Archive for January, 2009
The reputation of business leaders continues to fall. We have seen study after study stating that confidence in CEOs is at an all-time low. A Booz & Company survey (Recession Response: Why Companies are Making the Wrong Moves) from December 2008 among senior managers learned that 40% are unsure that their leaders have a credible plan to deal with the economic crisis. And even more—46%, are uncertain that their leaders can carry out the plan even if they believed in the plan’s foundation.
What surprised me was the perceived slowing of “green” efforts. Four out of 10 report that “green” and CSR efforts will “significantly” diminish due to the economic downturn. The industries most expected to experience this slow down are transportation and energy. Booz & Co. suggests the following antidotes to this crisis in confidence:
Get a clear perspective on your competitive set and your position in it
Put together a plan that is reasonable considering that time and resources are limited. Choose a plan that can make a difference quickly
Communicate and execute. Earn your stakeholders confidence by communication and getting things done.
Reputations are tightly linked with good communications. How else to get everyone in lockstep in difficult times and especially as workers are distracted by financial concerns and layoffs.
So the Spanish mega bank Banco Santander announced today that it is repaying customers who lost money in their Optimal Strategic US Equity Fund which was invested with fraudster Bernie Madoff. The bank is paying 100% to the victims (not to institutional investors) by handing out €1.38 billion in shares. This move puts off legal actions and helps to preserve its reputation. As I see it, the reputation premium is at work.
Starting to look like a better idea every day. I have written before about the idea of building a business around reputation rehab and the idea seems to be going around. The Deal wrote today about former Merrill Lynch CEO and Bank of America executive John Thain’s image re-management. Thain is spilling his side of the story about why he resigned from BofA, how bonuses paid to Merrill Lynch executives in December pre-merger were authorized and then apologized for his office decorating binge. Hard to figure out what the real story is but I have no doubt that it will unfold shortly. Regarding his apology, not easy to do so I applaud it.
As the economy falters and CEOs are booted out of office at an even quicker pace, these kinds of recriminations are going to escalate. Reputation rehab may not be far off.
Although I finished writing my book on Reputation Recovery over one year ago, it is always on my mind. When I find interesting tales of smart ways that companies can learn from their mistakes, I make a mental note. This morning in The New York Times, there was a fun article by writer Harry Hurt III about his time spent as a doorman on inauguration day at the DC Four Seasons Hotel. Of course, the enjoyable part was reading about all the celebs’ car doors he opened and shut like that of Aretha Franklin who sang the anthem on Tuesday. But Hurt also described the behind-the-scenes matchless training at the Four Seasons and one story hit home. The famed hotel chain has a “glitch system” whereby any employee mistake is entered immediately into a database and is discussed the next day at the group meeting. [Astounding that employees feel secure enough to enter mistakes.] The error and how to make sure it does not happen again is discussed among employees 24 hours later. Then the team goes out of their way to give the erred guest some extra TLC in the hope that the guest will soon forget.
When companies lose reputation and begin the restoration process, I advise them to go back in time to understand what happened and devise steps so that it does not recur. In addition, I describe how hospitals and the military follow After Action Reviews to better understand how mistakes happened and how they can be remedied. Although many companies do not take the time it requires to understand how they mis-stepped, it would be a wise move to take.
Ironic. I was finishing my reading of an article by Michael Hirschorn from Atlantic Online that I was given by my boss. Today is the day after President Obama’s inauguration. The article titled “End Times” is about the death of traditional (or “old”) media in favor of “new” media, with a particular spotlight on The New York Times. “The former Times executive editor Abe Rosenthal often said he couldn’t imagine a world without The Times. Perhaps we should start.” I could not help but think that such a disappearance might be inevitable after reading about the paper’s dire economic straits and contemplating the reading habits of the younger generation.
I stopped into my local newspaper shop where nothing much is ever happening at 6:15am. The newspaper stand is located on Flatbush Avenue and Seventh Avenue in Brooklyn where I live. The guy who I hand over my $3.50 over to every morning (The Times and the Wall Street Journal) is from the Middle East and has four fingers on his hand that hands me back change. The newsstand is like most in the city…grungy, poorly lit and dingy.
This morning it was packed. There was a line of at least 30 people, mostly African-Americans, standing on line to buy their copies of the New York Times. The Times had not been delivered yet which was unusual but every person wanted their own personal copy with President Obama on the cover. The commemorative issue for posterity! I tried to imagine what we would do 10 years from now (maybe 5?) when all news was online and we wanted a keepsake of some momentous event. Somehow downloading the Huffington Post or even The New York Times Online would not do it for me. I thought back to 9/11 and how that horrific event would be covered without the old news publications. It would not be the same as picking up the paper to those two page spreads of person after person killed and their heart-wrenching individual life stories cut short. Not the same. No way.
The incongruous juxtaposition of reading about the potential death of newspapers and this morning’s long line at my local newsstand with people beaming with pride, speaking languages I could not place and knowing that seeing President Obama on the front page of the most reputable paper legitimized everything will not be forgotten.
My friend Joy Sever emailed me to look at an article on reputation on The Edge. I did not know about this web site despite the excitement I experienced when I found it. The Edge was established in 1988 as an extension of a group known as The Reality Club including some of the most interesting minds in the world. From 1981 through 1996, The Reality Club held its meetings in Chinese restaurants, artist lofts, the Board Rooms of Rockefeller University, The New York Academy of Sciences, and investment banking firms, ballrooms, museums, and living rooms, among other venues. In January 1997, The Reality Club migrated to the Internet. It is similar, in my mind, to a networked Algonquin Roundtable or Bloomsbury Club.
