Archive for August, 2009

    One could not help but be moved by watching the eulogies for the late Senator Ted Kennedy today at the Lady of Perpetual Hope Basilica in Boston today. I watched the moving service thinking about how large a reputation he built in his 77 years. Reputation is all about character and Ted Kennedy’s character was complex — both flawed and exceptional, like many human beings.  His impact on people and our country was profound and searingly evident when listening to his sons, daughters, neices, colleagues, peers, and all.  Reputation redemption has come up several times which made me think how lucky he was (and us) to have had the time in his life to resurrect his reputation. The service reminded me of a quote I saved  that I read a few years back….

“Real leaders, in a phrase, move the human heart.”

  Two articles converged for me this week about how leaders are failing in their communications to employees. As we all know, leadership communications is an important driver of reputation because it keeps employees informed, motivated and sometimes inspired. The first study was from The McKinsey Quarterly on Leadership in Crisis. One of the questions asked of global leaders was about the types of actions they had taken to motivate employees as the economic crisis unfolded. As you can see from the chart below, most leaders are communicating about a company’s values, direction and financial performance. They are doing much less of what McKinsey says is most effective which is getting to know employees abit better and making individual connections. Too much focus on the company could not possibly resonate enough when employees are worried sick about their jobs. Of course, they want to know about whether the company is going to make their financial goals, but that is often not enough.

Talking about company’s values and direction–75%

Spending time informally with employees–71%

Talking about company’s financial performance–62%

Supporting programs that help employees improve their skills–54%

Mentoring one or more employees–50%

Recognizing high performance publicly–50%

Creating opportunities for promotion, career growth–31%

Expressing interest in employees’ lives outside of work–27%

Source: Leaders in the Crisis, McKinsey Quarterly

 The second report I read is from Watson Wyatt. They have been conducting a study for several years now on how companies communicate internally and its return on investment. If you have not been reading these over the years, you should. Watson Wyatt found in these difficult times that most companies are communicating about their business performance (similar to McKinsey) but not about what matters to employees, namely pay and benefits. Whereas senior leaders say their primary intention behind communicating is to reduce employees’ anxiety about the downturn, line managers say they need to communicate most often to improve employee engagement. Regional differences surface on the goals of internal communications as well. In Europe, leaders primarily communicate to earn employees’ trust and engage them. North American and Australian leaders say they communicate to ease employees’ stress. The bottom line is that employees want to hear different things from their leaders than they are receiving. To motivate employees, it might be worth asking them what they want to hear before beginning work on talking points. Employees play a large role in building the reputation of companies, attracting others to work there and being productive in order to drive growth. Leaders should pay heed to these findings and reach common ground with their most important ambassadors.

I always enjoy reading something written by Ram Charan who is one of the world’s most respected business gurus. He wrote an article in Fortune called “My (Recovery) Playbook.” I wonder if he saw my book on reputation recovery. Anyhow, the article is about several companies that are not waiting for the economy to improve but are jumping right in now to make sure they are ahead of the pack when it does recover. In the article, Charan uses examples from GE, Nalco, Avon and Waste Management.

GE CEO Jeff Imelt has an interesting quote on how he learned to change the way GE communicates during this economic downturn:

“The business press isn’t always the most complimentary to GE these days. So we hired people from different backgrounds — like political backgrounds — to teach us how to communicate better to our investors and to our own people.

I’d have to say we are much better at communicating because of the crisis than we were before, when we could just take our reputation for granted.”

I have no doubt that GE and Immelt have taken a serious look at how they manage their reputation now that it is not as effortless as it used to be. And since communications is an integral part of reputation management online and offline, GE probably did have to change course and learn from others with different kinds of experiences to steady its reputation and get it back on track. For one, I was pleased to see that he deemed communications important enough to make it the lesson he learned and told Charan about. I could not agree more.  I have written many blog posts about what Immelt has said about managing GE’s reputation and have been particularly fascinated by his frequent use of “resetting GE’s reputation.” Most companies rarely have the opportunity to take their reputations for granted and find that it is a 24/7 responsibility that has only grown harder as the Internet has invaded our lives at home and at work. As I scan the landscape of most admired companies, it is hard to believe that any are invincible these days.

  I recently had a discussion with a colleague about the rising importance of the company behind the brand. Brands are very important in their own right but I believe that in this environment greater credence is being given to the company behind the brand that someone is buying. I have often heard people say that they won’t buy a particular brand because it is owned by a company that is not environmentally friendly or treats its employees poorly or has a deceptive CEO. All it takes is a click of the mouse to find out who owns a particular brand. Companies can no longer hide behind their brands either. They need to build their corporate images to reinforce their brands and shine a halo on them. In the years ago, we will see more companies that used to put only their brands forward into the marketplace begin to build their corporate reputations as well. As a reputation strategist, I am seeing this trend quicken. 2010 will be a very different year as more companies recognize the need to have a strong and understood corporate reputation, regardless of how successful their individual brands are. Just you wait and see.

    Have to make this quick. Seems like I have been very busy for mid-August. But feel terribly guilty when I don’t blog. What’s with me?

