Archive for May, 2011

First, happy Memorial Day to those of us in the US. And many thanks to those who have fought valiantly in defense of the USA!  We are honored.

Turning now to reputational matters on my mind, I was thinking about reputation rankings over the long three day weekend. I happily concluded that our national obsession with rankings is actually a good thing.  Although I often  post about the endless number of top 10 and “best of” lists that quantify the meaningless to the meaningful, there is a silver lining to our rankings mania.  Companies — in all regions — work hard to be admired. Instead of complaining about the information fog we now live in brought on my all this quantification, I realize that we are lucky to have them in the first place. These reputation yardsticks help to challenge companies to measure up reputationally or move out!  Companies, from good to great, want to be seen as the most admired, most respected, most reputable and be chosen over their peers. The end result is good for us all  because companies now must regularly apply their resources to being good corporate citizens, best places to work, good quality providers, etc.  And what could be wrong with that.

 Just a thought for the lovely weekend that we are having here in the US and thanks again to those who have made Memorial Day what it is.

An article on how CIOs need to get a seat at the table and boost their reputational status within the organization appeared in the WSJ this week. I read it on a plane but left myself a message to post about it  (are CIOs really second-class citizens in the C-suite?).  I am always interested in who is sitting at the table with the CEO and have over the years been particularly interested in the role of CCOs — Chief Communications Officers — and how they are increasingly sitting at that table as crises soar and reputations tumble. So naturally, this drew my attention. 

 As I went to find the article online, I stumbled upon another WSJ blog post about the article which had this quote or two from Brian Halligan, chief executive of Hubspot, who spoke at a panel by MIT’s CIO Symposium on the role of the CIO:

 ”Mr. Halligan also said CIOs are the logical choice to help chief executives master new communication tools like blogging, Facebook and Twitter. Many chief executives are either uncomfortable using those media, or hire professionals to stand in for them: Either way, their audiences can sense the lack of spontaneity. CIOs can help their CEOs “have a more authentic relationship with the market and vendors,” he said.

Since I have been carefully monitoring how CEOs become more social, I admit that I had not thought about this in the same way. In my world of communications, I think that CCOs are the natural teacher for showing CEOs how to use social media and video to communicate deep within the organization and to customers and other important stakeholders. I liked Halligan’s statement about how being more social might change perceptions of CEOs as stodgy, risk-adverse and uncommunicative. He is probably right.

Related to this topic, it is probably not a good idea to hire professionals to stand in for CEOs although I don’t doubt that it is done. CEO voices are hard to imitate and employees should be fairly adept at noticing counterfeit CEO-speak. So I would advise that if you are getting your CEO to blog (it does not have to be too often as we advise in our research) to get to know people and let them get to know the CEO, get them to do it themselves.

  Last night I was asked how long I had been blogging. I threw out a number without thinking about it.  However, since I was not sure, I went online to determine how long it might actually be and I was curious about whether I had hit an anniversary of sorts. Should I be celebrating my 5th or 8th or 10th year anniversary of blogging about reputation?

My first web site was CEOgo.com.   I defined it as “The premier site on chief executive officers, leadership and management trends.” Actually, there was no other comparable site so I could have easily said it was “The site on chief executive officers, leadership and management trends.”  CEOgo is no longer live since it was closed down after I left my previous position and I joined Weber Shandwick, starting anew with reputationXchange.  I started CEOgo in February 2000 (according to when it was registered) which answers my question on how long I’ve been blogging — 11+ years. Who would have thought I had so much to say on CEOs, CEO reputation, corporate reputation, CEO transitions, leadership and all things reputation-related. CEOgo was the site to go to on CEO turnover, whether CEOs were insiders or outsiders, average tenure, reasons for departure, reputation-building, etc.  It certainly chronicled my thought leadership in this area and eventually rolled itself all up into my book, CEO Capital. And although much has changed (the more common division of the Chairman and CEO role for one), much has stayed the same. It is among the hardest jobs there is, next to being President of the U.S.

I have anniversaries on my mind today because I am looking at my five-year anniversary at Weber Shandwick. Although I like to think that annniversaries come and go and corporate life has its good-and-plenty ups and downs, I have to say that my past half decade at Weber Shandwick has been fulfulling, productive and full of pleasurable surprises. The leadership and collegiality are truly the real deal and I am thankful for what I have been encouraged to accomplish. And I have also been lucky enough to work with Liz and Jen who make all the difference to my ability to face those very early mornings that are my habit.

It is important not to let important milestones just pass — whether 11 years of blogging about reputation or 5 years at Weber Shandwick. I consider myself lucky.

  I follow the Fortune World’s Most Admired Companies survey almost religiously.  My fascination with its ups and downs have always intrigued me. The chart below is what I call the CEO Eye Chart.  CEOs like the numbers and zero in on them when it comes to managing their company’s reputation. Years ago I used to produce this chart on my own of  how the world’s most admired companies compared to the average S&P company or some other index. Since The Hay Group provides this for free on their online seminar on the Most Admired, I now wait for the chart and use it when asked what evidence I have that reputation matters and matters in particular to CEOs. Here is the latest analysis showing that regardless of time period, the world’s most admired companies outperform their peers on total shareholder returns. 

