Archive for June, 2009

One of the ways I try to tap into trends is to keep a mental note of requests from clients, colleagues and the media. At first, I may not notice that something is bubbling up but by the third time, I begin to scratch my head and wonder if something is up. Then I mull it over, ask a few people and try to decide if the trend is at all noteworthy and worth mentioning.

Lately I have been thinking about CEO visibility. Since I have been following CEOs for what seems like forever and witnessed the pre-Enron, post-Enron, pre-financial tsunami and now mid-financial tsunami, I think that we are starting to see CEOs emerge from the shadows once again.  As our recent research showed, few people have positive perceptions of CEOs in general (14%) but when it comes to their own CEOs, positive perceptions are sky high (86%). Thus CEOs seem to be getting the message that they need to speak up on behalf of their industries and their own companies. Over the past two months, we have increasingly been asked more about how CEOs can get their messages out in this kaleidoscope of news. CEO conferences never went away but many were scaled down as the economy took its toll and public scrutiny intensified over how CEOs were spending their time, where they were going and how they traveled from one place to another. What we are now seeing is that CEOs are more willing to speak at conferences that drive their messages and sales home. Whereas it is often hard to control the message in the media, it is easier to manage the message at a conference.  With the advent of social media, Twitter and all things digital, CEO conference keynotes, panel discussions and Q&A are easier than ever to circulate to wide audiences instanteously. My sense is that executive conferences are poised for a major comeback.

Some random notes on reputation from the past few days….

1. “Green” is having a hard time when it comes to reputation. Greenwashing claims are piling up as more advertisers try to appeal to socially conscious consumers.  According to the U.S. Advertising Standards Authority’s public affairs department, “We received a record number of complaints about green claims last year, which had more than doubled from the year before, to over 300.”  Companies need hard and clear evidence to make statements about their products being carbon-neutral, sustainable, organic, non-toxic, ozone friendly, 100% recycled. The reputation of “green” is quickly losing its power over consumers if it continues to be used irresponsibly. The Financial Times article where I read about this evolution of green’s reputation said that there are certain terms that are more passable than others such as “kinder to the environment,” “ecologically improved,” and “more environmentally friendly than before.”  These might not satisfy consumers and marketers although they may be more credible. More stringent rules are on their way in the U.S .and U.K.  Greenwashing charges against “green” could dilute its reputation altogether if we are not careful.

2. As our research on managing reputations online revealed, executives are very worried about the leaking of confidential documents. Another article I read recently in the Financial Times states that networking security is at greater risk than ever before.  Executives seem aware but will be surprised at how easy it now is to break into company networks and steal information. The CEO of NCC Group, a network security firm, says that his team of “ethical hackers”  has a success rate of 97.8% in hacking into corporate networks.  Not only are wireless networks making it easier to break into corporate networks but so are stolen or lost laptops and devices. I thought it was very cool to read that one of the safety recommendations was for companies to use a “remote device wipe” so that all the data on a lost device could be obliterated on demand.  Sounds very 24 to me (the program with Jack Bauer). After reading this article, I vow to never leave my laptop out on the desk of a hotel room just waiting to be taken. The article says that we should never assume we are safely covered network-wise.  The executives in our study are right to be worried.

3. In today’s WSJ, an article on CEO turnover in the financial sector helps make a point that surfaced in our other recent survey on CEO reputations. We learned that nearly one-half of rising executives (49%) say that they would take a CEO position if offered. We stated that this was good news because positive CEO succession is critical to our nation’s economic recovery. The authors wrote, “ There  aren’t any highly attractive CEO prospects in the financial-services industry. The best players won’t risk their careers going to a troubled enterprise.” Therefore the job number one for companies right now is to increase their leadership development programs and groom rising executives for the long-term.  According to the Booz & Co. terrific survey on CEO turnover, 18% of financial services firms lost their CEO in 2008 and of these, more than half were pushed out. As the WSJ reports, several firms are now looking for CEO replacements – AIG, Hartford, Freddie Mac. The reputation of the financial services sector is in great need of repair and only when we have willing, seasoned and values-driven executives in the corner suite, will we be able to talk about a reputation recovery in the financial services sector.

