I know I should get out of the house (the sun is shining) but I was so excited to read in the Wall Street Journal about a reputation committee being formed at Goldman Sachs. The lead director James Schiro is heading this effort as the lead director on the board and is apparenlty VERY focused on reputation, according to his first letter to shareholders. Reason I am excited? Because I am a chief reputation strategist, I am always looking for trends and firmly believe that reputation committees are going to being popping up in more Fortune 500 companies than in years past. For a speech I gave before women-directors-to-be a few weeks ago, I mentioned two companies who had reputation committees but that was all I could easily find in a quick search. Board attention to reputation is long overdue. Reputation is a form of wealth, a type of equity that you get to dip into when your company is in trouble or facing issues. You need a good stockpile to weather the everyday assaults most companies are facing day in and day out. It is heartening to see reputation recognized for the worth it is. Here are a few quotes I pulled from the WSJ article that give me hope.
“He [Schiro] said the board clarified the duties of its governance committee to manage Goldman’s relationships with the outside, guard its reputation and review philanthropic and educational initiatives.”
“We continue to be very focused on the reputation of the firm,” Mr. Schiro said in his letter. A “public responsibilities” subcommittee of the board’s governance committee was formed to focus on reputation, chaired by William George, he said.”
I was eager to read JPMorgan Chase CEO Jamie Dimon’s Letter to Shareholders this year. Considering the London Whale episode of the past year, I thought his Letter would be revealing. He clearly did not skirt the issue. I cut and paste some quotes below which are direct, apologetic and conciliatory. Also, I used the picture from the Letter to Shareholders here because it was surprising in that it almost looked like a man running for office but mostly because it is something that we advise clients which is to make better use of photos of their CEOs and execs with people (preferably employees) and not alone in some corner office isolated and solitary. You can’t know what is going on in your company by spending too much time in the office. It derails CEOs all the time.
What I like was how he presented his lessons learned for his reputation recovery plan. They are bulleted below as follows and include a favorite piece of advice of mine — problems don’t age well:
- Fight Complaceny
- Overcome conflict avoidance
- Risk Management 101: Controls must match risk
- Trust and verify
- Problems don’t age well
- Continue to share what you know when you know it
- Mistakes have consequences
- Never lose sight of the main mission: serving clients
On Responsibility: “I also want our shareholders to know that I take personal responsibility for what happened. I deeply apologize to you, our shareholders, and to others, including our regulators, who were affected by this mistake.”
On Complacency: “Complacency sets in when you start assuming that tomorrow will look more or less like today – and when you stop looking at yourself and your colleagues with a tough, honest, critical eye. Avoiding complacency means inviting others to question your logic and decisions in a disciplined way. Even when – and especially when – things have been going well for a long time, rigorous reviews must always take place.”
On the Aftermath: “There are a few things, however, that occurred this past year that we are not proud of. The “London Whale” episode not only cost us money — it was extremely embarrassing, opened us up to severe criticism, damaged our reputation and resulted in litigation and investigations that are still ongoing.”
On Reputation Committees: “That’s why we have a risk committee framework within the firm with extremely detailed reporting and many other checks and balances (like reputation committees, underwriting committees and others) to make sure we have a disciplined process in place to question our own thinking so we can spot mistakes before they do real damage.”
Each year Fortune publishes the 100 Best Companies to Work For in the U.S. While the bulk of the company evaluation rests on a comprehensive employee survey, Fortune publishes a wealth of employer statistics about benefits, diversity and jobs. Weber Shandwick has been cataloguing this data since 2006, enabling us to look at how each factor is changing over time and how reputations can be shaped by being a best company to work for.
Most Best Company statistics for jobs, diversity and benefits were unchanged between 2012 and 2013. However, this leveling off could be taken as a sign of good news. 2010 and 2011 were mediocre years for jobs and the improvement in job and diversity statistics in 2012 suggested that the market was starting to strengthen and reputations are stabilitzing. Similar numbers in 2013 may signify that improvement is still underway.