Simply put, reputation matters to the bottom line. Good reputation pays, bad reputation costs. However, today other factors increasingly matter to reputation-building that help drive the bottom line. My hunch is that those factors — corporate citizenship, how employees are treated, safe products — will continue to matter as well.  What I sometimes call purposeful reputation.

World’s Most Admired Companies Outperform Peers and the Market On Total Shareholder Returns

Source: The Hay Group 2011

  I must be on a “leadership” kick as this week ends. Yesterday I posted about leadership’s role in crisis preparedness. Today I am going to post on the effects of crisis on a leader. At a dinner the other night, my colleague mentioned the impact of the killing of Osama bin Laden on President Obama. We agreed that he had to be a changed man. In yesterday’s reading, Daniel Henninger wrote the following in the same vein:

A candidate is not a president. In the fall of 2008, after Mr. Obama won, our offices were visited by then-Homeland Security Secretary Michael Chertoff, a former anti-mob prosecutor. Asked about the Obama criticisms of the war on terror, Mr. Chertoff replied that it was impossible to overstate the sobering effect of learning the true magnitude of the threat and bearing responsibility for thwarting it. On another occasion, former Attorney General Michael Mukasey, who as a federal judge presided over terrorist trials in New York, was asked the difference between his understanding of terrorism then and as attorney general. “About the difference,” he replied “between what you thought you knew in the sixth grade and a post-doctoral education.”

Without a doubt, the decision to launch the Seals attack on bin Laden’s hideout and the risks that entailed changed the man. Whenever people go through their CEO transition to finally land their company’s highest office, they realize the enormity of the position. Nothing ever looks the same. The buck really does stop at that corner door. As you’ve undoubtedly heard before from Shakespeare,

“Heavy hangs the head that wears the crown.”

I am in a big believer in being prepared for reputational damage or crisis. My book on Corporate Reputation: 12 StepsTo Safeguarding and Recovering Reputation is all about learning from crisis and being ready for the next one.  As Weber Shandwick’s most admired stumble rate declares, every company should plan on some reputational mishap or misstep in the future. Nearly four in 10 companies have lost reputational status in the past year. I just read an article sent to me about the National Preparedness Leadership Initiative at Harvard. The initiative’s goal was to learn lessons from leaders who have faced crisis situations such as terrorist attackes (Israel, Madrid, London), natural disasters (Hurricane Katrina), health scares (pandemics), oil spills (Deepwater Horizon), etc. 

One of the first lessons they uncovered applies to companies and institutions and is:

“…that bad leadership – much like smoking – is a public health risk factor. Whether in the aftermath of a terror attack or a natural disaster, we have seen that when leaders don’t perform well lives are lost and people abandoned.”

And the second lesson is getting everyone on the same page so everyone can work quickly, effectively and efficiently on behalf of a common and shared goal. 

“Working together after a disaster requires forging bonds before a disaster.” 

Third, and a powerful lesson for companies, is to “expect every citizen to participate.”  Leaders have to listen no matter how soft or weak the signals are. And these early warning signs need to get to those who can act and whose job it is to protect reputation. Empowering employees is critical to averting reputational disaster. As the National Preparedness Leadership Initiative found, “citizen bystanders” can make all the difference as we saw with the shoe bomber and underwear bomber airline incidents of the past few years.

“We should regard these heroes as leaders in their own right.”

Harris Interactive just released their annual RQ (reputation quotient) survey among the U.S. public.  This is year 12 for the Harris RQ – that’s a long time and underscores the value that this kind of research brings.  Harris conducts the survey among  consumers on what they call the most visible companies in the US along with others that represent major industries. The study starts by asking people to nominate or name the companies that stand out as having the best and worst reputations overall.  The most nominated companies form the core group asked about. For this reason, one usually finds that those companies that have been in the headlines for reputational scandals are measured.  Besides the usual ranking of who’s on first and who’s struck out, Harris identifies several trends: 

• Among their “elite” reputation winners (i.e. most highly regarded), two reputation drivers stand out – “looks like a company that has high ethical standards” and “tends to outperform its competitors.” Again, this underscores the importance of speaking up and being an industry leader.
• How companies communicate also drives reputation according to Harris – communicating Sincerely, Accurately and Consistently correlates highly with positive reputation. Transparency and empathy count.
• An additional theme that Harris highlights is that those companies that “support the infrastrucuture” of Americans’ lives at work and at home also drives positive corporate perceptions.  This means that companies that help people get their jobs done easily at home and at work tend to be esteemed.  Interesting notion.
• All the major industry sectors saw year over year reputation improvements — particularly automotive.

Of course, there are always clouds and rays of light in any silver lining. And here it is….66% say that the reputation of corporate America is not good but there’s hope for improvement. This figure has not moved much from the 65% who said the same thing last year. So I’d say a solid thumbs down with cautious optimism. However, 22% say the reputation of corporate America is good with room for improvement (up four percentage points from last year).  Not so terrible. A miniscule 1% says corporate America’s reputation is great and can’t get any better (same as last year).  I sure would like to find out more about them to see what they are thinking or or if they are living in the clouds! Thankfully only 12% of the American public say corporate America’s reputation is terrible and there is little that can be done about it.  That’s pretty definitive. So all in all, hope is alive for corporate America and for those of us in the reputation management arena, it is in our hands.