Archive for June, 2012
Barron’s World’s Most Respected Companies came out last week. It is a highly coveted list for companies and must please CEOs and boards. Barron’s lists are definitely worth following because the ratings are gathered from money managers, not consumers which seem to be the stakeholder of choice these days. Apple was number 1 this year which is not a great surprise. Interestingly, the writer mentions that the problems Apple has faced with FoxConn appear to only be a distraction for now. As always, the ups and downs of company reputations are revealing, particularly among this money-centric set. As much as I like the list, I like the write up more because there are usually interesting nuggets of information. This year, these stood out:
· Investors gave more thumbs ups to US based multi-nationals. Barron’s says that this is because of the outperformance of domestic stocks in a year of global tumult and the outperformance of quality mega-cap shares as global growth expectations diminished. Six of the top 10 are among the 30 members of the DJIA. This was more pronounced than usual. Even though the money manager sample is US based, Nestle managed to sneak into the top 10 which says a lot for that company’s prospects.
· What drives perceptions of the world’s most respected companies among this select set? Strong management and sound business strategy top the list, followed by business ethics, product innovation and then financial performance. In the past two weeks, it seems that I have had more conversations about Ethics and reputation than I usually do. I have been asked to define business ethics, trust and reputation and how they are interchangeable and need better defining. And as you see below, ethics ranks #3 among money managers in their respect for companies.
Most Important Attributes of Companies They Respect
Sound business strategy
Ethical business practices
Revenue and profit growth
· Russian and Chinese companies did not perform well in the rankings. Clearly there is a perception of “untrustworthiness,” says Barron’s.
· They predict that the global healthcare companies might be due for a reputational upgrade. Barron’s says that right now all the pharma companies are cast into one big “ugly” bucket of drug-patent expiration, reimbursement head winds and weak development pipelines. “Funny, it would seem a forward-looking investor could make the case that aging populations in the developed world and growing medical spending among the emerging middle-class could boost these giants’ fortunes in the coming years.”
Every year, we at Weber Shandwick work with executive recruiter Spencer Stuart to survey worldwide CCOs (chief communciations officers) about the challenges and opportunities facing them. The survey is called The Rising CCO. It is a subject that I have always been very interested in. My interest does not stem solely from being in the public relations industry but in the complexity of the communications position today. How a company communications in good times and bad speaks volumes about the management, its values and its attention to the public trust. This year, as in other years, we asked about the impact of social media on CCO positions, what senior managment expects from them, how their effectiveness if measured, the number of board meetings they attend, the qualities needed to be successful, crisis management and a host of others. Here’s one fact for today that has to do with reputation. I will continue to discuss some others that are reputation-related.
We learned from CCOs that improving corporate reputation tops the list of senior management’s expectations for corporate communications this year, as reported by approximately two-thirds of global CCOs (65%). This focus on reputation was followed by obtaining positive media coverage (60%) and increased support of brand reputation/marketing (56%). This prominence for reputation is not surprising given that reputational crisis is practically a fact of life for large companies globally – nearly three-quarters of CCOs (71%) experienced a crisis threatening their reputation in the past two years. I was not surprised either by how important positive media coverage is although I know how difficult that is to secure enough of what will please a CEO. Quantity and quality always matter at the top.
More to come on other interesting feedback from the study.
Am stealing shamelessly here because I found this so interesting. The survey is from the Luxury Institute and this is their press release. Traditional media is still an important source to wealthier consumers when it comes to learning about CSR efforts by companies but watch out, social media platforms are gaining. However, according to this survey, even the wealthiest are being careful about costs, no matter how ethical a company is.
“In a new survey by the independent and objective New York-based Luxury Institute, “Corporate Social Responsibility: The Wealthy Consumer’s Viewpoint,” U.S. consumers earning at least $150,000 per year define socially responsible corporate behavior, rate companies and divulge importance of socially responsible practices in shaping purchase decisions. Responses were compared to those from the same survey in 2007.
Most (82%) wealthy Americans define social responsibility by a company behaving ethically with employees, customers and suppliers. Environmental behavior and philanthropic actions are both named by respondents as an essential component of CSR (58%).