Below are insights into these jobs, diversity and benefits trends:
Jobs: The Best Companies reported virtually the same job statistics in 2012 and 2013, including median job growth (6%) and median voluntary turnover (7%). In fact, with the exception of 2010 and 2011 which were poor years for jobs statistics, median job growth has maintained a steady rate since 2006, only fluctuating between 5% and 7%. Perhaps this job growth range is a Best Company standard.
Improvement in negative growth may be a sign of recovering job market. After hitting a low last year (11%), the number of companies experiencing negative job growth remained steady in 2013 (12%). This is a drastic improvement from 2011 when 45% of Best Companies reported negative job growth.
The rate of Americans quitting is on the rise, suggesting that people across the country are becoming more confident in leaving their jobs to find work elsewhere. Best Companies, however, maintained the same voluntary turnover rate between 2012 and 2013 (8%). The difference between these two trends may reflect the impact that a good reputation can have on retaining a company’s workforce.
Diversity: Diversity initiatives at Best Companies have also remained mostly unchanged. The average percentage of women and minorities working at Best Companies has been consistent since 2008. But with women already comprising, on average, nearly half the Best Companies’ workforces, it is very possible that we will see this trend continue into the coming years. 2013 was another solid year for gay-friendly policies and benefits. Nearly all Best Companies this year have gay-friendly policies (99%) and the number of those offering gay-friendly benefits has hit a record-high (93%).
Benefits: The most noticeable change in employee benefits offered by Best Companies since last year is the decrease in number of companies extending compressed workweeks (down from 80% in 2012 to 73% in 2013). Also taking a small hit is on-site childcare, which fell below 30% for the first time since 2008. The Fortune evaluation, however, does not look at companies that offer flexible workweeks, which could be taking the place of these two benefits. Best Companies could be giving employees the opportunity to better balance their work lives outside of a formal perk. We may be starting to see this trend happening at companies not on the best-of list too. For example, while Yahoo CEO Marissa Mayer was recently in the media spotlight for banning working from home, it is possible that Yahoo employees have other options for work flexibility aside from telecommuting. The benefit with the greatest improvement is on-site gym, which hit a high this year (73%). All other perks remained largely unchanged from 2012.
On my travels, I met with the CEO of Ocean Park (disclosure: a client) in Hong Kong. Ocean Park is a theme park that promises to connect people with nature and provide memorable experiences for all. Although I had several memorable experiences seeing my first Panda and getting a personal behind the scenes tour of how Pandas are taken care of, I also had an unplanned memorable experience that had simply to do with people. After my presentation on Social CEOs to the executive team, Ocean Park’s CEO Tom Merhrmann joined us outside as we started our tour. Tom is a very social CEO as you can see in his discussion of the Halloween bash with Marketing Magazine or impersonating Elvis, let alone his presence on Facebook and LinkedIn.
When we were outside the meeting room, we quickly ran into two Ocean Park visitors who were enjoying the park. Within seconds, I saw Tom offering to take their picture with one of the girl’s cameras. I had no doubt that the visitors had no idea who he was but were only glad to have their picture taken together to create their own memories of the day. It was nice to see that how observant he was of his customers’ concerns. A few seconds later, I turned around to see him picking up some litter that had fallen to the ground. Between watching a CEO connecting with customers and picking up a speck of garbage to keep a park pristine as it could be, he reminded me that being socially-media savvy is just one element of leadership.
Weber Shandwick’s annual calculation of reputation loss – the “stumble rate” – finds that a few more of the world’s largest companies retained their esteemed status as their industries’ #1 most admired company during 2012. This is good news.
Each year Weber Shandwick measures the rate at which companies lose their #1 most admired position in their respective industries on the Fortune World’s Most Admired Companies survey. We call this the stumble rate. Between 2012 and 2013, 46% of the world’s largest companies experienced a stumble, slightly down from last year’s 49%. These companies did not have too great a stumble, however. On average, they dropped two places, falling from number one to number three in their respective industries. However, for those companies that did fall from their perches, the loss is agonizing. Boards of directors and CEOs will want to understand why their reputations eroded and why their competitors leaped upwards. Explanations will be in order.
