Archive for September, 2009
Someone asked me where I got 99 tips to safekeeping reputation. I thought it was a good question and it made me think about the process. I started by reading the books I wrote, reread various reports we have done at Weber Shandwick on safeguarding reputation and reviewed our most recent study on online reputation. I then yellow-highlighted all the steps to safeguarding reputation that I thought were important in preserving reputation and keeping reputations safe. I stopped at some number around 65 and thought that maybe I should pare the list down to 50. However, I liked the number 99 because that is what I originally set out to do. So I went back to articles I have written over the years to find more tips and before I knew it, I had about 103 reminders. It did not take much to reduce the 103 to 99 tips.
Looking through all the 99 tips to safekeeping company reputation, it appears to me that the mainstays of lasting reputation are transparency, ethics, leadership, culture and responsibility. Regardless of what companies do online or offline, these values must be in place and religiously adhered to to sustain reputational trust during good times and bad. Of course, reasonable financial performance must be in place as well. As someone else has said, flat is the new black.
As the recession lingers and trust in business erodes, company reputations are at greater risk than ever before. Since October is around the corner, my mind turns to the distribution of Fortune’s World’s Most Admired Companies ballots which should be out the door momentarily. Respondents are soon to be asked to rate the world’s largest companies on their reputational success or failure over these past difficult 12 months. What will it take to gain admired status in times as unprecedented as these ? Not an easy question to answer but some of the answers are in those 99 tips.
I was glad to read an article in the Financial Times by Richard Milne about leaders balancing their internal and external communications now that we are moving beyond the downturn. If you are a regular reader of this blog, you know that I have noted that CEOs are just starting to take steps back into the sunlight (ever so lightly). Many CEOs worked hard at boosting their internal communications over the past year but now is the time to begin planning a more visible external role. See a quote from the article below:
“After bunkering down for most of the past year, leaders need to start to peer out of the parapet as a possible recovery beckons. It is a time to stop being introspective and look outside to see what is happening.”
The choice of words is right — peering! CEOs should be taking a look out the window and taking small steps towards engaging external constituencies through a wide variety of channels now that a recovery is on the horizon.
Today at Weber Shandwick we just issued a new reputation offering that I particularly like. As safeguarding company and brand reputation continues to rise to the top of executive agendas, 99 Tips to Safekeeping Reputation provides a simple visual roadmap to navigating crises and restoring reputations. We think it will come in handy for anyone interested in reputation. Enjoy and let me know what you think or would like to see added in our next version. I am thinking of doing this annually.
McKinsey had an interview recently with Kenneth Knight who is the national intelligence officer for warning. I thought that was a great title and a tough job. As he says, avoiding surprises essentially defines his job description. When he was asked how he balances short-term with long-term analysis, he replied:
I always use the analogy: my father was a DC policeman. And some of this is about the difference between a stakeout, where you’re watching some known activity that you’re interested in—say country A invading country B—and more walking the beat, where you’re going through your neighborhood looking for signs that don’t look right to you. Maybe it’s anomalies, maybe it’s some kind of activity that is new, and potentially maybe you just want to understand it.
But that balance between the horizon scanning—walking the beat—and then the standing warning issues, where you know you’re concerned and want to watch, there’s a range of analytic techniques. And I think one size doesn’t fit all there.
I feel much better about the, what I would call, enduring warning concerns—the stakeout problems, where I know to watch, and we built an analytic process, and we watch the area, and we typically have designated people watching it. I think we can still get surprised there, but those I feel pretty good about. It’s the emerging issues that we didn’t imagine or didn’t know to watch. And that’s what my staff is trying to push and engage and uncover out of that tremendous daily and weekly, monthly product that our community churns out.
Sustaining good reputation requires the same kind of diligence and scenario planning. Watching carefully or staking out your stakeholders and shareholders while making sure your peripheral vision is in check is required to safeguard reputation. Keeping an eye on the industry, competitors, partners and now government is necessary to maintaining reputational balance. As I have repeated here before, hope is not a plan.
Wanted to make sure to let everyone know who reads my blog that I am moderating a series of seminars on reputation protection in the Internet Age. There are three planned with Akin Gump Strauss Hauer & Feld, K2Global and Schillings are taking place in New York (September 23), Washington DC (September 24) and London (September 29). These law firms and risk consulting firms including us at Weber Shandwick will add an interesting perspective on reputation defamation and restoration today in the changing world of reputations online. Please check it out. Registration is free and I would love to see you.
