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.”
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.
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.
A former colleague sent me an engaging article from Gawker about CEOs and hubris. The first half of the article was actually about powerful CEOs sock exposure when their legs were crossed on stage. But the article hit the nail on the head when it comes to CEOs. “A Wall Street CEO primarily serves as the human embodiment of the firm—the competent, reassuring face that the many-tentacled monster projects to the world. As Nassim Nicholas Taleb once said, ‘A C.E.O.’s incentive is not to learn, because he’s not paid on real value. He’s paid on cosmetic value.’ This is not to say that these wildly successful men are dumb; it is simply to say that their job is not about muddling in the details, or tinkering with the gears of the machine. The CEO’s job, in public, is to frame the perception of what his company does, to cast the company’s activities in the proper terms, so that it sits in the public’s mind in an acceptable way.”
I thought that this quote and the part that I bolded sums up well the role of the public CEO — positioning the reputation of the company to its many publics in the most effective way. Of course, I could go on about how important the narrative is and how it should be distributed to maximum effect. But it does go to the central core of the CEO’s external job today. Internally, the CEO’s job is vastly different — modeling the values of the company, inspiring and motivating employees, building a top team, and communicating its mission and purpose. Creating meaning for the workforce and making sense of it all. A massive job.
We just issued our study on Socializing Your CEO II. It is a sequel to the audit we did in 2010 on how CEOs were using social media. It was one of the earliest explorations of social CEOs and we found that two-thirds of the largest revenue producing company CEOs were bascially UNsocial. Two years is a long time in Internet time so we were curious how these chieftains were faring in the social dimension now.
We learned that CEOs are more social — hurrah! Good news. In 2012, 66% of CEOs of the world’s top 50 companies engaged online compared to 36% in 2010. There was heightened visibility on corporate websites and usage of video such as corporate YouTube channels. Where they failed to show a surge like we saw in other social activities was in their usage of social media platforms such as Twitter, Facebook, Google+, Pinterest and LinkedIn. In fact, in 2010, 16% of CEOs of the largest companies in the world used social media compared to 2012 where the incidence was 18%. Interestingly to me, the current usage of social media platforms at 18% is similar to what the IBM CEO survey found in 2012 (16% of CEOs participate in social media). However, when IBM asked CEOs whether they’d be using social media three to five years from now, a whopping 57% said yes. They may be over exuberant here but let’s just say that they are acknowledging its importance and their commitment to get the hang of it.
What do I think about all our results? I think that CEOs are still dipping their toes in the social media waters but for the most part, I’d have to say they are decidedly taking their jobs as social storytellers to heart, whether on their About Us/home pages, in video, and to some extent on social media. They are covering all their bases, trying out different channels to find out what suits them and reaching out to stakeholders in the many places they may be — be it prospective talent visiting their career pages, investors checking out their credibility quotient on YouTube or customers visiting their Facebook pages. Of all the social media we examined, the greatest increase over the past two years was for CEOs on Facebook. Usage of Twitter declined which is curious. Perhaps Twitter appears to pose more risk than most. Mind you, these are the largest companies in the world in mammouth sectors – oil, automotive, telecom, financial — and not the usual Internet technology companies that feed off of social media. Also, those of us in the U.S. do not quite realize that CEOs in other regions consider being on a home page to be a big giant social step and in some regions, there are security issues about plastering your information or picture widely. I should add that U.S. CEOs are more social on social networks than their peers in Europe, Asia and Latin America — 26% vs. 18%, respectively.
I thought, however, that I would use this post to talk about social CEOs and reputation since that is what my blog is about. I will return to our Social CEO study often so keep a watch. Not only will I continue to observe social CEOs because I am interested in reputation but because I firmly believe that being social will be a prime driver of reputation in years to come.
Here goes. We learned in our audit that CEOs of the world’s most reputable companies consistently demonstrate greater online engagement than peers at less reputable companies. 81% of CEOs from Most Admired companies (using the Fortune World’s Most Admired study) engage through company websites or in social media, compared to 50% of those from less reputable or “contender” companies worldwide.
The growth in engagement among CEOs at Most Admired companies exceeds the growth in engagement among CEOs at contender firms. While contender company CEOs are more social in 2012 than they were in 2010 (50% vs. 28%, respectively), Most Admired company CEOs essentially doubled their sociability in the past few years. I have no doubt about it. Most Admired company CEOs may more acutely recognize the relationship between social media engagement and positive reputation and the importance of having a dialogue with customers
despite the risks.
Just caught up with my November HBR. There is an excellent article by the CEO of Siemens, Peter Loscher, on how to use a scandal to activate change in an organization. There is a section in the article on Loscher’s first 100 days, a favorite topic of mine. He says that he was the first chief executive at Siemens who came from the outside and mentions how it actually worked to his benefit because he brought an outside perspective to his early start.
In the article, he mentions that one of the things he wanted to do in year one (post 100 days) was to get the organization more focused on customers. And then he proceeded to explain how he did it. I thought it was such a cool idea that I wanted to share it. Here is what he said:
“In my first year, I tried to find other ways to emphasize to the entire organization that customers should be our primary focus. Once a year, our top 600 or 700 managers gather for a leadership conference in Berlin. Before my first one, in 2008, I collected the Outlook calendars for the previous year from all my division CEOs and board members. Then I mapped how much time they had spent with customers and I ranked them. There was a big debate in my inner circle over whether I should use names. Some felt we would embarrass people, but I decided to put the names on the screen anyway.