   The Financial Times columnist Stefan Stern wrote an article about a CEO who went undercover for two weeks before he was announced as the new chief executive. He pretended to be an office worker who was sent around to several locations. During these two weeks, he was being filmed for what his co-workers thought was a documentary on how office types cope with hard labor assignments.  In truth, the film they were producing was part of a new series called Undercover Boss to be shown in the U.K. It is coming to the US next fall.  What was fascinating about the undercover CEO’s two weeks was that he overheard the real conversations that employees exchanged about their company and its reputation.  When asked what his greatest learning was, the undercover CEO said, “Our key messages were not just getting through to people. People working a shift on a large site do not have time to read newsletters or log on to websites. You have to communicate with people on their terms, and it is different for every location. One size does not fit all.”  The critical lesson learned was that all the finely crafted messages from the top are often not received or are totally misunderstood. The new CEO realized that when he was officially instated as CEO, he had to over-communicate, especially in bad times like these.  Reputations cannot be built internally without reaching employees on the front lines or end lines.

Some advice was given in the article about what works best besides over-communications when it comes to getting messages heard. They are quite clear…keep it simple, break it down into easy pieces what you are asking employees to do and show empathy. Good reputation-builders.

  There is a new officer title emerging that includes reputation as one of its responsibilities. I learned about this in an article on CSOonline.  The new (and not so new) title is Chief Security Officer and although it is still about business continuity and enterprise risk, it is quickly evolving to include brand protection and reputation security. We just have to be reminded of the Dominos incident to realize how important brand protection and integrity is nowadays. In addition, just think about what happens to your reputation when email scams, copyright infringement, phishing, brand high jacking, etc., accelerating even more.  As the head of global security at Caterpillar rightfully said: “With the proliferation of social interaction tools any company’s brand could be put under attack for a multitude of reasons. We all have to be very, very astute about watching for those emerging risks and to be able to deal with them.” 

The need for CSOs is all the more urgent. Our research among executives around the world about online reputation management found that confidential document leaks and negative employee chatter are keeping leaders up at night. [I read today that the federal deficit is keeping Obama up at night these days. High on his risk agenda I presume.] Companies need to do much more to protect their reputational integrity as well as that of their employees, partners, and supply chains.

Aon annually reports on global risks facing industries and is cited in the CSO article. Reputation damage is among the top 10 greatest risks that executives are concerned about. The survey was taken last fall when the economic news was fairly catastrophic and the U.S. presidential election was close. Therefore not surprising how high the first three risks are below.

The Top Ten Risks Around the World
1. Economic slowdown
2. Regulatory/legislative changes
3. Business interruption
4. Increasing competition
5. Commodity price risk
6. Damage to reputation
7. Cash flow/liquidity risk
8. Distribution or supply chain failure
9. Third-party liability
10. Failure to attract or retain top talent

Maybe we just need more CROs…chief reputation officers to combat this increasingly menacing reputation infection.

  

We just released the results of a survey we did with KRC Research among 151 executives in Fortune 1000 companies in April/May on the reputation of CEOs in general. Although we have seen several surveys on what consumers think and it is not pretty, we thought it would be useful to understand what the executive class thinks about this elite group of officers. Since it is critical that the next generation of leaders do not abandon ship and decline any “chieftain” jobs if offered, we thought we’d inquire about their perceptions. As many CEOs gather in Detroit this week to come up with solutions on American competitiveness (National Summit), this would be a good time. Here are some of the findings:

*The majority of executives in America’s biggest companies – 66% – believe that the reputation of CEOs today is largely negative. Only 14% give CEOs a positive rating and the remaining 20% are non-committal.

*Despite CEOs’ low approval rating, approximately one out of two executives (49%) report being interested in becoming CEO one day, virtually unchanged from earlier aspirations. Even those executives who rate CEOs’ reputation poorly are surprisingly upbeat about one day accepting a CEO position (48%).

*Executives overwhelmingly believe that the road to CEO redemption requires publicly taking responsibility when their firms are in crisis and tying CEO compensation to performance (knew that was coming). Other critically important steps include holding more face-to-face meetings with employees, publicly speaking up for themselves and their companies, being more transparent, and issuing regular CEO updates about their business outlook. No surprise that internal and external communications figure large in CEO reputation salvation. It is important to now begin filling the void.

The good news is that our next generation of CEOs appears eager to sit in the corner suite and for the right reasons (making a difference, growing business and meeting the toughest challenges of the day). CEOs have their work cut out for them but I think we will see reputation recovery in due time.  In fact, when we asked when we’d see CEO reputations redeemed, it looks like 2013 is the year. Mark it on your calendars. I did on mine.

[Check out an interview on the results in BusinessWeek online]

   In an article this week, I read about the discussion with the captain (C.B. “Sully” Sullenberger) of US Airways 1549 that landed in the Hudson River.  The vice chairman of the safety board asked the captain, “What made the critical difference in this event? How did this event turn out so well?” An apt question.

