Archive for October, 2009
Crisis is the ultimate reputation destroyer. Rarely does any company exit without a bruise. For those communications professionals at the heart of the crisis, the lessons learned take you to unimaginable places and arm you with irreplacable insights and experience. Jon Harmon, a former Ford corporate communications executive and someone I know, just released his aptly titled book, Feeding Frenzy, about the well-publicized Ford-Firestone crisis. Jon provides more information about the book on his blog as well. Jon tells the tale of the two companies — Ford and Firestone – colliding over deadly tire and safety issues that grabbed headlines and public attention for weeks on end. His minute to minute descriptions of the frenzy keeps you on the edge of your seat (if that is how you read). I remember hearing that the corporate communications department received 800 calls or more within minutes of the news breaking. Managing reputation when your house is on fire is one hell of a job.
For all of us anticipating or living through reputation recoveries and crises now, it is a must read.
Earlier in the week, an article on who will succeed Bruce Wasserstein at Lazard Ltd. talked about the difficulty of replacing someone so intellectually adept and dynamic. I found it particularly interesting when someone was quoted as saying that it was no accident that leading investment banking firms followed the “faceless brand” model. Certainly there is a case to be made for the collective over the individual but we are now starting to see another shift in light of the horrific past 18 months. You could not say now that JPMorgan Chase is faceless (Jamie Dimon) and from recent reports, Goldman Sachs is starting to draw a face on its brand with its CEO. There have been several articles about burnishing Goldman Sach’s image with its CEO Lloyd Blankfein. Just last weekend in a New York Times’ article by Joe Nocera, there was a focus on Blankfein’s comments at a Fortune event. So it seems that the theory of putting a face on the brand to humanize it and strengthen reputation among key stakeholders might be coming back in vogue. My, how some things come around.
The airlines have a lot to tell us about managing reputation and being prepared. I came across an article in BusinessWeek a few months late but I found some of the advice about preparedness and reputation resilience worthwhile enough to repeat here. The gist of the article was that the airline industry “is truly the school of hard knocks.” They are always dealing with immense challenges such as soaring fuel prices, terrorism, storms, horrific events such as 9-11 and the global economic downturn, labor strikes, accidents and government intervention. Plus the airlines have amazingly vocal naysayers who take to the Internet when they lose a bag, dislike the food, miss a connection. American Airlines (Disclosure: Client) reaches out to people on social networking sites, according to Roger Frizzell, vice president of corporate communications, brand and advertising and quoted in an article on Forbes.com about brand detractors or “badvocates” as we call them at Weber Shandwick. “In August, when New York’s LaGuardia Airport closed a terminal due to a bomb threat, American Airlines posted notices on its Web site and sent a Tweet to its followers on Twitter. It leaves general information on lost baggage and canceled flights on its Facebook site. Getting the word out before consumers run into problems at the airport is one way to avoid criticism, says Frizzell.” Reputation management is a daily business in the airline industry.
Here are the lessons from the airline industry that BusinessWeek summarized.
1. You need to prepare for what you cannot control which is most everything today. Executives should be trained to respond to the unexpected and boards should review contingency plans because worst case scenarios do happen.
2. Board members need to be more patient while plans are being implemented as airline executives manage with unintended events. Sometimes the implementation is what makes or breaks a successful crisis response. Stakeholders are more forgiving when the recovery plan works.
3. Get all stakeholders aligned. The airline industry seems to have more than their share of stakeholders and if one segment is not moving in line with the others, beware. “For example, when airline employees oppose management, they take it out on customers, who in turn stop flying the airline, which in turn affects shareholder returns – a vicious cycle.” No one should be overlooked although it takes an army to manage this.
4. Seize the moment. In my book on reputation recovery, I called it Seize the Shift but it is the same idea. Opportunities come around usually only once when massive shifts in business or public opinion are bubbling up. Make them your opportunity because chances are that they won’t resurface in the near term. It is everyone’s job to be alert to those moments when fundamental change can be applied.
Interested in building and protecting your corporate reputation? Boston College Center for Corporate Citizenship , along with support from The Hitachi Foundation , issued its fourth 2009 State of Corporate Citizenship report. The report provides valuable insights from nearly 800 U.S. senior executives about their attitudes and perceptions on the value of corporate citizenship. Rightfully so, the authors preface the report by describing the difficult year that faced senior executives and the high expectations about continuing their support of corporate responsibility and giving initiatives. The good news is that nearly half of the executives surveyed believe that corporate citizenship is even more important in tough times and kept up their corporate citizenship efforts. Boston College Center says that this finding underscores how corporate citizenship has passed the value test. What do executives mean when they report on corporate citizenship? To them there are three important areas — ethical business practices (91%), treating employees well (81%) and accurate financial management reporting (76%).
When it comes to reputation, we have known for some time that reputations are enhanced when a company’s words match its actions in the corporate responsibility space. Also, Weber Shandwick’s Safeguarding Reputation research found that companies with better corporate citizenship track records recovered their reputations faster than those with poorer corporate citizenship records.
