How do women build reputations that get them to the top? What’s the secret sauce or what’s the recipe for getting there? (Enjoyed using those cooking metaphors). On a near annual basis, we investigate top conferences for CEOs and other senior executives. For this year’s study, the firm examined speaking engagements, board memberships and honors of the most powerful women in business, based on Fortune’s 50 Most Powerful Women (MPW) U.S. list.
One of the ways to get to be a successful businessperson in the U.S. is by proactively connecting with external audiences. We are finding that speaking engagements are increasingly important and we are not the only ones who have noticed. If you read this article that appeared on the booming conference business, you will agree that the podium is the new LIVE MEDIA channel.
In our research and as you can see in this infographic, we found that the majority of women (72%) on the list spoke at one or more conferences in 2012, and, on average, had 2.1 speaking engagements during the year. The leading speaking forums in 2012 for these most powerful women included Fortune’s Most Powerful Women Summit*, The Wall Street Journal’s Women in the Economy, MIT Sloan Women in Management, Catalyst Awards Dinner, Fortune Brainstorm TECH and the World Economic Forum in Davos. A categorization of all of the conferences found that, by far, these women spoke at more industry-focused events than other event types. (*Not every woman who makes Fortune’s Most Powerful Women in Business list has a speaking role at its annual conference.)
Weber Shandwick’s research also shows that these executives are being acknowledged for their roles as leaders. On average, these female business leaders sat on 2.6 boards, the most prevalent type being industry/professional. Six in 10 women received an award or a place on a rankings or “best of” list. Of the honors bestowed upon the most powerful women in business, most (72 percent) were rankings compared to awards.
My colleague and friend Carol Ballock who runs our conference business had this to say: “Conferences, rankings and awards are essential for company storytelling. Women business leaders are leveraging these tools to communicate their companies’ messages and reinforce their company brands.”
Reputation resilience is a topic I often think about because it should be on all leaders’ minds. How can I build the most resilient culture so that we can withstand a crisis that risks our hard fought for reputation? A new report from Schillings in the U.K. examined UK FTSE 350 and leading private companies about reputation risk and resilience. Respondents were Communications, Legal and Risk executives. Here are some of the findings:
- All executives surveyed are spending more time on reputation risk management than they did two years ago — 80% say more time (among risk managers), 68% (among communications heads), and 53% (among legal executives). No one said less time.
- Only 17% say that there is formal reporting to the board of directors on reputation risk. Clearly, not good enough.
- The top five threats to their company’s reputation are (in rank order): business underperformance, information risk, operational risk, health and safety incidents, and employee behavior. Social media comes in at 6th place.
- When asked what was the biggest obstacle to making reputation risk management top of mind at the company they work for, 37% of respondents said “CEO/Board removed from reputation risk: lack of focus without a crisis and too much reporting.” That is unfortunate. Companies should not need a real crisis to get them to pay attention to risk management.
- Fortunately, communciations and legal executives are onto it. They know that their jobs require them to take charge of their company’s reputation and any associated risks. A full 72% of communications executives said they feel directly responsible and 63% of legal executives are responsible for their company’s reputation.
- How resilient are companies to facing challenges to their reputation? There is a surprising (to me) fair amount of confidence. 55% are “confident enough,” 29% are “very or extremely confident” and 16% are “not at all confident or unsure.” Although this bodes well for many companies, I would be wary – essentially 84% of top executives are confident. If you ask me, they are not worrying enough about all the possibilities that could befall their reputations. Risks to reputation seem to be coming from all directions today and being over-confident is the wrong stance.
Another interesting aspect of this newly issued report is that Schillings is a law firm. They have rebranded themselves to be all about managing reputation risk. Their tag line is “Law at the speed of reputation.” Serious business. What would compell a law firm to switch to focusing on reputation? Here is what they say about their transformation: “To continue to lead at a time of such extensive change, we’ve fundamentally changed our own offering. By combining our unrivalled expertise in reputation law with new risk consulting and IT security expertise, we have been able to create an integrated offer that continues to safeguard the successful businesses and individuals we represent whilst living up to the promise that underpinned our business from day one.” It would be hard to name many law firms that have done the same. Reputation is changing the face of organizations all across the globe and some firms see the opportunity ahead. Maybe Schillings sees the risks down the road for them as a law firm and are taking their risk by the horns. Interesting approach.
