where the company was headed and what the storyline was. Now I have been thinking about reframing that reference to CEO as content provider. It actually makes sense with all the channels available to communicate to employees, customers, media and other stakeholders. Since CEOs have the bully pulpit and are in great demand, they can provide the content that tells your company’s plotline.

I wanted to share some of the findings of our recent research (“From Guessing to Planning: Placing C-Suite Executives in the Most Strategic Forums”) that we did with Vital Speeches of the Day and David Murray, its founder. We both found ourselves at a conference in February on external communications and realized that external executive communications pros appeared anxious about figuring out a process for placing senior executives.  Everyone was seeking the holy grail and asking if someone had a better way to judge if a conference was right for an executive and if they had only limited time, which ones were most important. We decided to do a little more digging and here we are. You can find out more here and don’t miss the executive summary either. Here are some key findings:

• Senior executive participation at business leadership conferences has held steady or grown since the start of the global economic crisis, according to nearly three-quarters (73%) of external communications professionals we surveyed in April.
• CEOs, according to those surveyed, consider speaking engagements prime channels for communicating thought leadership platforms (61%), attracting new business and cultivating customer relationships (58%), and defining or redefining brands (52%).
• CEOs are most interested in speaking at top-tier business media events (44%), public policy conferences (41%), and business school gatherings (31%). Jen Risi, my colleague at Weber Shandwick who runs our Voiceboxx practice on executive visibility and conferences,  says: “Essentially, this new data validates what we’ve been saying to our clients. While financial media continues to be the preferred outlet for enhancing corporate reputation by executives, the strategic use of high-level speaking opportunities is steadily becoming a close second.”
• One of the bigger messages in the survey was that placement is an art, not a science. Clearly the conference business needs greater metrics and better demonstration of ROI to prove that executives are using their time well.  With substantial risk for making a bad recommendation about an appropriate executive conference, communications pros told us they depend upon various resources to confirm their suggestions. Ultimately, they admit that they need to do their own research including networking, monitoring event Web sites, conducting media searches, leveraging agency expertise, and “cold-calling” conference organizations for their schedules. A large 44% report that they have no related processes in place.  Of the remaining 56% who say they have a process, confidence in their system is evenly split – exactly half are confident and half are not. All the more reason to call us……

Hope you find the results useful in getting your CEO out there as content provider. Check in tomorrow for more on executive conferences and social media.

  I have been mighty busy of late. I think about posting all the time but the days seem to leave little time for reflection. Several items of interest have been collecting in my reputation-obsessed brain so here are a few for an early Sunday morning.

It seems that many people are learning about “leadership” these days. Because people know about my keen interest in the reputations of leaders, I get asked when I am among friends what I think of Obama’s leadership. The discussion usually gets heated because everyone is now an expert on the topic as we read and hear about how President Obama is dealing with the oil spill in the Gulf of Mexico. For me, President Obama is exhibiting “no drama” leadership. I do not need him to be overly angry, emotional and making a human spectacle over the man-made disaster now at his doorstep. The majority of the American public that elected him did so exactly because he was reasoned, calm, rational and thoughtful. We got what we voted for. 

Yesterday’s WSJ had an interesting article about the importance of “near misses” or close calls in the science of disaster. This type of study is really the science of risk assessment, something that many industries do regularly to calculate the chances that something will go wrong.  Nuclear power companies are big fans as are industries such as aviation, NASA and more. For example, NASA puts the chance of any shuttle mission ending in disaster at 1 in 89. Sounds like risk-y business to me.  The concept of assessing a company’s “near misses” is appealing to the reputation protection business. If a company could regularly tabulate and review  its near misses, it might be able to prepare for improbable events and develop strategies that come in handy when a crisis arises. I recall reading about a hospital that meets monthly to review its near misses where things could have gone much worse for patients and other members of the facility.  The regular discussion among hospital staff sensitized them to how human error could raise the risks they face every day and make them more alert for problems that might surface. I think it would be a good idea for companies to regularly practice “near misses” meetings to review how they would react quickly, who would do what, what else could go wrong and what would protect their reputation from  full-blown disaster. We might have fewer reputation scars if we practiced better.