Of course, the bright side of the coin is the non-stumble rate of 54%. This means that more than half of the industries in the Most Admired survey boast companies with durable reputations.
In addition to calculating the stumble rate, we also dig through the data, including the nine drivers of reputation, to glean some interesting insights about stumblers and non-stumblers. A stumbler is an industry whose top company last year is no longer the top company this year. What is interesting this year?
- 22 industries (out of nearly 60, give or take depending on the year) have never had a stumbler since we started monitoring the stumble rate in 2010. The most admired companies in these industries have been stalwarts of reputation: Automotive Retailing; Building Materials-Glass; Computer Peripherals; Consumer Food Products; Electric & Gas Utilities; Electronics; Entertainment; Household & Personal Products; Information Technology Services; Property & Casualty Insurance; Internet Services & Retailing; Metal Products; Mining, Crude Oil Production; Oil & Gas Equipment Services; Pipelines; Newspapers & Magazines Publishing; Railroads; Semiconductors; Apparel Retailers; Diversified Retailers; Food & Grocery Wholesalers; Office Equipment & Electronics Wholesalers.
- 13 industries have stumbled at least three times since 2010. The most volatile, with four stumblers each, are: Airlines, Energy and Life & Health Insurance. Those with three stumblers are: Computer Software; Consumer Credit Card & Services; Financial Data Services; Food & Drug Stores; Medical Equipment; Motor Vehicle Parts; Petroleum Refining; Telecom; Tobacco; Health Care Wholesalers.
- No one particular driver of reputation took a big hit or could be said to be the culprit for reputation erosion. The worst average declines among drivers across all stumblers were experienced only by two drivers – management quality and long-term investment. All other drivers declined by just one ranking position, on average. Perhaps some stabilization on what positively and negatively affects reputation is taking hold.
- However, four stumblers lost rank on all nine drivers. The hardest hit was the Airlines industry. The company that stumbled took the greatest blow on its quality of management driver (dropping 6 ranking spots). Ouch. Other hard-hit drivers for this company were innovation, social responsibility, long-term investment, product/service quality and global competitiveness (a loss of 5 positions on each of these qualities). The company that supplanted this stumbler improved on all of its nine drivers in impressive fashion, rising at least two rankings positions on each driver and four spots on two drivers (financial soundness and global competitiveness). This does not mean that this new “king of Airlines reputation” will necessary remain so…this particular company was also tops two years ago and, as discussed earlier, Airlines is among the three most volatile industries.
- From zero to hero in 12 months. One stumbler lost its enviable top position to a company that is a newcomer to the World’s Most Admired evaluation. This goes to show that even the most reputable companies need to be on guard from all angles – not just their traditional competitors.
As I mentioned, I am traveling in Asia to talk about social CEOs and generally spread the good word about our thought leadership and Weber Shandwick. It is so terribly interesting to present our research and learn what people have to say and listen to the kinds of questions they ask. Today in Shanghai someone asked me what type of emotional commitment a CEO has to make to become a social CEO. What a great question! It definitely takes an emotional commitment. Not only does a CEO have to commit time and resources but there is a genuine personal commitment as that goes hand in hand with being social. You are putting yourself on the line as well as your ego. It also takes courage. In our new upcoming research which we have not released yet, executives are quite aware that being a social CEO takes courage. It is not for the faint-hearted. However, one CEO reminded me that the CEO job is all about risk anyhow. True.
In addition, at a presentation yesterday in Beijing, someone mentioned that even if you cannot get your CEO to be social (meaning using social media in some shape or form), CEOs need to commit to “the intrinsic value of sociability.” He rightly said that sociability (whether online or not) should not be ignored in this business environment. It can make a significant difference. Smart advice.
