Archive for February, 2012
CNNMoney recently asked the question about whether CEOs should be speaking out on hot issues of the day. It is a fair question to ask. Years ago, CEOs would never really speak up or out about global climate change, saving the whales or getting girls to become engineers. The article cites the Human Rights Campaign video that has several CEOs speaking out on very hot issues such as same sex marriage (CEOs from Nike, Goldman Sachs, Starbucks and Microsoft). As we witness the growing incivility in Congress, it is not terribly surprising that people are turning away from government to business to lead on some of the greater issues of the day that affect the greater good. Note that Senator Olympia Snow from Maine’s resignation yesterday after three terms due to the political “lack of comity.” Companies and CEOs take on more political issues to attract the best talent, align the values they preach to employees with their actions and to reach common ground with their customers who care more about these issues than they used to when purchasing products. So far, I have not seen terrible backlashes from consumers in the positions that some of these CEOs have taken. Maybe now is the right time.
- 95% (a lot) of major companies have suffered at least one reputational crisis in the past 20 years
- Major companies suffer a “significant” reversal of fortune every seven years
- One out of two (50%) of these reputational failures were tied to having the wrong business strategy or model; 15% from lawsuits; 10% from merger and acquisition issues. Interestingly, the CEO of Willis Global Solutions Consulting Group said that none of the crises were related to natural disasters until 2011. That is hard to believe since there have been plenty of natural catastrophes over the past 20 years that should have impacted companies such as floods, hurricanes, droughts, food shortages, cyclones, earthquakes, SARS, etc.
Also wanted to mention a recent analysis that came from the 2012 Harris Interactive Reputation Quotient (RQ) and was reported in PRWeek. Harris Interactive reported that advertising has less of an impact on company reputation than social media or new stories. Research continues to show that word of mouth from news stories with negative information about companies drives perceptions more than we realize. We learned that in our Company Behind the Brand: In Reputation We Trust. Consumers are talking about more about company wrong doing than right doing and advertising may not be as able as it used to be in rehabilitating brand reputations.
Enjoy the Oscars if you are watching tomorrow!
Just saw this from the Hay Group. It’s pretty cool. People are asked to make their predictions about who will top the Fortune Most Admired Companies survey in various countries and sectors as well as by the 9 drivers of reputation. I love the dragon theme and design. It is a way to draw attention to the release of the survey on March 1.
The votes are already in from top executives, analysts and board members so here is a way for the “masses” to vote on who their choice for most admired corporate reputation is. So if you are up to predictions, this might be fun. Definitely auspicious.
Beautiful morning here in New York. I even hear the birds chirping, almost like Spring. However, for me, it is a sit-down day. I am working on an article which I will tell you more about later but I am looking at many hours in front of my laptop as I draft away. I already started my list of what I want to do when it gets done in a few short weeks. When I wrote my books and other articles, I started a similar list that contains all the things I want to do on an ordinary Saturday or Sunday like see a movie, go out for dinner or lazily walk in the park. Anyhow, back to my blog post. I have my own reputation and risk to manage with this article looming before me.
I kept an advertising insert from a few weeks ago because it had a few good stats on reputation. It was on Risk Management, a favorite of mine because reputation often comes up. It was written by Joe Mullich. I am unable to find the link, apologies. A few interesting facts:
- Accenture found that 44 percent of companies do not gauge reputational risk
- The Federational of European Risk Management Associations (FERMA) along with the Institute of Risk Management (IRM) found that reputation risk from social media is cited as a “material risk” by nearly 50 percent of European companies, making it one of the greatest threats that companies face.
- Corporate responsibility or CSR is having a large impact on consumers’ buying habits.
- Reputation is seriously affected by missteps. Mullich’s section cites a 2010 study of the world’s largest 1000 companies and found that 80 percent of those firms have a major “reputational” event every five years that causes them to lose one fifth of their value.
I particularly liked #3 above because we found a similar trend in our recent study on the importance of the corporate brand behind the product brand. And this quote intrigued me….”The higher the cost of the purchase and the more that translates into a long term relationship, the important reputation becomes.” I think that is exactly right. When consumers are buying big ticket items or even medium sized ticket ones, the relationship is deeper and the consumer wants to get it right. They want to invest their dollars with a nod to doing right and supporting companies that treat employees right. The big shift however is that consumers feel this way about the company behind the brand for smaller, everyday purchases.
The article also mentions how insurance companies are introducing reputational risk or crisis management insurance policies (something we know about) and interestingly, that there is a new data terminal that incorporates a reputational risk indicator “which allows investors to identify the severity of criticism and negative press coverage directed toward individual companies and market sectors.” That’s new to me and quite interesting. Perhaps it is one of those predictive systems that advise companies on emerging threats that we have seen as more clients are being proactive vs. reactive.