Interesting to me is that the survey found that CEOs are now leading the corporate citizenship agenda in three out of four companies. Understandably and not surprisingly, CEOs recognize that their reputations need improvement and corporate citizenship is one way to communicate to employees and other stakeholders that they are concerned about doing the right thing. The survey also identified REPUTATION as the number one driver of corporate citizenship (70% for all executives, 82% for large-company executives). Reputation shares that top spot for the first time with company traditions and values.
Reputation is increasingly becoming a driving force in shaping company and leadership action. That can only be viewed as a positive. Glad to hear that senior executives agree.
Always try to get my CEO fix and today turned out no differently. For inspiration, went to Fortune‘s Pattie Sellers who has a super blog named Postcards. I always learn something from her and I get my CEO jolt that helps me through the day. I was breezing through her postings this afternoon on an inspiration break and read what Susan Jacques, the CEO of Borsheims Fine Jewelry and Gifts, said about the best advice she has gotten from owner Warren Buffett. Buffett writes his top team a memo along these lines every year. The advice also contains a piece of my favorite quote regarding reputation. If you know me, you’ve heard me quote it. Had to get it down on this blog for posterity’s sake:
We can afford to lose money–even a lot of money. We cannot afford to lose reputation–even a shred of reputation. Let’s be sure that everything we do in business can be reported on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter. In many areas, including acquisitions, Berkshire’s results have benefitted from its reputation, and we don’t want to do anything that in any way can tarnish it. Berkshire is ranked by Fortune as the second-most admired company in the world. It took us 43 years to get there, but we could lose it in 43 minutes.
Apologies for not writing during the past week. I started a posting but this week was a long one. I had wanted to mention a compelling article that I have been carrying back and forth in my work bag and now is a better time than ever. No surprise but it came from The Economist and the topic was about how some companies thrive in the worst of times. Despite the challenging days and months we’ve all been through, crises give birth to opportunities and this is surely one of those times when new companies rise or established ones leap frog ahead of competitors, reputation-wise. We can all read the tea leaves on how certain companies within particular industries are facing major shake-ups as to who is on first, second and third base.
The Economist article noted a few key points that I want to commit to memory (which is why I am writing it down):
- “Recessions shake things up rather than slowing them down. They reward strengths and expose weaknesses, create new opportunities and kill old habits, release pent-up energy and destroy old business models.” Is that what is happening with Wal-Mart and Amazon fighting over $10 best-sellers? Interesting turf wars.
- Several companies thrived or arrived during the Depression — P&G, Revlon, HP, Polaroid and Pepperidge Farms. FedEx, CNN and Microsoft first breathed life during earlier recessions.
- Bain management consultants reported that twice as many companies made the jump from laggards to leaders in their industries in the early 1990s recession AND the vast majority (70%) kept that momentum going in subsequent years. Pity the 30% who did not.
- Nothing wrong with being big (although conventional wisdom seems to think that big companies are bad and too big to fail. Why does no one remember that the largest companies employ the most people? And as follows, they manage through adversity fairly well.) “The most obvious winners are established giants: market leaders that entered the recession with cash in their pockets and sound management systems under their belts. These companies are reaping rewards from investors who are skittish about shakier rivals. They are also using their corporate muscle to squeeze their costs (for example, by negotiating cheap rates for advertising) and so win market share from their competitors. BCG, another consultancy, notes that 58% of companies that were among the top three in their industry had rising profits in 2008 and only 30% saw their profits decline. In contrast, only 21% of companies outside the top three had rising profits, and 61% had falling profits.” Makes sense then to make it hold on for dear life if you are at the top of your industry. The same goes for reputation. Being highly regarded and among the top three most admired in an industry gives companies a second and sometimes third chance. Stakeholders are willing to look the other way and continue buying your products and services. I am not so sure about a third chance however. Reputation erosion almost always sets in if the third chance is wasted.
- Challenging recessionary times also are good for repositioning a company, according to this article. Cisco is repositioning itself as the Human Network, IBM as a Smarter Planet and according to Fast Company’s recent article about Intel, they too are pushing boundaries with their new Atom mobile chip.
- The last line of the article got me: “Indeed, business is more likely to take advantage of this ‘serious crisis’ than the world’s politicians.” Let’s hope not.
One of the news items this week was the resignation of a France Telecom executive. The reason was the mounting suicide rate at the company. As the story goes, 24 employees at the telecommunications giant have committed suicide since mid 2008. The furor is not about the number because it actually tracks with the norm but the the violent nature of these deaths or attempted ones. The cause of these suicides has been attributed to a restructuring program that has been ongoing over the past three years. The executive who resigned said in an email, “My sense of self control often prevented me, perhaps wrongly, from expressing what I felt and better explaining what I was doing.” He goes on to say he was devastated. Of course.