Am on a tour of Asia to talk about our research on social CEOs. Obviously, social media is at different stages in various markets which is making my presentations very interesting to me (hopefully to others too!). When I was in Tokyo earlier this week, we found ourselves talking about how new social media was still new (only 10 years old at most) but how quickly it had grown in Japan recently. My Japanese colleagues told me how the reputation of social media or SNS (social networking systems), as they call it, has improved after the horrific earthquake and tsunami of two years ago. Since the telephone networks were not working, people turned to Twitter and Facebook to communicate. On the Twitter blog, they said that there was a 500% increase in Tweets from Japan when the earthquake hit. In turn, I told the story of how websites changed from static brochureware after 9-11 into two-way gateways when it became apparent that people wanted to be able to find out from company websites if people were okay, if financial transactions were still going through and what time to show up for work the next day in New York. Interesting parallels of how disasters can quickly change behavior and how social media’s reputation turned positive when emergencies are at hand.
Am trying to keep my eyes open. I arrived in Tokyo late last night or should I say early this morning and hoping to adjust before I hit the road visiting our offices, talking to media, presenting research on social CEOs and meeting clients. I thought it would be a good idea to look at The New York Times and understand a headline I saw about “fire ice” in Japan. Why that would necessarily keep me awake, I can’t explain. Perhaps I thought it would distract me from wanting to sleep.
But I was glad because I also found an uplifting oped from David Brooks. I was drawn into it because he started out talking about how he goes to conferences hoping they will provide him with fodder for his twice-a-week columns. His conclusion is that these conference conveners are the same ones that make it on the glossy covers of business magazines and other upscale publications. They are flashes in the pan. He then goes on to say that all those quiet, unassuming, downhome executives are the real movers and shakers we should be hoping to learn from. He says the following as way of contrast with the cover boys:
“Meanwhile, the anonymous drudges at American farming corporations are exporting $135 billion worth of products every year and transforming the American Midwest. The unfashionable executive at petrochemical companies have been uprooting plants from places like Chile, relocating them to places like Louisiana, transforming economic prospects in the Southeast. Most important of all, the boring old oil and gas engineers have transformed the global balance of power.”
Brooks pays homage to the “Material Boys” — the people who grow grain, drill for fuel and lay pipeline. He calls them the real winners. This peaked my interest because it was unusual to read such reputational support for the oil and gas industry but here it was. The oil and gas industry is usually a fairly maligned sector but Brooks gives them a thumbs up for providing jobs, keeping emissions down and making us energy independent in a big way. Always good to see a reputation shot in the arm.
As you already know, I am keenly interested in how CEOs manage their tenures. In my book on CEO reputation, I referred to the various stages of a CEO’s tenure as the seasons of a CEO. When I wrote it several years ago, it started with the Countdown period (pre-announcement), the first 100 days, the first year, the middle years and ends with the last 100 hours and legacy-setting. Since then, I have continued to follow CEOs closely but have been particularly fascinated by how CEOs can use social platforms to build their companies’ reputations and to some extent, their own. That is what I explained in this new article on CEOs getting social in their early tenure. (See also Weber Shandwick’s Socializing Your CEO II)
Surprising to me, despite billions of people communicating and socializing online, little has changed in experts’ advice to CEOs or other executives on how to navigate their early tenure by taking advantage of social tools. In three separate research investigations on how CEOs spend their time by Harvard Business School, the European University Institute and the London School of Economics, and Fondazione Rodolfo Debenedetti, the words “social” or “digital” did not appear once in the nearly 30,000 words written. Management consultants’ white papers on CEO transitions reveal little attention to how to effectively use social platforms. I have about 15 articles with smart advice on CEO successions and transitions that I send to new CEOs and not one mentions using social media. Further still, an online search of the most relevant 30 hits for “how CEOs should use social media in their first 100 days” does not retrieve a concise blueprint whatsoever. Instead, the mentions consist of lists of Twittering CEOs, reasons why CEOs don’t use social media, events and primers for getting into the social game, articles written by CEOs of digital agencies, and do’s and don’ts for CEOs who use social media.
