Archive for January, 2008
There is more information on a dedicated site — www.corporatereputation12steps.com. It is based on our discovery that the corporate reputation “stumble rate” continues to rise. Over three-quarters (79 percent) of the world’s number-one most admired companies lost their crowns over the past five years in their respective industries. While reputation loss may now be inevitable, my new book offers a realistic roadmap to reputation recovery that can help any leader stabilize and regenerate a company’s most competitive asset.
It is pretty simple: recent corporate crises have demonstrated that a company’s reputation can be destroyed in seconds. A mishandled response, inappropriate act, product tampering, or poorly timed financial disclosure all have the power to instantly tarnish a respected reputation. As I see it, the well-managed and reputation-conscious company need not stand defenseless when faced with a damaged reputation.
Tomorrow we officially launch my new book on safeguarding and recovering reputation. All the details will be here as well as on our Weber Shandwick’s home page. It’s exciting and I invite you to check it out. Couldn’t be more timely, don’t you think?
We just released a report on Corporate Communications Officers AKA CCOs. The survey, The Rising CCO, which was conducted with partners’ Spencer Stuart and KRC Research examined the changing role of today’s CCO. Anyone who knows me is well aware that I firmly believe in the contributions made by corporate communications departments. Perhaps because I came into the public relations world late in my career and was basically clueless about what public relations/corporate communications people did, I now have the deepest respect for CCOs. Perhaps because I felt like an outsider for so long. They used to call me a “non-traditional” hire.
This is all to say that I am particularly proud of this research. Our intent was to quantify the hunches most of us have about this evolving and rising position in the corporate hierarchy. To focus on one aspect of what we learned from Fortune 500 CCOs themselves, we uncovered a strong correlation between a company’s corporate communications organization and the company’s ranking on Fortune’s “World’s Most Admired Companies” list. Most admired company CCOs, compared to those in “contender” companies, stay in their jobs longer, have fewer internal rivals and are more likely to report straight to the top (the CEO). See below.
HOW CCOs IN MOST ADMIRED COMPANIES DIFFER FROM CCOs
IN CONTENDER COMPANIES
CCOs in Most Admired Companies Are MORE Likely than CCOs in Contender Companies to:
|Most Admired Companies||Contender Companies|
|Have longer tenures||4 years, 10 months||3 years, 5 months|
|Have prior PR agency experience||42%||32%|
|Report to CEOs||53%||33%|
|Have no interdepartmental rivals||25%||9%|
|Identify reputation management as top priority in 2008||34%||21%|
|Report that future CCO success depends on global expertise||52%||41%|
|CCOs in Most Admired Companies Are LESS Likely than CCOs in Contender Companies to:|
|Rate talent shortage as a significant challenge||35%||47%|
|Give themselves six months or less to prove their worth when a new CEO arrives||73%||85%|
Other interesting reputation-related findings include:
- The CCO focus is shifting from financial communications, media relations and internal communications to the broader strategic issues of environmental/social responsibility and corporate reputation. Reputation just continues to grow in importance every year and capture top management attention. I cannot say that I was disappointed to learn this.
- Nearly one-half of elite CCOs report directly to the CEO (48 percent). Again, this finding underscores the COO-CEO partnership in protecting a company’s reputation. If the CCO and CEO are not in sync, reputation risks can easily multiply.
[The Arthur Page Society recently released research on the changing role of public relations officers too.]
Country reputation is fast-becoming an even more important issue over the past several years, as our research found. A fascinating article in the Financial Times turned me on to a spat between India’s Taj Hotels and British run Orient-Express Hotels. [Indian Hotels owns the Taj Hotels and is part of the Tata Group of Companies. They have increased their holdings in Orient-Express Hotels recently which might be igniting the sparks. Taj Hotels are interested in developing a closer relationship with Orient-Express in terms of marketing and purchasing, according to the International Herald Tribune.]
As the story goes, the CEO of Orient-Express Hotels penned a tart letter to Taj Hotels saying that any business development or overture from the Indian luxury firm would taint their reputation as a world-class brand. Consequently, CEO of Orient-Express Paul White replied in a letter distributed to the media and posted on his company’s Web site: “…any association of our luxury brand and properties with your brands and properties would result in a reduction of the value of our brands and our business.” Those are clearly fighting words. As you can imagine, this public quarrel next pulled the Indian government into the rumble. Commerce Minister Nath is quoted as calleding Orient-Express CEO’s comments “a mind-set of the past.” He also added: “Indian companies will continue to play a role in the ongoing global economic integration. Those with a fossilized frame of mind risk being marginalized.”
The entire inter-country reputational brawl brings up a trend that has no stopping. Many of the third world and/or emerging countries have built substantial businesses and are set to expand beyond their borders and buy premium brands. These countries are cash rich. We see that happening now with the infusion of Middle Eastern funds into American financial services firms right now. We also saw more evidence in 2006 when a UAE state-owned DP World tried to win contracts managing six major U.S. ports.
I expect that country reputation battles will only grow over the next five years and the ability to grow ugly. Country reputation is yet another dimension in reputation management that will need managing well.
Another great fact about how companies that are “best places to work” pay off in terms of financial performance. This finding comes from Wharton finance professor Alex Edmans who wrote a paper titled, “Does the Stock Market Fully Value Intangibles? Employee Satisfaction and Equity Prices,” also from the Wharton newsletter I get. Edmans examined the stock returns of companies scoring high on Fortune magazine’s annual list of the “100 Best Companies to Work for in America” between 1998 and 2005 and found that they returned 14% compared to 6% annually for the overall market. Nice fact for those of us who are obsessed with the Fortune Best Places to Work list which is due out real soon–January 28th. There is no doubt about it — happy employees —> good bottom lines + favorable reputations.