I was just glancing through the Booz & Co. CEO succession report that I enjoy so much every year. There are always interesting nuggets that are worth repeating and musing about. Here is a good one because I like to use it when talking about the importance of CEO engagement and visibility. The researchers found that 80 percent of a CEO’s day is spent in meetings, vists with clients and in symbolic, ceremonial events. The remaining 20% is spent behind a desk. Reality Check– most of a CEO’s work gets done outside the office (with employees, customers, etc.) , as it should.

This Booz finding fits with the advice of P&G’s former CEO Alan Lafley who authored an article in Harvard Business Review on what only the CEO can do. He said, “The CEO alone experiences the meaningful outside at an enterprise level and is responsible for understanding it, interpreting it, advocating for it, and presenting it so that the company can respond in a way that enables sustainable sales, profit, and total shareholder return growth.” The CEO’s job is to link the inside and outside together. Only the CEO has the enterprise wide view that can be brought inside to direct the organization. That is really what drives CEO reputation — engaging stakeholders.

So if your CEO spends a lot of time in the office, something must be wrong.

  Lately was reading some interviews with former Xerox CEO Ann Mulcahy. She always has insights into leadership that are worth noting.  She says that the decisions her team makes now are critical and quotes a former Xerox researcher who said, “The best way to predict the future is to invent it.” I thought I would steal that and adapt it as follows: “The best way to build a good reputation is to manage it.” Not as profound but definitely has a certain ring to it.

Back to Mulcahy. In another article I read, she talked about “followership.” What she means is that leaders should think of their employees as volunteers and individuals who choose to follow their leaders or not. Her point is that leaders spend alot of time getting people to execute strategy when instead they should be focusing on giving employees a reason to align with the company’s strategy and the drive to do their best to build an enduring reputation.

All rings true.

Now that Mulcahy has moved on to Xerox’s chairman or chairwoman — not sure which she choose – I have to commend her for her always wise leadership instincts that built herself one mighty reputation.

   It should be incumbent on departing CEOs (at least those who leave in good standing)  to leave behind a public record of sorts on what they learned from holding one of the most difficult jobs. These are not easy times to be CEO and the lessons learned can help those coming aboard. In my book, CEO Capital, I ended it with this observation on the show-stopping power of this one question I always asked:

 “If you were going to leave a note on your desk for your successor, what would it say?”

The McKinsey Quarterly recently had an interview with the departing CEO of Royal Dutch Shell, Jeroen van der Veer. He spent 38 years with the oil major  and took over from a disgraced CEO Phil Watts who overstated its proved oil and gas reserves by nearly 25 percent.  I remember when he took over during these tumultuous times and the criticism of him because he was an insider. However, he proved them wrong and managed to get Shell back on its feet and restore its reputation. Here are some salient points from the interview that touch on reputation, communications and leadership:

“The second one is communication. Not only internal communication—people feel uncertain, so they like to undersand how the bosses think about it –but external: with politicans, ministers. ..So you have to think a lot about communications. Externally and internally, what are your key messages.”

“If the company is in difficulties, people have a tendency—especially senior people have a tendency—to walk with their head down. And in the operations, they say ‘Okay, the difficulties are somewhere else. It’s not us.’  But in the end, what needed to be done for the reputation: we had to make certain changes at Shell, which basically affects all people. “

“The world is much more critical. And if you go from this ‘trust me’ to this ‘show me’ world, then it is very important that the senior leaders are very good communicators. I started as an engineer, so we all have to learn that over the years.”

“And if I look back sometimes I think, hang on, we should have made even more speed. Usually my regrets are those kinds of things.”

Rarely is there a CEO who says they wish they had moved more slowly. Usually they regret not moving faster. CEOs are also always cognizant of the state of the company’s reputation when they leave and how it compares to the time when they first became CEO.

  An article I read in today’s Wall Street Journal  left me shaking my head in disbelief. I read the article right before I gave a presentation to a communications team on the new rules and metrics on reputation today.  Since I could not comprehend how something like this could happen, I blurted it out when I met the head of the communications department prior to the start of the meeting.  I still cannot assimilate it so I am hoping that sharing this news will help me get back to work. The article is about attacks on the home of Swiss pharma company Novartis’ CEO allegedly by animal rights activists. The story is that activists have been targeting Novartis to discontinue animal testing of drugs, something that Novartis says they have taken “strong steps” to reduce. What is so terribly alarming is that the suspected attackers stole the ashes of CEO Daniel Vasella’s mother from her grave. This is in addition to a suspicious fire at his summer home in Austria this week.  All I can say is that there are some rules that no one or no organization should break. Stealing a loved one’s ashes or consecrating a grave is immoral. Everyone, including activists who feel strongly about a topic, should follow a moral code by which they live and communicate with others. Violence of this type ultimately harms the reputation of all activists.

The New York Times Sunday Business Section interviewed Cisco’s CEO John Chambers today. Chambers mentioned smart advice he got from former GE CEO Jack Welch on what makes a great company was genuinely true. When Chambers was facing a major business impediment, Welch told the networking CEO that the makings of a great company are “taking major setbacks and overcoming those.”  Chambers thought he had already hit several roadblocks but Welch said that what he meant was not just an obstacle but a “near-death experience.”  This is why leaders often say that the wasting a crisis is tragic. I have my fingers crossed that the near-death experiences we’ve seen over the past 18 months are just a sign of better things to come. As I always say, reputation can’t be left up to the roll of the dice. They need to be managed and often come from ashes.