The captain’s answer was telling: “I don’t think it was one thing, it was many things. We had a highly experienced, well-trained crew. The first officer, Jeffrey Skiles, and I worked together well as a team, and we solved each problem as it presented itself to us.”

Great answer about team work, being prepared and solving problems as they came at them. All businesses should be able to say the same.

Where do I start?  Several people sent me a copy of the recent McKinsey Quarterly article on Rebuilding Corporate Reputations.  Its sub-headline read, “A perfect storm has hit the standing of big business. Companies must step up their reputation-management efforts in response.”  Sounded like a home-run article to me.  It was already in my inbox because I subscribe but I had not had a chance to read it. My heart sank thinking that McKinsey had come up with the perfect strategy for rebuilding reputations and that all my advice and research in this area was for naught.  I Twittered the article on my ReputationRx Twitter saying that here’s an article that had to be read. After all it was from McKinsey which I greatly admire and religiously read. Soon enough I began reading the article. I stopped in my tracks. I deleted my Twitter instantly.

There are two major problems with this article.

First, the authors misunderstand the business of public relations.  A few select quotes from the article reflect a misunderstanding about the business of public relations when it comes to reputation-building.

“Now more than ever, it will be action—not spin—that builds strong reputations. Organizations need to enhance their listening skills so that they are sufficiently aware of emerging issues; to reinvigorate their understanding of, and relationships with, critical stakeholders; and to go beyond traditional PR by activating a network of supporters who can influence key constituencies.”

“Moreover, traditional PR spin can’t deal with many NGO concerns, which must often be addressed by changing business operations and conducting two-way conversations.”

“Reputations are built on a foundation not only of communications but also of deeds: stakeholders can see through PR that isn’t supported by real and consistent business activity. Consumers, our research indicates, feel that companies rely too much on lobbying and PR unsupported by action.”

Authors’ Sheila Bonini, David Court and Alberto Marchi are under the general impression that PR practitioners actually believe that reputations can be built on words, not deeds or action. This could not be farther from the truth. In addition, the authors imply in several sentences that PR is only about the one-way conversation, not the two-way dialogue.  Again, far from the truth.  Public relations has always been about the art of conversation with and perceptions of one-to-one or one-to-many stakeholders. The business has always been about developing relationships with many publics, no matter how small, how large or how hard-to-reach.

The second argument I have with the article’s direction is its premise that there are three new ways to manage reputational threats in uncertain times. They are 1) understanding key stakeholders and what matters to them (e.g., benchmarking competitors, quantitative research); 2) being transparent and action-oriented (e.g., more business activities, less lobbying); and, 3) engaging a wider portfolio of influencers through a variety of means to spread word of mouth (e.g., grassroots, partnerships with NGOs). These are good strategies for advising companies and their leaders about restoring and rebuilding reputation. No doubt about it.

These practices, however, are all commonplace in the public relations domain and have been for many years now. In fact, I would argue that this has always been the business of public relations – understanding a company or organization’s many publics, researching stakeholders on perceptions and concerns, getting the true story out, changing corporate behavior by doing the right thing, and engaging influentials in conversations that lead to deeper understanding.  These recommendations are part of the everyday toolbox employed by most PR professionals working now (and for decades). And in fact, PR professionals greatly expanded on these three recommendations years ago, particularly in the general public, corporate responsibility and social media space.

Today’s Financial Times had an article on business’ role in restoring reputation and mentioned the McKinsey article. The author seens to agree with me. Whew. Michael Skapinker wrote “This is all sensible but it strikes me as yesterday’s advice.”

Moving on….I do agree wholeheartedly with McKinsey’s conclusion that CEOs should lead a company’s reputation strategy. I have always said that CEOs are the guardians of company reputation. My first book on CEO reputation, CEO Capital (2003), argued exactly this point, as I am sure many others have too. 

After letting off some steam here, it occurred to me that PR firms have clearly not done a good enough job communicating what we do for clients or McKinsey’s authors would have known that their recommendations are core to PR engagements today. When I first joined the PR field from Fortune, I too had a limited understanding of what the industry did. Now that I have been in the field for nearly a decade, I recognize that PR is often misunderstood and we are partly to blame.

In short, it seems that McKinsey has succumbed to the stereotype of PR as an industry of spin doctors and no more. This is not true. And probably has never been true. McKinsey’s recommendations are not new and the best of them have been used by PR for some time now. What is needed is not as McKinsey proclaims, less PR but probably more PR.

To say the least, the article in yesterday’s New York Times on blogging made me wince.