Social media should be incorporated into new CEOs’ early playbooks. Whether CEOs are communicating, engaging in two-way conversation or simply listening in, social media platforms should be gradually adopted. As technology increasingly permeates all aspects of business and society, CEOs cannot afford to be out of touch with their cultures, how their products or services are being received and what their competitors are up to. Moreover, as the next generation of technology-literate CEOs start taking office as 77 million baby boomers leave the stage, being socially-literate will become the norm, not the exception.
For these reasons and because all these management consultants seemed to be overlooking social media as a leadership tool in their early CEO days, I wrote this article titled Get Social: A Mandate for New CEOs. It just appeared this week on MIT Sloan Management Review’s nicely redesigned Social Business site. Please take a look if you are a new CEO and getting the social bug! Or if you are advising CEOs to jump on the social bandwagon even a little. I firmly and proudly believe that this might be the first (or among the very first) articles on how and why CEOs should be social citizens at the start of their tenures and not wait til their seasons come to an end. There are some great examples from CEOs and presidents of companies such as Aetna, Etsy, GM, MassMutual, Best Buy and BAE.
Bill Keller wrote this fascinating piece in The New York Times about how the Catholic Church could repair its reputation. As he points out, the Church operates just like a business with more than one million workers, one billion or more customers, more outlets than Starbucks, more real estate than Trump and a powerful lobbying arm. And like many companies today, it just lost its CEO and has the opportunity to reset its reputation and restore its luster now.
Keller asked several consultants how they would go about advising the Church to repair its reputation as they name a new Pope and move forward. Here are their suggestions:
1. Find the right new pope. One with drive and charisma who is communications savvy. One who is more than a caretaker. A Pope who is dynamic as well as a road warrior with unending energy to persuade customers back into the fold.
2. Manage the culprits out. Out with those who have sullied the Church’s reputation. Or as they say, “managing out” the ones responsible for the abuses of recent years. This would include full disclosure behind how predatory priests were allowed to stay within the institution. And third, hire a highly-regarded compliance or ethics officer who would have full support from the top. Keller quotes Wharton’s Michael Useem and his experiences helping to clean up the Tyco mess of years past.
3. Understand the past but look ahead towards the future. One consultant suggested a big time summit or strategic review that would be responsible for developing a new and improved Church strategy, mission and values with a plan to execute accordingly.
4. Adopt a global/local point of view. The article describes one consultant’s idea to let its 220,000 parishes make their own decisions attuned to local customs and preferences. “Rome could encourage the parishes to be laboratories of worship.” Interesting idea. Beta labs full of women participating, gays welcomed, local music.
5. Go social. Bring the Church into the digital age…fast. I did not realize this until Keller pointed it out but Pope Benedict tweeted as @Pontifex but only 35 times despite having 1.5 million followers. A social media strategy would go far in encouraging meet ups and spreading news and information to the committed. I have just the right document for him too….our research on social CEOs. Perhaps the Church could get some lessons from President Obama’s social media machine.
6. Get PR support. Interesting since that’s the business I am in. Keller rightfully states: “Its stock response to criticism from without or dissent from within has been to been to drop into a defensive crouch, stonewall or go negative. That can come across as bullying and arrogant — in other words, not very Christian.” Media training and message development would definitely be high on the list here.
What would I add to this list..
7. Build a solid crisis plan that raises red flags when early warning signs show up and design rapid response mechanisms. Figure out how to stop the leaks and understand how it happened in the first place so it does not happen again.
8. Measure the Church’s reputation now when it is at its most challenged so that the Church could mark progress as a new Pope begins and reform makes it to the agenda in the year(s) ahead.
9. Commit to a strategic internal communiations plan that engages its customers and followers. Get everyone on the same page. Start by going on a listening tour and asking what needs to change and what can stay the same. Feed back that information and describe how the Church will tackle its greatest problems and improve on its strengths.
10. Build a reputation advisory council that can help restore the Church’s reputation for the long-term. This is serious business.