A new McKinsey survey among board members reports that members acknowledge knowing little about risk. Nearly three in ten (29%) say their boards have limited or no understanding of the risks their companies face. Even more compelling, members say their boards spend just 12% of their time on risk management, an even smaller share of time than two years ago. Not sure about you, but I’d say that the business environment has become more complex and risky, not less complex and risk-free.
This is not good news for executive teams. When it comes to risk management, reputation is high on the list of vulnerabilities that can damage a company’s good name. This has me thinking that if board members are not focusing enough on risk, executive teams are going to be held even more responsible for any misdoings and misdeeds. They had better been attuned to crises and risks that are lurking around the corner. CEOs and their direct reports should make reputational issues an A-1 priority on their management agendas.
I received an email about two weeks ago asking if I had information on whose most to blame when crisis strikes. Years ago, I asked that question of executives and if I recall right, CEOs received most of the blame, regardless of whether they knew about the problem or not. The McKinsey research is hinting at the same blame chain. The CEO takes all the credit when things go right and all the blame when things go wrong. The board is looking in all the wrong places. CEOs, beware.
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.”
Boards continue to see reputation risk as their top concern. In the third annual study by EisnerAmperLLP among board members, two thirds (66%) see reputational risk at the top of their agendas for concern, ahead of regulatory issues (59%). In fact, reputational risk has grown while regulatory risk has remained stable year over year. Both IT risk and privacy risk showed increases from the last survey and reflect the many breeches in systems security that we’ve seen which inevitably led to attacks upon a company’s reputation. Similarly, according to the report, crisis management, is also an indicator of reputational concern.
What do board members really mean when they say they worry about reputational risk? In an open ended question, board members are most likely to be talking about product quality, liability and customer satisfaction (30% of all responses) followed by concerns about integrity, fraud, ethics and specifically the Foreign Corrupt Practices Act, (24%). IT concerns fell in at about 12% and environmental concerns at 8%. It always surprises me how little attention is paid to environmental issues at the top.
How are risks assessed? About two in 10 get reports from executive management, discuss risk issues at board meetings and get help from professionals or outside experts. About one in 10 get information from the risk committee. That seems like an area ripe for assistance. The report interestingly mentions that recent years have not been kind to risk teams and that with all the recent issues and crises stealing headlines, boards are realizing that CFOs need greater support. In fact, the survey found that nearly two-thirds of boards are planning to enhance staff and increase audit coverage and about one in three are leaning towards hiring outside service providers.
I feel like I have read this article before. The title in USA Today yesterday was “CEOs stumble over ethics violations, mismanagement.” Is it 2002 over again when Enron, WorldCom and Adelphia made headlines over ethical transgressions and wrongdoing? I agree that there seems to be a rush of these events recently but I am not sure it is vastly different than it has always been. The Internet has certainly added to the scrutiny of corporate executives but the spotlights were just as glaring and intense as they were years ago. In fact, I tend to think that wrongdoing on the part of CEOs stayed in the news for a longer period of time than they do now. I am waiting for headlines about JPMorganChase CEO Jamie Dimon to be replaced soon. Not sure what will substitute for him in the days ahead but I can bet $5 that something will surface in the next week to knock Dimon off the front pages (so to speak). And whistleblowers have been around for a long time. It is not the first time I have heard about a note being sent to a board member about an executive transgression.
The real difference is that there is zero tolerance for these missteps and for a simple reason — “reputation.” It was interesting to me that the word “reputation” did not appear once in the USA Today article. Boards are making split-second decisions about CEO tenures because they know the downside of having their reputations tarnished, trashed, torn and tattered. Not only are their own personal reputations at risk but that of the companies on whose boards they sit (and that impacts their compensation which is often in stock). As Lucian Bebchuk, director of corporate governance at Harvard Law School said in the article, “Boards do seem to move faster to deal with scandals and public failings that attract shareholder and media attention.” Being in the headlines and chatted about online about reputation failure is the new scarlet letter. I hope that next time an article appears, the reputation damage that brings down share prices, dampens employee morale, attracts headlines and invites investor activists gets mentioned. The cost of reputation failings are higher than ever and the stain can be very deep. In fact, it takes years to wash out.
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.
