Archive for July, 2007

Corporate Reputation Management is Hot

28th July
2007
written by Dr. Leslie Gaines-Ross

Paul Holmes, author of The Holmes Report, recently wrote about the global pr agency business. It appeared in his July 23rd issue. The report was a roundup on how the pr business was faring and prognosis for the future. Luckily for those of us in the business, the news was very good. The business is growing. According to Holmes, “What emerged was robust evidence of an important global business, one generating at least $7 billion in fee income annually, employing in excess of 50,000 people, and growing by at least 8.5 percent a year.”

What struck me most — no surprise — was his finding about expectations for the future. Holmes said that he asked heads of pr agencies where they saw the greatest growth. He said that without a doubt all agreed that corporate reputation management offered the greatest potential. Two-thirds of PR principals around the world identified corporate reputation management at the top of the list followed by digital public relations and from what I understood in his write-up, technology and healthcare more or less tied for third.
From where I sit in the reputation world, everything that matters is about reputation today. There does not seem to be a day that passes that reputations are not being built or torn down. I agree with the finding that reputation management will be the greatest challenge of the next five years and beyond.

Technorati Tags:
, , , , ,

Tags:
3 Comments
Blogroll

When The End is Near — CEO Exit Strategies

23rd July
2007
written by Dr. Leslie Gaines-Ross

An article appeared in Global Business News Online on Rollercoaster Reputations. The main point of the article is that CEOs should take their careers into their own hands. The authors report that CEOs initially enjoy a honeymoon period but the freedom ride is soon followed by a “climb to glory” that “leads to a plateau and an inevitable slide down the other side.” I have to agree. Many CEOs do not leave when the going is good. In time, nearly all lose favor with the street, the board and other important constituencies. In time, they all succumb to thinking they are infallible. Of the many good examples given are British Airways Sir CEO Rod Eddington who left after five years with his reputation intact vs. BP’s Lord John Browne who could have retired as one of the most admired CEOs ever if he had only timed it better.

The authors make a good argument for charting your own course. They suggest that CEOs should figure out their average tenure and then identify when they can expect to fall from grace. The best CEOs pull themselves away from glowing headlines, ignore their own hype and gracefully leave in time with their halos intact.
The million dollar question is, who is going to tell the CEO it’s time to go?

Technorati Tags:
, , , , , , , , ,

Tags:
0 Comments
Blogroll

Apology Please

19th July
2007
written by Dr. Leslie Gaines-Ross

Although I am on vacation (technically), I cannot keep myself away from recent CEO events. I have been following the Whole Foods’ CEO John Mackey episode with great interest. As you probably heard by now, he was discovered to have been posting on a discussion board using a fake name. For eight years, no less! I went to the web site to see the latest press release. I found this:

AUSTIN, Texas (July 17, 2007). Whole Foods Market today released the following statement from Co-founder, Chairman and CEO, John Mackey: “I sincerely apologize to all Whole Foods Market stakeholders for my error in judgment in anonymously participating on online financial message boards. I am very sorry and I ask our stakeholders to please forgive me.”

The press release is all of 50 words. I don’t recall reading something this short from a corporation.

I firmly believe that Mackey’s behavior was an error in judgment as he said. Transparency is the watchword for CEOs and public companies. What was he thinking? I know that he is described as quirky but at some point in those eight years, he must have wondered whether his “fun” postings crossed the line. My sense is that a new CEO will be announced in due time. Its just too close for comfort.

I believe that this is another example of CEO-itis. Mackey lost track of how his behavior impacts the reputation of Whole Foods. Like other CEOs, he thought he was invincible. Even as a founder, he must recognize that each employee’s conduct reflects the ethical standards and moral underpinnings of the company. My sense is that if another officer of the company had been posting anonymously, they would have been shown the door. Reputation of the CEO and other senior officers matters and need to be taken ever so seriously.

Technorati Tags:
, , , , , ,

Tags:
2 Comments
Blogroll

Pharmaceutical Industry Beware

13th July
2007
written by Dr. Leslie Gaines-Ross

A friend of mine emailed me at the start of this week about a cnn.com article on how prescription drugs are the new campus marijuana or weed. Since former vice president Al Gore’s son Al Gore III was caught driving over the speed limit with a pharmacy in his back seat (Vicodin, Xanax, Valium and Adderall), the coverage on young adult prescription usage has become red hot. My friend, a reputation expert like myself, read the article and quickly knew that this heightened media attention spelled t-r-o-u-b-l-e for the pharmaceutical industry. To quote from the article, “According to a CASA report, between 1993 and 2005, the proportion of college students abusing Vicodin and other opiods went up 343 percent, about 240,000 individuals. The numbers increased 450 percent, or by 170,000 students, for tranquilizers such as Xanax and Valium, and 93 percent, or 225,000 students.” (CASA= National Center on Alcohol and Substance Abuse)

These percent increases in prescription drug abuse are astounding. The reputation of the pharmaceutical industry is already under severe public pressure over perceptions that drugs are overpriced and the healthcare system is flawed. Without a doubt, this newest trend is yet another problem that the industry will have to tackle with haste if they want their reputation to stay intact.

On a personal note, I took the opportunity at dinner to talk about what happened to Gore III. My young adult children and visiting friends were not at all surprised by Gore III’s stash of drugs and mentioned that this behavior was fairly common on college campuses today. The industry will ultimately be held responsible. This reminds me of the entire obesity issue where individuals were initially blamed for not exercising and eating poorly and now food companies are reaping a large portion of the blame for marketing to youngsters. The pharmaceutical industry might want to get out ahead of this moving target and seriously consider educating young adults about the dangers of using prescription drugs without medical supervision and especially when mixed with alcohol.