Almost half (45%) of wealthy consumers say they seek out brands with high ethical standards, but only 39% of these shoppers would be willing to pay a premium. That’s down from 56% who would pay a premium in 2007. Apple, BMW, Coach, Lexus, Mercedes-Benz, Nordstrom, Starbucks and Whole Foods are frequently cited as highly ethical standouts.
Twenty-seven percent of wealthy consumers learn about companies’ socially responsible behavior via Facebook or Twitter. That’s up from 8% who received their information from social media in 2007. Reading news articles is the most popular (52%) way to learn of CSR efforts, down from 64% five years ago.
“Even wealthy consumers have de-emphasized social responsibility as this economy focuses everyone on price/value and away from social issues,” says Luxury Institute CEO Milton Pedraza. “Nevertheless, we see that luxury and premium brands that are socially responsible do better even during recessions because doing well by doing good is a universal and timeless concept.”
Respondents reported average income of $307,000 and average net worth of $3.1 million.
Woke up this morning to an incredible oped by Charles Blow on incivility in this nation. He talked about the recent incident of the school bus monitor (a grandmother) and how she was taunted by several young kids. And taunted she was. Very hard to even watch the video of this bullying. Blow talks about the divide in this country and how our discourse has changed. We at Weber Shandwick have been tracking civility in America for several years now and just released our third survey two weeks ago. Although the video makes the point in spades, Americans told us this year that 63% of Americans say we have a major civility problem in the U.S. and 55% expect it to get worse. The rise of cyberbullying has doubled. Busbullying has just gotten worse. Will it stop? Hard to feel confident after seeing this video. Blow writes:
“But what, if anything, does this say about society at large? Many things one could argue, but, for me, it is a remarkably apt metaphor for this moment in the American discourse in which hostility has been drawn out into the sunlight.
Those boys are us, or at least too many of us: America at its ugliest. It is that part of society that sees the weak and vulnerable as worthy of derision and animus.
This kind of behavior is not isolated to children and school buses and suburban communities. It stretches to the upper reaches of society — our politics and our pulpits and our public squares.”
The good news from our survey that shines a bit of light on this dismal situation is that Americans are trying to take some charge of rooting out incivility in their lives. Nearly 4 in 10 have blocked or defriended someone online because of their uncivil commentary or behavior. That’s say something.
RED CURLY HAIR. I have been fascinated by the new movie Brave and what I have read about how they fashioned the red curly hair of the first female leading protagonist for Pixar named Merida. “Merida’s explosion of fiery ringlets started as a series of springs on a computer. The Pixar team created many kinds of springs, including short, long, fat, thin, stretched, compressed, bouncy and stiff. In order to give Merida’s hair volume, the springs were entered on the computer screen in layers. The layers varied the length, size and flexibility of each curl. We used 1,500 hand-placed, sculpted individual curls. There is this weird paradox where a ‘spring’ of hair needs to remain stiff in order to hold its curl, but it also has to remain soft in its movement.” Since I have red curly hair that does moves this way, I found it fascinating how challenging they found it to do when I see it live every day. It is a miracle of physics and hair-raising proportions (Merida has more than 1500 individually sculpted, curly red strands that generate about 111700 total hairs!) And also, I have a niece named Merida. My sister visited Mexico many years ago and decided that she loved the name. Apparently the Pixar people had the same experience because I read that it is a name found in both Spain and Mexico’s Yucatan peninsula. Merida will be the new Ariel. Red curly hair is going to break through and have a reputation of its own.