Yesterday I was asked to talk about what I do at Weber Shandwick to our Crisis and Issues group in New York. It was an end of the week get together to take the edge off of all the long hours. I talked about reputational issues and answered several questions. It was a nice opportunity for me to reflect too.
I was asked where all the celebrity CEOs had gone which made me recall my first book on CEO reputation. The book was released at the height of the dot com boom when 22 year old CEOs were the norm and celebrity CEOs were plentiful. In my book, I tried to make the point that it was not CEO celebrity that mattered but CEO credibility. As I was answering this question, I realized that I hit on some of the right notes as to why CEO celebrity was not the same today but missed a few. In fact, I mentioned that being CEO today was not an easy job whatsoever. CEOs are much more embattled. Here are some of the reasons I talked about yesterday but others as well taken from an Economist article I was saving to post about.
- CEO tenure is shorter than it used to be (on average 6.6 years, according to Booz’s research). They usually come into office with great fanfare. They get approximately two years of grace when they start out (more like 18 months), 2 years to provide evidence that their strategy is working and two years to get pushed out. After six years like this, it’s best to be a CEO nobody.
- CEOs don’t have all the power anymore. Most CEOs now have separate chairmans that are looking over their shoulders and asking a lot of questions. Booz found that in 2002 48% of incoming CEOs were also chairmen. In 2009, that number dropped to 12%. Hard to be a celebrity when there is power sharing going on.
- CEO compensation is always a headline and increasingly links the CEO title to perceptions of greed. CEO compensation is actually declining.
- Shareholders and stakeholders are not sitting idle. They are much more aggressive. Some hedge funds are actively browbeating CEO and corporate decisions and in executives’ faces. The ridicule can get strenuous.
- Boards are more active too. They don’t want their reputations shamed either by poor CEO decisions or poor behavior. And according to Korn Ferry, new board members are more likely to be deep in international experience and have worked abroad. They are not necessarily golfing buddies like board members of yore. Angry birds maybe, but not necessarily tee time!
With all these barriers in place to curb the power of CEOs, celebrity CEOs can hardly flourish. Instead, we are looking at a new world of convening CEOs who communicate internally to employees, communicate online or through video to netizens, travel to speak to customers and influencers at forums they convene themselves (IBM‘s Smarter Planet method), partner with third parties and government to problem solve on today’s economic woes and so forth.
RHR International was mentioned today in an article in the WSJ about the recent revolving door for CEOs. Not that this is new. CEOs have been coming and going for some time now. But what was new was that among the 83 CEOs of publicly held companies surveyed, the board seemed to be a greater source of tension than it used to be. Nearly three quarters wish they were included more in board discussions of succession planning. And as one would expect, the top two threats to their tenure, according to CEOs, were the current economy (39%) and rapid industry change (22%). However, a third top threat to CEO tenure was strategy disagreements with the board (17%). As a watcher of CEO trends, I find it noteworthy that CEOs mentioned disagreements with boards and desire greater collaboration over transitioning. The disagreements over strategy (spin offs, shedding assets, etc) does seem to be a rising cause for CEO exits these days. Something has changed. I wonder if the new tension that is developing is because boards are more active now because of the criticism that they were no more than a rubber stamp on CEO activities or if the strategic choices facing boards today are infinitely more complex and disruptive. When no one knows the true answer, there is room for disagreement. CEOs and boards seem to be caught in this new tango.
Another finding which I liked seeing because it provides some hard numbers about something I have observed was that half of CEOs feel isolated and lonely. For this reason, CEOs should reach out to other CEOs in different industries, find mentors or retired CEOs to talk to. It can be debilitating so finding an ear to listen and advise is highly recommended.
The S&P downgraded the U.S. credit rating last night. The full report is here. What struck me in its overview are these two points (below) which directly speak to how our fiscal reputation is being managed. In other words, the ability of our governing leaders to work effectively as a management team is no longer putting the US at the head of the class. We all know that when corporate boards do not function well, they are called to task, reputations gets tarnished and board members find themselves disinvited to serve. We now see the same reputational metric of good governance being applied to our government and the picture is not pretty. S&P is essentially saying that our ability to govern fiscally and responsibly is ineffective, less stable and more unpredictable than it was earlier. And our ability to collaborate across parties is in question. It’s not just the credit rating that’s being discredited but our fiscal reputation as well. America’s reputation for fiscal safety is being downgraded as well.
More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.
Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.