The Gore III episode is a classic early warning sign that prescription drug abuse and an overmedicated young adult population is about to crash and land on the doorstep of the pharma industry like a burning meteorite. Reputation…beware.

Technorati Tags:
, , , , , , , , , , , ,

Tags:
0 Comments
Blogroll

The Importance of Being CEO

8th July
2007
written by Dr. Leslie Gaines-Ross

Portfolio.com has an interesting interview with Ogilvy & Mather’s CEO, Shelly Lazarus. She has been CEO of the much admired advertising/marketing firm since 1996. That’s a long time in CEO history. The question about whether CEO reputation matters was posed to her and she replied: “Everything a CEO says and does is no longer personal. It is attributed to the company. Ultimately, the leader bears the responsibility for everything that happens.” For better or worse as the marriage vows say.

Lazarus was asked if she manages her image or reputation and she said no. But in the interview she said she is careful about where she speaks publicly and turns down many speaking engagements. She says that she asks herself if the speaking opportunity benefits Ogily & Mather and if the answer is yes, she will seriously consider. If it benefits her personally, she will decline. That’s a wise filter for CEOs in deciding which invitations to accept.

Without a doubt, CEO reputation matters. The research that I have done over many years continues to show that leadership counts and is inextricably linked to the company’s reputation. The right CEO can do wonders.

Technorati Tags:
, , , , , , , ,

Tags:
0 Comments
Blogroll

Reputation Foodies

6th July
2007
written by Dr. Leslie Gaines-Ross

We all feast on reputation coverage and the recent article in BusinessWeek, “What Price Reputation?” by Pete Engardio and Michael Arndt was filling. I knew about the article since Pete Engardio had called me weeks earlier. Congrats to all those quoted and particularly to my friends’ Jon Low and Pam Cohen. Jon and I met years ago when he was at Ernst & Young’s Center for Business Innovation. While he was writing his book with Pam on intangible assets, I was busy with mine on CEO reputation. In fact, we gave them some of our data on CEO reputation for their model building. At about that time I wrote an article for Ernst & Young’s CBI journal describing Communications Capital –the importance of knowing what, when and how to disclose information.

I wholeheartedly agree with the writers that reputation is a company’s most competitive asset. My entire career has been based on this simple fact. Engardio and Arndt are also right in saying that reputation management is now becoming more science than art.

I disagreed with a few points in the article. First, CEOs do not just fret about reputation when they have a crisis as the authors indicate. Most CEOs seriously think about their company’s reputation and apply resources and time to managing and communicating it well. Reputation management is not show business. Engardio and Arndt say, “Want to be viewed as a good corporate citizen? Order up a PR blitz on your charity work or efforts to go green.” If it were only that easy! CEOs know well that you cannot manufacture a green reputation overnight. Neither would they want to be caught with a half-baked plan. Like Jeff Immelt at GE, all the t’s are crossed before CEOs venture forth with a green campaign or any campaign for that matter these days. Lets not forget that we live in glass houses these days.
I also disagree with Switzerland’s International Institute for Management Development Professor Phil Rosenzwig’s statement that the biggest driver of a company’s reputation is its stock performance and financial results. (I did like his article in the McKinsey Quarterly on the halo effect of reputation.) But lets use GE again. Their reputation is well-regarded and yet their share price has not moved much in recent years. Plus we were all fooled by the soaring share prices and bottom lines of high flying companies such as WorldCom and Enron that were later found to be built on sand. As they say in reputation circles, “financial results are necessary but not sufficient.” There is alot more to reputation building than wooing Wall Street and targeting investors. Financial results are exactly what Sandra Macleod of Echo Research says in the article, “threshold expectations.” They are expected but not enough to turn a company from Cinderella to Princess Di.

The many tools we have available to us today are all helpful in building enduring reputations. To truly understand reputation, companies should partake in the wealth of data that is now available for the asking — customer satisfaction studies, magazine rankings, media coverage, blogs and discussion boards, analyst reports, employee surveys, competitive intelligence, industry shifts, etc. Nearly all public relations firms dig deeply into how their clients are perceived among their varied stakeholders. Whether a complicated statistical model is needed or just plain common sense to build good names can be debated forever but what we do know is that reputation is in the eye of the stakeholder, not the markets.
Great read on reputation and satiated my appetite.

Technorati Tags:
, , , , , , , , , , , , , , , , , , ,

Tags:
0 Comments
Blogroll

Smoldering Crises

4th July
2007
written by Dr. Leslie Gaines-Ross

The recent Institute for Crisis Management report on 2006′s business crises found that when leaders think of crises, they think of a fiery explosion, plane crash or natural disaster such as Hurricane Katrina. Instead, the ICM fround that “smoldering” crises are the ones that take companies by surprise and harm their reputations. In fact, ICM reports that two-thirds of all business crises over the past 10 years can be classified as of the smoldering type. Makes sense. Companies rally behind the red hot crises but overlook the simmering ones.

The top 10 greatest crises of 2006 are categorized as follows (in rank order):

White Collar Crime

Mismanagement

Labor Disputes

Catastrophes

Workplace Violence

Class Action Lawsuits

Casualty Accidents

Discrimination

Defects and Recalls

Consumerism

The top five most crisis prone industries in 2006 are airlines, software manufacturers, pharmaceutical companies, natural gas companies and petroleum companies.

Time for companies to manage their reputations better by establishing some form of crisis alerts or warning signals.

Technorati Tags:
, , , , , , , , ,

Tags:
0 Comments
Blogroll