COMMUNICATING ETHICS. I attended a conference this week on best practices in ethics communications. The conference was sponsored by Ethisphere and others. Several companies presented how they have built a culture of integrity and ethical conduct and communicated it successfully. What was most telling was how much work and persistence went into building ethics-minded cultures. Presentations came from AFLAC, GE, AECOM, Realogy, Fluor and a few others. Every company had the usual communications vehicles to show such as posters, contests, wallet fold outs, web sites, internal awards, Q&As, banners, videos, newsletters, logos, screensavers, full weeks dedicated to compliance, and so forth but you could tell that ethics was baked deep within each company and there was zero tolerance for misbehavior or wrong-doing. Moreover, these companies were willing to tackle the hard questions that get raised when ethics is discussed and confronted. Once a company goes down this road, there is no looking back. Interestingly, AECOM spoke about a global advisory board which included business and political leaders that they posed questions to and asked for feedback. They found it useful when confronting the challenges of different cultures around the world. Another great example of a truly imprinted ethics program came from the Panama Canal Authority. Their program was stellar. GE representatives also spoke about their in-depth initiative which they refer to as The Spirit (Ethics) & The Letter (Compliance) and the importance of tone at the top. Amen. For all the best practices presented, the CEOs were directly involved and critical to success, particularly because budgets have to be set aside for these kinds of initiatives. GE also spoke about the “need to get caught doing some good things,” having the courage to follow through and recognizing that there are no half measures. Fluor’s efforts were compellingly presented because they are a “quiet” company that made a big public commitment when they helped found the Partnership Against Corruption Initiative (PACI) in 2004 at the World Economic Forum.
STORYTELLING. Just to close the week, I was reading an article in The Economist on my way home last night about how Japanese companies could do a better job of storytelling and marketing their companies. It talked about the cultural bias where making things is considered more virtuous than selling them. It closed with an interesting quote that sums it all up. “In Japan, people say: the nail that sticks up gets hammered down—an engineer’s view. In the West: the squeaky wheel gets oiled—a salesman’s mantra. In a crowded global marketplace, even the best-engineered wheels need to squeak.” Food for thought.
I guess I knew it would happen quickly but I did not expect it to happen so soon and so disturbingly. Our survey on Civility in America was released just this week. Many Americans (55%) believe that incivility is only getting worse and 81% believe it is harming our future. No doubt about the fact that it is hurting our reputation. Although I was immersed in my work today, I just glimpsed at a Twitter mention of a reporter interrupting President Obama’s speech in the Rose Garden on a new policy on immigration. Apparently the reporter called out or tried to interrupt with questions which is unusual when the president is speaking. Where’s the decorum these days?
WSJ: Why do you use Twitter?
Bertolini: I have three objectives in my role as chairman of the company. One is to make sure that I set the company on a path for the next 160 years. I have an obligation to keep it moving forward. The second is to make health care reform real and tangible for people, because the system is broken. And the third is to re establish the credibility of corporate leadership in the eyes of the American public and that’s the loftier of all of them. And the only way I can do that is by humanizing the job. And humanizing the job means I have to be out there. I have to be available. I have to be willing to hear the bad, the good, the ugly.
I have to be willing to interact when things are difficult. We’ve got to a point where people [on Twitter] are saying ‘I need this done,’ or ‘this is happening to me,’ and I get them to the right people.
A reputation for uncivil discourse is not good for America’s reputation. We at Weber Shandwick just launched our third annual survey on Civility in America. We started investigating this fascinating topic about two years ago when I heard political consultant David Gergen mention at a conference that President Obama was seriously giving thought on how to make civility more interesting so that we could eradicate the rising tide of incivility in our nation. This idea just stayed with me for weeks and I thought that this had to be one of the more provocative subjects for further research and one that a leading public relations firm should investigate and begin making a difference in. After all, we are all about conversation, engagement and dialogue. Of course, little did I realize at the time, that the topic would turn explosive and that few Americans would be untouched by incivility a few years later. We started thinking about civility in America before the horrible events that occurred with the shooting of Gabrielle Giffords in Arizona, Tyler Clementi’s suicide, cyber bullying and the debt ceiling debates — just to name a few instances of extreme incivility. The amazing part of learning about incivility for me was how it extends beyond what we first think about when we hear the word incivility. It extends beyond politics and the media to schools, shopping, roadways, and our neighborhoods.
Some of the findings are truly amazing….