The third item I thought I should mention this morning was that Booz & Co. released their comprehensive CEO succession annual research. Many years ago, I started a database on CEO turnover when I realized that CEOs were losing their jobs by the boatload. It may have been in 2001 when Enron exploded but it became a major source for the media on who was in and who was out. It was a great deal of fun compiling all the stats on why CEOs departed, the average tenure of departing CEOs, regional variations and all the many reasons for the rising turnover rate.  I have to say that I miss being in the quarterly departure rate business. We stopped doing it because it was so time intensive. But I was one of the first to report on CEO turnover and for that reason, I totally enjoy the Booz report every June.  A few details are worth noting because CEO turnover is explicitly tied to company reputation recovery. One way to get a company’s reputation back on track is to bring in a new CEO over a CEO who did not do the job. It is one way of providing a clean slate and giving the company a grace period to correct failings and start anew.

• The number of forced CEO turnovers declined indicating that boards are getting better at picking the right candidates and supporting them.
• There has been a “harmonization” of CEO turnover rates regionally with 10 year averages between 12 and 14%. The US used to be known for its rising CEO turnover rate but it seems to have evened out worldwide.
• The trend towards a separate Chairman and CEO is real and growing. North American companies are now splitting the role more often which is quite a change from years ago. Comined roles (where one person holds the CEO and Chairmen job)  in 2009 fell to 16.5% in the US and 7.1% in Europe. Years ago, the figure in the US was about 50%. Interestingly, Booz reports that no one governance role (separating the roles or combining them) outperforms the other.
• More companies are having their outgoing CEOs become chairmen and annoint the incoming CEO as an “apprentice” CEO. The chairman oversees the growth of the CEO this way.
• Insider CEOs continue to be the norm, perform better and last longer.

There are many more interesting details in the research which I hope to cover in another post. This one is getting too long for casual reading. Enjoy your Sunday.

  Hard to believe but the reputation of the workplace has gotten tougher. The Corporate Leadership Council found that employees’ jobs have expanded by a third since the recession. And The Hay Group reports in their survey that two-thirds of workers say they have been putting in unpaid overtime. That is to be expected since everyone doubled and tripled up as the economy spun out of control and job freezes set in. The Hay Group goes on to report that 63% of workers think their employers do not appreciate their extra work and 57% feel like they are disposable as far as their employers are concerned. And alarmingly,  one-half of workers don’t think they can keep up their onerous workloads like they have anymore. Last night I was speaking to someone who told me exactly that after working seven days a week,11 hours per day. He said he just told his boss that he could not keep it up anymore. What did his boss say? Go get yourself some help which he did. Impressive. Wonder if all it takes is asking?

What can employers do to boost their reputations as kind and caring? A few suggestions appeared in an article in The Economist. Cap Gemini has a golden awards program where people are publicly thanked every six months for their work. They also give people blackberry type devices to use while traveling to help them get their jobs done while on the road. Thoughtful. Flexible hours is another favorite employer reputation enhancement that some companies use. I never had flexible hours early in my career but sure wish I had the option since I would have used it well. And the other strategy for building a strong workplace reputation is paying attention to the high-potentials like HP does. HP invites rising stars to important strategy meetings and asks them for suggestions.

All of these ways of recognizing employees cost employers next to nothing but make their employees more loyal and more likely to put in the extra time to come up with new ideas to grow the company.

When employees start leaving their jobs for better ones as soon as the economy picks up, employers will have to get creative about retaining employees and letting up on the workload once again. But there are plenty of inexpensive ways to improve workplace reputation and there is no better time than now when employees are on the fence about leaving or staying at their jobs. It is a good reminder to us all that recognition goes far and costs next to nothing. This is probably the real ROI everyone is always asking about.