“According to a 2008 survey by Technorati, which runs a search engine for blogs, only 7.4 million out of the 133 million blogs the company tracks had been updated in the past 120 days. That translates to 95 percent of blogs being essentially abandoned, left to lie fallow on the Web, where they become public remnants of a dream — or at least an ambition — unfulfilled.” 

I obviously fit into the 5% that keep blogging (or sticks to their knitting). Is there something wrong with me?  What distinguishes this 5%? When I finished my dissertation many years ago, I realized that there were many fellow students who never completed the degree. I thought to myself then that there must be something wrong with me for toiling all those years  when others just made the decision to move on. I guess I don’t move on well.

Back to my blog, two interesting tidbits for my posting this evening. 

First, I read that the pre-presidential Obama administration asked the following of applicants: “If you have ever sent an…email, text message or instant message…that could…be a possible source of embarrassment to you, your family or the President-elect if it were made public, please describe.”  We should all be adding similar questions to our employment applications. Social media is key to reputation-building and reputation-busting whether you are in public or private business. [This appeared in the Economist, April 18th, 2009 and cannot find the article.]

The second item I saved recently has to do with the CEO of online shoe store Zappos.  CEO Tony Hsieh is the new Jeff Bezos.  You may have heard this story if you follow social media tales among the executive set like I do.  Hsieh’s Twitters are now quite famous and the company receives extraordinarily high marks in terms of its reputation for extreme customer service (“deliver WOW through service”).  What I particularly like is this story about Hsieh’s team focus.  Since talent is so important, recruiting at Zappos is heightened.  Imagine this. Hsieh offers new employees $2,000 to quit their call center trainee jobs in order to weed out those who won’t make the grade.  As reported, three people took the money and ran last year.

 As I have mentioned before, I like to read CEO Letters to Shareholders. And this has to be quite the year for reading what CEOs have to say about the past year. I just read Jamie Dimon’s Letter to JPMorgan Chase shareholders. It is well worth reading if you want to understand what went actually wrong in 2008. An excellent review of the causes of the financial meltdown.

A few excerpts that I underlined. The last quote is my favorite because he is so right:

 About buying Bear Stearns: “We were not buying a house – we were buying a house on fire.”

On accepting TARP funds: “That said, we believe that accepting  the TARP funds was the right thing to do for the U.S. financial system — and that JPMorgan Chase should not be parochial or selfish and stand in the way of actions that the government wanted to take to help the whole financial systems.”

 On Making Bold Decisions in Tough Times (President Theodore Roosevelt): “It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

On Understanding Underlying Causes that Contributed to the Financial Crisis: “It was also surprising to realize that many of the main causes, in fact, were known and discussed abundantly before the crisis. However, no one predicted that all of these issues would come together in the way that they did and create the largest financial and economic crisis of our lifetime.”

On Not Wasting a Crisis: “Someone has famously said that a crisis should not go to waste. But what is also true is that it shouldn’t take a crisis to solve our problems.”

    I recently Twittered about this survey since I thought it had some excellent information. The research comes from Deloitte LLP and is their 2009 Ethics & Workplace Survey. The topic this year was social networking and reputational risk in the workplace. Timely.  Since we conducted our survey on how executives manage their reputations online, Deloitte’s survey added some nuances that we did not cover. Deloitte had Opinion Research survey 2000+ employees and 500 executives in the U.S.  Here are some of the more interesting facts that caught my eye.

Employees

• 74% of employees believe that it is easy to damage a corporate reputation through social media (That’s high awareness for sure)
• 24% say they don’t know if their company has a social media policy and 11% say their company has one but they don’t know what it is about.
• 49% say that they would not change their online behavior if their company had a corporate social media policy (the survey also found that 29% of employees were being a bit more careful about what  they did online in insure that they kept their jobs in these tough economic times)
• Somewhat more than one third said that they rarely or never think about their boss, colleagues or clients when participating online (I’d call that risky)
• 26% say that their company does not allow them on certain social networking sites during work hours (I hear that often when traveling in Europe and was initially surprised. But there seems to be a large enough portion of the workforce that has no access to certain of these sites.)

Executives

• Only 15% of executives are addressing risks from social media at the board level
• Only 17% say that their companies have management systems in place to identify online social media risks (Not good news)
• Only 22% say that their company has formal social media policies and guidelines in place for employees (This is increasingly important as the FTC becomes more involved with social media and begins thinking about changing rules.)
• 67% of executives say that their company does not discuss how to use social media to leverage their strengths or mitigate risks (That’s an awfully high percentage. This is risky in itself!)