The 2009 World Question for this year is “What Will Change Everything? What game-changing scientific ideas and developments do you expect to live to see?” One of those answers was by Gloria Origgi, a philosopher and a researcher at the Centre Nationale de la Recherche Scientifique in Paris. And her answer was about reputation. This is what Joy wanted me to see.
Origgi’s speaks about how the Internet has become an enormous network of ranking and rating systems where people can find what they want to know through the filters of others. She says, “My prediction for the Big Change is that the Information Age is being replaced by a Reputation Age in which the reputation of an item — that is how others value and rate the item — will be the only way we have to extract information about it.” As I have written before and was noted by Clive Thompson in a Wired article, Google is not a search engine but a reputation management system. Yes siree. She envisions a world where a whole new set of search engines aggregate people’s judgements. “This softer Web, more controlled by human experiences than complex formulas, will change our interaction with the net, as well as our fears and hopes about it.” Just like the world is turning to soft power, we might be on the verge of the soft Web and as Origgi says, an Age of Reputation.
I should have mentioned that I received wonderful news that I am very proud of. I do not know if there is protocol for “tooting one’s horn.” But the greater part of this plug is for the work done by Ethisphere. The organization has been mentioned before on my blog when I described their new coalition BELA. Check it out because companies should consider being regularly audited on their ethical compliance to help restore trust in business.
I was included in their 2008 Most Influential People in Business Ethics and part of the description as to why has to do with some of the topics I review on this blog. This made me quite happy in these mostly down times. A good start to the new year does not hurt. Thanks for reading.
According to the New York Times, potential candidates for Senator Hillary Clinton’s Senate soon to be vacated seat have to fill out extensive background forms for Governor Paterson. All the typical requests appear on the form such as tax returns, spousal business, educational background, arrests, hiring of illegal immigrants, investments (with Madoff, hope not), etc. But apparently now candidates need to provide urls for their children’s Facebook or MySpace pages. Perhaps the news about VP candidate Sarah Palin’s daughter’s pregnancy caused politicians to be more careful in their vetting process. No one likes surprises. I doubt that McCain’s campaign dug into Bristol’s boyfriend’s Facebook entries at the time. That is now the past but the future clearly indicates that family social media networks will increasingly become an important element of a candidate’s reputational baggage. I imagine for some of these candidates, they have never been on their kids’ social media sites. Who wants their parents as friends?
We can soon expect that candidates for high-level business slots will have to provide information on their children’s social network pages as well. After all, a company officer’s reputation impacts the reputation of the company and his or her family can cause some collateral damage. Why wouldn’t a board ask a CEO-to-be to provide that information as part of the background check on whether they have the right stuff or not. [Actually board members should be asked to do the same.] Headhunters may already been doing this background checking as a matter of course but fairly soon, it will be SOP (standard operating procedure) at Fortune 500 companies. Poor kids. They will all need online reputation managers and coaches soon.
This week I received my 92nd Street Y catalogue of lectures, events, and everything under the sun that is available at this amazing institution. It truly is a New York landmark of cultural affairs and happenings. I often attended the Captains of Industry CEO engagements that are moderated by BusinessWeek’s top editor. This year is their 10th year. So I was eager to see what the schedule would be for 2009. I can’t say I was too surprised to see that it was fairly skimpy. Henry Paulson spoke in December (if he made it out of DC due to the bailout) and Martha Stewart is slated for February 2009. Martha is not one to shy from controversy and take a stand. And that’s it. Executive visibility is probably not too high on company agendas as the economy delivers its daily shock waves. Or perhaps it’s impossible for CEOs to schedule anything when they do not know if they will make it to the second quarter. BusinessWeek included an article this week on which CEOs were most likely to lose their jobs in the next 12 months. My guess is that CEOs are being ultra-selective about what they do that requires them to be away from running the business day to day. CEO reputations are on the hot seat. Makes sense.
More of the speaking platforms are geared towards the economy instead. The 92nd Street Y has Paul Krugman on deck along with Robert Rubin, Gary Hirshberg (CEO of Stonyfield Farm), Larry Summers and real estate pros from Corcoran. The economy and business are grabbing the headlines whereas captains of industry are busy plugging the holes in the lifeboats (for good reason).
A recent article found that a huge 50% of British businesses do not check how their brands are doing online. The research by web hosting company 1 &1 was not encouraging for online reputation management. Nearly half of the 400+ companies surveyed also reported having no capabilities to manage their online reputation. The article wisely pointed out that these findings are even more remarkable when compared to the diligence that consumers take in using the Internet to guide their purchase decision-making. Nearly two-thirds of online buyers check out and research brand and company reputations before buying something. Contrast this with these British companies are surprisingly lackadaisical about their reputations online.
The 1 & 1 survey also found that nearly one out of every two UK businesses never monitored the web for customer complaints, comments or reviews about them. When it comes to social networks and blogs, these businesses were even less adept with less than one-third using these sources to check out their reputations online. As the article says and it seems to be the case is true, “The data would suggest that British firms are undervaluing the impact that online reputation can have on revenues.”