Today’s New York Times had an interview with the CEO of Goldman Sachs, Lloyd Blankfein. He was asked about lessons learned from the recent and ongoing financial crisis. Blankfein makes a clear argument for ongoing internal communications. Worth reading the entire interview but the banking CEO reiterated one of the most powerful tenents of reptuation recovery during tough times:
“What I did more of–and then I kept doing more and more of it as it got validated as a strategy–is that I talked to the firm very frequently. So in the last year and a half, and particularly in periods of peak stress, when people were wondering what was going on, when the press was as bad as it was, almost every day I would send a voice mail to the whole firm. I’d walk around the firm. I’d answer people’s questions. And generally this firm has a walk-around culture. But I really emphasize that.”
One of the more fascinating attributes of the Goldman culture is that they use an all-employee voice mail system to communicate. Several years ago I wrote an article on Hank Paulson’s apology for a statement he made and I mentioned how he apologized using their all-employee voice mail system. I believe he felt that it would be quick, immediate and show how deep felt his apology was in his voice. I also recall having studied communications best practices for a client and interviewed a few people at Goldman Sachs who spoke about how they were more of a voicemail than email culture. Voicemail certainly provides the emotional and qualitative texture that email does not. More companies should consider all-employee voice mails in addition to all the newer technology such as webcasts and podcasts that we have on hand today. It requires less executive preparation and might just be the right cup of tea when morale is low and employees uncertain.
UBS’ CEO Oswald Grubel issued this statement to all employees on Tuesday September 8th. It appeared in the Wall Street Journal. As Grubel works hard to repair UBS’ reputation after the many challenges facing the bank, he provided this communications update on the positive signs ahead. As I bolded below, Grubel candidly points to the bank’s damaged reputation and the fact that it will only be restored when when the organization accomplishs what it sets out to do. He smartly remarks that no aggressive media headlines nor advertising campaign is going to change perceptions overnight. What will make the difference, according to Grubel, is trained people at every level, a focus on the business and a commitment to doing the right thing. Grubel’s assessment is right — it takes hard work and relentless effort to restore reputation and it takes more time than anyone imagines. According to Weber Shandwick’s recovery research, it takes approximately 3.5 years to recover from reputation loss. Unfortunately, most CEOs are on their way out of office when the reputation recovery process is nearly complete.
I thought it was helpful for the CEO to point out to employees that internal reality on achievements are not readily seen from the outside. External stakeholder perceptions take time to catch up with reality. This single factor is one of the more frustrating elements about recovering reputation, particulalry for CEOs. Too often CEOs take the lack of acknowledgement about turnaround signs as a personal affront when in fact, rebuilding trust takes many many incremental steps to regain that trust.
From the looks of Grubel ‘s letter, he appears to get it.
Since I last wrote you, we have accomplished a great deal and have had several positive things to report.
In the second quarter, we reported an operating profit for the first time in eight quarters. In addition, we have strengthened our capital position and further reduced our risks. The market too has shown more confidence in us.
We have also consolidated the initiatives determining our firm’s new positioning in a turnaround program, and we are on track with the program to increase overall efficiency. The unpleasant side of it, the job cuts, is almost complete, and most of the employees have been informed.
The creation of a comprehensive Corporate Center is well advanced. The teams in the areas of Finance, Risk and Communications & Branding have been brought together, and the remaining functions will take this step in the next quarter.
In connection with the summons of the US tax authorities, a settlement agreement acceptable to all parties was reached. What’s crucial about it is that the agreed solution lies within the framework of the existing Swiss legal system. Implementing the settlement will continue to occupy the bank for some time yet, but the fog of uncertainty that the summons created has lifted.
Finally, the Swiss government sold its stake in UBS through a placement with institutional investors and realized a healthy profit from it. This closed another important chapter in our recent history.
How should we assess these events? Our transformation is proceeding according to plan. But we must recognize that none of these steps free us overnight from all the challenges we face. We must change and keep changing in an ongoing, sustainable way.
To do so, we need to get the basics right. We must abide by all laws everywhere and have clear responsibilities. You are the key here. You are the specialist in your field, the one who knows best what has to be changed. But most of all you are the point of contact with our clients. Right now, at the point when we’ve put some of our biggest problems behind us, is the time for us to serve our clients even more attentively.
One thing must be clear: our results have indeed improved and certain progress has been recognized, but our reputation is still damaged. Primarily the situation with the US has left our clients with a bitter taste in their mouths, and it is now up to us to show them that we are a trustworthy bank with trustworthy employees. There is nothing more important, and I count on your active engagement in winning their trust back step by step.
It is important that we do not point fingers at each other, but that we grow closer together across divisional and national boundaries. Only then will UBS be a truly integrated organization that can achieve its fullest potential. This integration cannot only be centrally designed; it must be truly lived everywhere we are operating. Our regional CEOs are responsible for making the total expertise of UBS available to our clients, and we must do everything possible to support them.