- 55% of Americans expect civility in America to get worse
- 81% believe incivility in government is harming America’s future
- 72% believe incivility in politics deters qualified people from going into public service
- 67% expect the upcoming November election process to be uncivil
- 83% say a candidate’s civility will be an important factor in the 2012 presidential election
- 39% have defriended or blocked someone online because of uncivil behavior
- 18% have personally experienced cyberbullying or incivility online (double from last year)
- 66% say cyberbullying is getting worse
I will continue to post about this because America’s reputation deserves better. The heartening note was that people are starting to stand up against incivility. We found that nearly 4 in 10 Americans are defriending or blocking people online who are uncivil in their commentary and even more (44%) said they have ended a friendship over someone’s uncivil behavior. This is optimistic news.
Found some interesting comments regarding being a social CEO. This came from a blog post from Spencer Rascoff, CEO of Zillow, the online source for information on homes for sale, etc. He was pondering what it meant to be a social CEO….
This caused me to ponder what it means to be a social CEO. Yes, it means that I participate in social media on Twitter , Facebook, Pinterest , Zillow Advice and of course on my two blogs. But it goes beyond that. It’s a state of mind. Being a social CEO means that I’m always accessible – to my employees, our advertisers, our business partners, and our users.
And in response to what happens when Zillow became a publicly-held company:
I was worried that when Zillow became publicly traded in July 2011, we might have to reduce our socialness. But I’ve worked hard to maintain a social culture even while being public. And it has been less difficult than I expected. True, there are plenty of topics that are off limits – financial results, forward-looking statements, and the like are all no-nos. But I’m always permitted to talk publicly about the company and our strategy, and to engage in discussion and debate about Zillow and the industry. I think CEOs that choose not to participate in social media by pleading “we’re a public company” are being cop-outs. If they don’t want to use social media, that’s fine. But don’t blame the lawyers.
The point is that being a social CEO is a state of mind.
Every week I think nothing new is happening in the world of reputation. And I am always wrong. There are always CEOs coming and going, companies that get into trouble and lose reputation points and new things to learn. That’s the best part. Here’s a few:
1. Booz Allen released their fabulous CEO Succession report. I read it every year and welcome the insights. This year they focused on new CEOs, a topic dear to my heart and book. This year they found that 14.2% of CEOs of the world’s 2500 largest public companies changed over. This is a sizeable increase from last year when the turnover rate was 11.6%. This increase makes sense because as boards battled the recession, it was not the opportune time to change chief executive reins. Better to batten down the hatches when times are tough. Strikingly, Bozo found that outsider CEOs are making a comeback. In 2011, 22% of all new CEOs were outsiders compared to 14% in 2007. That’s definitely surprising to me since the trend has been in favor of insiders for a while now. The possibility is that companies need fresh new ideas and outsiders with global experience as they now look to grow. You should check out the report because there always is a lot of fascinating information on the world of CEO transitions. For example, outsider CEOs are more likely to lose their jobs, the number of CEOs being appointed chairman has declined and nearly 90% of new CEOs have not been a CEO before. That last fact is astounding and perhaps why we get asked about our services on CEO First 100 Days as often as we do. In another post, I will provide Booz’s insights on advice on CEO’s first year in office.
2. Reputation Institute released its worldwide reputation findings on the Most Reputable Companies. Their headline reads, “Reputation Is Impacted More By What You Stand For Than What You Sell.” In their research, they found that “People’s willingness to buy, recommend, work for and invest in a company is driven 60 percent by their perceptions of the company and only 40 percent by their perceptions of their products.” That’s an important finding and mirrors Weber Shandwick’s results on the importance of the company behind the brand. We are on the same wavelength, clearly. They also found that only 11% of the top 100 companies have better reputations abroad than at home. “It’s because reputation isn’t something that’s easy to export,” says Nicolas Georges Trad, Executive Partner at Reputation Institute. Love that quote.
3. I also attended Spencer Stuart’s CMO Summit this week on innovation. It was illuminating in how innovation gets baked into companies from the head marketing honcho. Whereas one company CMO panelist was analytical in her approach, another was more artistic and qualitative. Goes to show that culture drives execution. From the panel, I learned about another usage of HIPPO which is always a bonus to me – it is a reference to the Highest Paid Person’s Opinion. Everyone in business knows what that means.