Just was forwarded an interesting study out of Northwestern’s Kellogg school. It found that the share price of a company that is being boycotted drops nearly one percent for EACH day of national print media coverage. Ever wondered what happens when those protesters zero in on your company and tell people not to buy your products? Often I will hear the response, “The boycott is not affecting our sales so let’s not worry too much about this.” However, the research uncovered that perhaps your sales are not being affected, but watch out for your reputation and stock price. Assistant Professor Brayden King found that Day One may not be as much a problem (decline of one half of one percent in share price) but there is an average decline in share price of 0.7 percent for EACH day afterwards that the company remains in the national print media spotlight. After looking at 177 firms who were boycotted over several years (1990 to 2005), King concludes that there is a clear link between reputation and media coverage. And when you think of today with the Internet, whoah.
I liked this fact — about 25% of those companies generated a concession from the targeted company. What does that say about the other 75%? Perhaps there are some behind the scenes negotiations that we are not privy to. And clearly companies stuck to their position if they felt they were right.
Also liked this fact. King used the Fortune Most Admired Companies ranking (one of my favorites) and found that boycotted firms with a high reputation ranking generated 4.4 times the coverage generated by boycotted firms that were unranked, three times the coverage of those in the lower quartile and six times those in the middle ranking group. Essentially, the bigger you are and the more admired, the greater the coverage when boycotts land on your door. Like I often say, when you make it to the top of your industry in the Most Admired, you might as well paint a bulls eye on your back (or logo).
I have always wanted to do this research. I was glad to see that someone else did it — how CEOs spend their time. Over the many years that I have been involved in understanding and studying CEOs, I have been asked for whatever information I have on how CEOs spend their day and particularly how they gather information. Many of our clients want to better understand where they are and what they do all day. In addition, I have always maintained that employees wonder too. If you asked employees, what their CEO does all day, most would not have the foggiest idea. Many people, in fact, think that CEOs spend their days counting money.
So the research by a team of academics from the London School of Economics and Harvard Business School set out to answer the question of what the boss is doing most of the time. Some of the findings are discussed in today’s WSJ. The Executive Time Project, as it is dubbed, found that this is how the average CEO’s 55 hour work week breaks out. Interestingly, they had CEOs’ assistants fill out the diaries to gather the information.
- 18 hours in meetings
- 20 hours in miscellaneous (travel, exercise, personal appointments, etc)
- 6 hours working alone
- 5 hours in business meals
- 2 hours in public events
- 2 hours on conference calls
- 2 hours on phone calls
That equates to the following over a year (figuring 50 weeks with 2 weeks off for vacation):
- 900 hours in meetings per year
- 1,000 hours in miscellaneous (travel, exercise, personal appointments, etc)
- 300 hours working alone
- 250 hours in business meals
- 100 hours in public events
- 100 hours on conference calls
- 100 hours on phone calls
Obviously, they spend a LOT of time in meetings and probably traveling. Again, some of the questions I would like answered has to do with how much time these captains of industry spend using social media or monitoring what is being said about their companies online. Although there is mention in the article about a CEO who also uses his time texting, instant messaging and video chatting, the time spent being “social” was not broken out. How many are Social CEOs? Will have to investigate if they were able to isolate that piece of information but doubt it.
I was glad to find these facts about online reputation management companies this week. I’ve often wondered about the market for them as they have boomed in recent years. An estimate for spending on online reputation is provided by BIA/Kelsey — $1.6 billion for 2011 and an expectation of $5 billion by 2015. This is for small and medium-sized businesses. My sense is that this is the market because one or two negative customer mentions or reviews can really wipe dollars off that precious bottom line. Fixing your online reputation is not easy. If it were, everyone would have a pristine reputation. In fact, it takes years for a reputation to build or recover — just think about BP and how painful that recovery has been although they are slowly making progress. Even when hiring an online reputation management company, it takes at least a year to see change from what I have been told. And that might be optimistic. In fact, I went to check out an uncomplimentary mention about an executive I know that first appeared at least four years ago. It was still there although it had a few more positive mentions ahead of it. But four years is a long time to correct something online. This executive did not hire an online reputation management and just took her chances.
A quote that surfaced in the article where I found this spending estimate caught my attention, “If the Internet is the Wild West, then online reputation management is Dodge City.” Whoah.
Today I was reading this article on there being no women on Facebook’s board. Only seven men. And many of Facebook’s users are apparently women. Although I had heard this before, it was quite stunning to me considering their impending IPO.
And I was also reading an article on young CEOs in the WSJ at the start of the week and noticed that the featured CEOs were all men.
Perhaps I am missing something but where are all the women or at least a few women of them or at least one? Is it me or is anyone else concerned about this? If you want to learn why women are important to business success and reputation, take a look at the special report from The Economist…..amen.
Is it me or is there an article every single day about how to manage your online reputation, particularly if you are a job seeker. I know that I get Google Alerts as to when anything surfaces on online reputation but I don’t think I can read any more. For instance, today I got another one and I took a deep sigh. How many times do people have to read that they should do a Google or Bing search of their name to see how they are being talked about online? How many times do people have to read about buying their name on a domain site or be positive online and off? Oh well. I think I figured out the answer. “A lot.” Obviously people do not follow these simple rules because otherwise there wouldn’t be a demand for this information. And from my experience with job seekers, many people do not think twice about how often employers check out candidates online (I think that 70% of employers check online).
So I get it. But I can still ask the question. I guess it is just me.