Where I work at Weber Shandwick, we just got a coffee bar. Its been a terrific “watering hole.” Employees gather at different times during the day for expressos, cafe lattes, chai teas, homebaked chocolate muffins, jelly beans, candied nuts, croissants, fruit, etc. Professional barristers serve us while CNN is broadcast on two screens. It feels like such a perk. I love taking a walk and happening on fellow colleagues and chatting about this and that. For me, happiness is a coffee bar. It is also a great reputation boost.
Great communications quote in one of the Wharton Knowledge newsletters that I get. “You can never err on the side of communication as a leader,” said Carter Roberts, president and CEO of the US World Wildlife Fund (WWF). “In the absence of communication, you will be surprised by the incredible things they assume about you…. It’s great to have a vision, but where I see people fall down” is when they fail to “communicate that vision in every way, shape and form, every second of the day.”
Communications is an integral part of leadership today. We see it being played out right now in the political arena. Obama is a gifted communicator. Hillary, on the other hand, had to communicate her emotional side in order to change the storyline about herself that might have cost her New Hampshire. When people ask me why communications is so important, I remind them how they felt on September 11th waiting for President Bush to speak about the horrific tragedy. Despite what people may think about him today, his words on 9.11 were critical to reassuring to Americans and helped steady this nation’s sense of loss. The wrong words would have been devastating. Unfortunately we saw what happens when leadership communications does fail — when the levees broke in New Orleans and the White House communicated too late about the destruction of homes and human lives. Without a doubt, communications can build or erode leadership reputation as much as any crisis.
A good quote for the day.
Weber Shandwick just released some new research on the executive conference business. The Global Strategic Media Group at Weber Shandwick audited the CEOs and top executives of the world’s 50 most admired companies to see where they were speaking and how the conference world had changed over the past three years.
The “Five-Star Conference” study found that executive participation in top-tier, or Five-Star, events is soaring. Since 2005, there has been an extraordinary five-fold (525 percent*) increase among elite C-level executives at five star speaking forums. For elite CEOs during the same time period, there has been an increase of 35 percent in participation at these distinguished events. Strikingly, the rising importance of these events as a vital communications tool is underscored by a 50 percent rise in the number of top-tier global conferences from 2005 to 2007.
The research also identifies the top events for CEOs (#1 WEF) and C-suite executives (Fortune Innovation/iMeme).
I am pleased to see the CEO/executive conference business heating up again. A few years ago, many of the business publications abandoned this service offering due to the expense and difficulty proving the return on investment. In my humble opinion, it’s a great way to push CEOs to think outside the box and find something important to say. It requires putting one’s thinking cap on and on that subject, I am in favor.
*Small sample size
Did you know about T-type people? I did not at first. However, I was reading an interview with the CEO of Toyota, Katsuaki Watanabe in the Harvard Business Review (July-August 2007). I had heard about it so I made sure to add to my pile of reading and luckily got to it this weekend.
Thought it was very smart to use the “T” in Toyota in such an illustrative way.
Have been meaning to mention that I attended a luncheon a few weeks ago where Bill Holstein spoke about the relationship between CEOs and the media. Bill is an award-winning editor and journalist who regularly writes about CEOs and board members. You have probably seen his name mentioned in The New York Times, Fortune, BusinessWeek and so on. Bill just wrote a book for Harvard Business School Press titled Manage the Media (Don’t Let the Media Manage You). It is part of a new series of HBS books called Memo to the CEO. These books provide leaders with advice on a wide variety of topics pertinent to top executives. The premise of the book is that CEOs are not managing the media well and instead are having their reputations shellacked. Bill’s advice is to manage the relationships with the media for the long-term, not just when you need it. He advises proactively working with shareholder groups, using social media, architecting messages and never underestimating the importance of communications. Instead of living in a “gotcha” media environment, take control or your reputation will suffer.
Bill had a few unconventional ideas. He suggested that all CEOs in training spend one year training in the communications department to learn how to articulate their messages better and understand the media. His hope of course would be that rising stars would see joining the corporate communications department as an opportunity and not as punishment or a career detour. Not sure this will happen soon. His second suggestion had to do with his belief that many reporters do not really understand what CEOs do. He suggested an Adopt A Reporter program where CEOs educate reporters on the overwhelming complexity of the corner office. I thought that these ideas did a good job of challenging the status quo.
Clive Thompson wrote an engaging article in Wired that actually made me smile. It was very clever. His title was “Clive Thompson on the Age of Microcelebrity: Why Everyone’s a Little Brad Pitt.” The article is about a friend of his who is the executive committee chair of Technorati turned microcelebrity. Apparently when this fellow attends parties, he often finds pictures of himself on Flickr the next day. This fellow has a blog and knows that he has to watch out for his public image. Impression management, as they used to call it. Thompson discusses this new trend that describes his friend – “Microcelebrity is the phenomenon of being extremely well known not to millions but to a small group of a thousand people, or maybe a few dozen.” This is similar to what I call the reputationalization of society. Everyone has a reputation — some bigger and deeper than others – but we all have to watch out for the snapping flashbulbs and quotable soundbites.
Thompson, who interviewed me for a piece in Wired in 2007 and is fun to talk to, credits academic Theresa Senft with christening the term microcelebrity. As she says: “Corporations are getting humanized and humans are getting corporatized.” Or as I would say in my world, everyone is under the influence of reputationalization.