The downturn has created many horrific episodes although hopefully not as tragic as taking one’s life. This string of suicides is a stark reminder of how tough this struggling economy and downsizing has been on employees and how it has upended reputations of companies, executives and entire industries.
Out of curiousity, I went to the France Telecom Web site to see if anything was mentioned. I found this recent press release. How difficult must it be to communicate intelligently about something so heartwrenching . Again, a stark reminder of these hard times.
Further to recent events, Didier Lombard is proposing a new social contract at France Telecom
Didier Lombard, France Telecom’s Chairman and Chief Executive Officer, met today with Xavier Darcos, the French Minister of Employment, Labour Relations, Family, Solidarity and Urban Affairs. In addition to the measures that the Group announced on Thursday September 10, new decisions were taken with a view to putting in place a strong and consistent action plan demonstrating the Group’s determination to bring an end to the series of suicides and attempted suicides that have recently affected its workforce.
The national health, safety and working conditions committee (CNSHSCT) will be meeting on Thursday next week in the presence of Jean-Denis Combrexelle, the Ministry’s Director General for Employment.
To stop the phenomenon from spreading, it has been decided to immediately put in place a freephone number to promote dialogue. Psychologists from outside the company will be available to listen to and talk with any employees who may be having difficulties.
The first meeting for the negotiations on stress will be taking place on Friday September 18. On this occasion, the employee representatives will appoint an external consultancy to conduct an audit of the situation within France Telecom.
These negotiations will focus on the prevention of stress and psychosocial risks in the event of geographical or professional mobility among staff. To address this issue, a forward-looking employment and skills management (GPEC) system will be set-up with a view to offering employees and their direct managers visibility over their professional development and support.
As previously announced, the company has decided to suspend all geographical or professional mobility programmes until October 31 in order to reexamine the conditions for their implementation. During this period, meetings will be organized between management and staff throughout France.
Within this framework, France Telecom will be working with the French Ministry of Employment in order to ensure that the occupational health services agreement fully takes into account the prevention of psychosocial risks. Moreover, France Telecom has decided to take on new occupational health specialists, while further strengthening its local Human Resources teams.
Didier Lombard declared that he would “make every effort to ensure that a new social contract emerges following this period of negotiations and actions. December’s France Telecom will not be the France Telecom of today”.
Reputations are sometimes left in the hands of the media, bloggers or Twitterers. And that is not always good. In a WSJ interview with the turnaround CEO of Delphi, Robert “Steve ” Miller, was asked about communicating when your company is in bankruptcy. He replied:
“I was very outspoken when we went into Chapter 11. But there was a lot of pushback and criticism. We made the decision to shut up. But if I had to do it all over again, I would keep speaking out. When you are in a controversial situation, you are going to be criticized whatever you do.
The critics said, “Steve Miller is the devil incarnate,” and we said, “No comment.” The only thing left out there for the public was the notion of a devil.”
Miller underscores the importance of engaging critics because if not, your enemies get the last word. CEOs are constantly confronted with this conundrum and especially when legal counsel is involved or regulators are part of the equation, as they are today. However, sometimes it makes sense to figure out what you can talk about that is not controversial and speak up. Thought leadership platforms are tailor-made for these times. The best antidote is having a senior management team with a thick skin because the critics will always be out their with their pitchforks.
Marketing News’ (not available except by subscription) recent publication on Obama as Marketer-in-Chief contained evaluations by experts including Weber Shandwick’s CEO Harris Diamond. Harris made an important point that jumped out at me. He said that “The reason that you can’t underestimate Barack Obama is we’ve had very few presidents who’ve had the ability to make us listen.” Sometimes when thought leadership platforms or speaking opportunities are identified for CEOs and other top executives, we lose sight of the fact that being visible is well and good but that CEOs need to really make us want to listen to what they have to say. It is not just nabbing the panel or keynote opportunity but making sure that the CEO truly says something memorable, important and tied to our collective future. I agree with Harris that Obama makes us want to listen, regardless of your political persuasion. Perhaps that is also why I regularly read Vital Speeches of the Day.
Despite BP’s downfall and ouster of Sir John Browne, he made you want to listen to what he had to say about global warming and carbon footprints. Thought it was worth reminding myself as well as others that Harris is right, that reputation-building today is built on no less than saying something that we want to hear.
Was reading BusinessWeek, the October 5th issue, while returning from a new business pitch yesterday. On the second page of the Table of Contents was a picture of Citi’s CEO Vikram Pandit next to a picture of Apple’s CEO Steve Jobs. A few pages later was a photo of GE’s CEO Jeff Immelt regarding an article in Harvard Business Review about reverse innovation at the Fortune 500 company. Three ads later was an interview with HP‘s CEO Mark Hurd and Maria Bartiromo. Another 14 pages later, came across a feature with US Airways’ CEO Doug Parker. Other CEO features and interviews followed. For me, it was a bonanza of great information and insights into reputation-building and turnarounds. As I have mentioned before on this blog, CEOs are stirring, defending themselves, getting their messages out. Hurrah.