Returning the group to profitability will only be the beginning. The recovery of our reputation will require hard work and relentless effort. But I am confident that we have the fundamentals and the right people in place. Essentially, it’s about one thing: we must do everything better than our competitors.
To do that, we will support you with the “UBS Business University” currently being developed. I am confident that the success of a bank in the future will be, more than ever, dependent on having the most competent people at all levels. At UBS, we want to be diligent in pursuing this goal. I am excited about our new university, which will help us put our strategy into practice.
To conclude, I want to again touch on the topic of communications and the media. Along the path to success, we will have to deal with a skeptical public. Achievements will be apparent to us in the bank long before they will be recognized by the outside world. We will not be able to accelerate this process through advertising campaigns, public promises and aggressive media work. Our clients have read enough headlines about us. If we want to convince the public, we must, first and foremost, provide evidence of our accomplishments again and again, and this takes time.
I would like to thank you again for your replies and encourage you to use the recently launched TurnAround Platform to comment on UBS’s most recent developments.
Oswald J. Grübel
Industry reputation has been of great interest to me. Especially as entire industry reputations now overwhelm the reputations of the individual companies within them. When we think about the financial sector today, it is hard not to have an overall perception of transparency-lessness (not a word, I know) over the past year.
A few years ago I spoke at a Governor’s meeting that Davos held to nail down the best topics for the broader January meeting. My topic then was of course reputation and particularly reputation in the financial sector because of the massive failures at Enron, WorldCom, Royal Ahold, Adelphi, and so on. I never forgot a gentleman from one of the largest German banking institutions who said that reputation meant everything to them because after all was said and done their reputation was built on one thing and one thing only — trust. As I thought about that at the time, I found it profoundly perceptive. Why chose one financial institution over another for any reason besides trust? Most companies and individuals would have trouble articulating why they place their money with one financial institution over another except for trust.
At the time, accounting firms were also under tremendous pressure for having failed shareholders of Enron and other tainted companies. Arthur Andersen imploded, similar to Lehman Bros today. Accountancies too were facing troubled reputations. Yet, in the Financial Times this week, they editorialized about the accounting profession’s resilience:
The resilience is unsurprising. The industry has shrunk from the “big eight” of the 1980s to the “big four” of today, a consolidation that has helped bean counters; PwC earned a juicy 34 per cent profit margin. Much of their work is also required by law, with taxation and audits seen as annuity businesses. Arguably, though, the most important asset accountants have maintained in this recession is their reputation.”
The FT cites two reason for their ability to rebound and lack of major scandal in these difficult times. First, they say that auditors are more conservative post-Enron and second, Sarbanes-Oxley demands more disclosures. I would add a third reason to accountancies’ reputation stabilization and that is that the “big four” has poured time and money into rebuilding their industry’s reputation, understanding where they went wrong, working closely with their trade association and paying strict attention to behavior and training. They have taken the “trust” issue seriously and are often on best places to work lists.
Reputation resilience is made, not born.
Usually when I write about what CEOs should do in their first 100 days, the listening tour pops up. CEOs are advised to travel to facilities and ask employees and customers what’s on their minds, what the company could be doing better or not doing at all, what they wish the CEO would do or not do, and where they think the business is headed in general. Even “insider” CEOs who have been with the company for three or more years need to go on listening tours. People will tell CEOs things they would never tell anyone else. I always recall how Xerox’s former CEO Ann Mulcahy went on a listening tour when she was first named CEO although she had been with the company for 25 years. She quickly sent a message that there was plenty for her to learn.
So I chuckled to myself when I read a recent article about Governor Sanford — the one who had the affair with the Argentine woman while conveniently telling everyone that was hiking and unreachable. The Governor is now going on a “forgiveness” tour around the state of South Carolina asking for repentance for his sins. Despite having written a book on reputation recovery, I guess that this is one kind of recovery tactic that I had not thought of. Most people in public relations would advise someone in the Governor’s situation to get the bad news out all at once and put an end to it at once. But the Governor continues to extend his front page scandal beyond the pale of reality. I kept waiting to hear that he has started a “forgiveness blog.”
I tried to think of other red-faced CEOs or politicians who went on forgiveness tours and none leaped to mind. Former NY governor Eliott Spitzer had the wisdom to stay out of the spotlight and slowly emerge one year later to redeem his reputation. I have always contended that he will manage to redeem himself over the long term. Michael Miliken redeemed his reputation by participating in very worthwhile and noble deeds but not with a forgiveness tour. Enron’s Ken Lay and Jeffrey Skilling never went on a forgiveness tour although they had time before their trials began. They must have crossed the idea off their lists.
The idea of a forgiveness tour might be one and the same with a listening tour because Governor Sanford’s constituents probably have alot of advice to give him on the topic of marital infidelity. I just hope he listens carefully while asking for atonement.