The rankings were a classic bell curve, with most people in the middle. I was number one, having spent 50% of my time with customers. I said to the people at the leadership conference, “Is this a good sign or a bad sign? In my opinion it’s very bad. The people who are running the businesses should rank higher on this measure than the CEO.”
I put the rankings up again in 2009, in 2010, and in 2011. And now things have changed. The curve has shifted. Some people have passed me, and most are near me at the top of the distribution—because everybody knows this matters and that names will be up there at the next leadership meeting. With this simple approach we have achieved a much, much stronger emphasis on customers in the top management echelons.”
What a smart way to get management focused on being customer-driven. As he concludes, “But if you want to change a big, complex organization like Siemens, you have to make your agenda known, and you have to communicate in simple terms.” I’d say taking stock of everyone’s calendars and tallying up the time spent on customer activities, sent the right message, clear as a bell.
Another reason for why CEOs matter. Today’s story in the WSJ focused on how investors are increasingly demanding CEO face time in order to get greater insights into the company’s strategy and future and determine whether it is worth their investment to take a stake. One of the CEOs complained said that meeting with investors and analysts is taking up too much time. This should not come as such a surprise. The job of CEOs today is not to only run the business but be that communicator-in-chief with its portfolio of stakeholders which I grant is expanding by the year. The article seems to point out that these meetings are getting more granular than the larger-sized ones of years past and taking up more and more time. One CEO says he meets groups of 50 investors in batches, one after another, or in private 30 minute sessions.
The article provides a few interesting stats on the pressure on CEOs to make time for investors…
- C-suite executives in North America attended 70% of private investor meetings over the past 12 months, up from 64% one year earlier.
- CEOs and finance chiefs spent 14 days and 17 days, respectively, on these meetings.
The article provides many different reasons for why meeting the CEO is important but one that wrapped it all up for me was when a president of Fidelity Investments said that meeting the CEO provided “nuances” about the company that does not come through in an earnings call and helped him “put the entire mosaic together.” I thought that the “mosaic” idea was useful in understanding what role the CEO and his or her reputation does actually play. Although the CEO is just one part of the picture or mosaic in this case, the CEO’s leadership, transparency and credibility helps glue together the partial perceptions of a company we all have and fit them into a pattern that yields a reputation. Getting to meet the CEO and gauge his or her character through the whites of his/her eyes is a critical piece to the puzzle of reputation that adds to a valuation about a firm’s future performance. After all, isn’t that part of the CEO job description today — to balance the external and internal?
I attended a Council of PR Firms Critical Issues Forum about one week ago. However, I can now only think in terms of PHS (pre-Hurricane Sandy) and PostHS. It feels like the world has been turned upside down since life has not yet to normal. My neighborhood is basically fine (meaning we have power) but everything seems different in some indescribable way. Since I cannot get to the office, I have been working at home. We will see what Monday brings.
I wanted to write about the survey that Harris Interactive did with the Council on the connection between brand and corporate reputation. This topic was the theme of the forum. As you know, this is a subject we at Weber Shandwick also know well — take a look at our report on The Company Behind the Brand: In Reputation We Trust. The Harris Interactive study analyzed results from several of their own studies (50,000 consumers) and VP Robert Fronk concluded: “Marketers might profitably think of themselves as operating in the corporate reputation business, while corporate communicators might think of themselves as operating more deeply in the product marketing business.” As we also found, brand and corporate reputation are now indivisible. The Harris Interactive analysis looked at three industries — auto, B2B and Food/Beverage. It is worth looking at their brochure, Hidden Harmony, which I highlighted above because it shows what drives purchase consideration and recommendation. To give you a taste, below are the drivers of purchase consideration for the auto industry. I was fascinated by the importance given by consumers of how employees are treated when it comes to perceptions of reputation in the auto industry. And no surprise that trust is high on the list for both brand and reputation. Brand consideration appears to be very me-centric (how it fits with my own image, seeing it everywhere, brand is exciting). For reputation, in constrast, the drivers are very company-centric. They are different but when strengthened together, they are a powerful punch. They should not be siloed.
DRIVERS OF PURCHASE CONSIDERATION—AUTO INDUSTRY
Fits with how I think of myself
Emotional appeal-trust, admiration and respect
Brand has an excitement surrounding it
Rewards its employees fairly
Trust the brand to fulfill its promises
Offers high quality products and services
I see this brand everywhere I go
Offers products and services that are a good value for the money
I was recently interviewed in the Tennessean about how a hospital in Nashville, Saint Thomas Hospital, was handling the crisis related to the fungal meningitis outbreak. The question posed to me by the reporter was how this public health disaster caused by a New England compounding company would ultimately impact the hospital’s reputation. Like many people, I have been following the crisis but did not know much about how Saint Thomas Hospital specifically was dealing with the contamination and its aftermath. Of the nearly 17, 500 vials, 2,000 were sent to the St. Thomas Outpatient Neurosurgery Center. The Clinic is on the St. Thomas campus but not wholely affiliated with the hospital. Apparently the high number of people coming to the hospital’s emergency room is where the problems with the compounded steriod drug injected into people for back pain first came to light.
After the reporter contacted me, I immediately went to Google to learn more about how the hopsital was dealing with the crisis and found this interview with the CEO of St. Thomas Hospital, Dawn Rudolph. I was very impressed with the steps she took to lead the hospital through the crisis and it was apparent to me that she had taken her crisis preparation seriously and had good judgement. It is worth reading how she and her communications department prepared talking points for medical staff, worked with the Centers for Disease Control and Prevention and Tennessee Emergency Management Association, coordinated with the clinic to determine who would do what and let people do their jobs while she fiercely observed what was happening. Some of her actions that are worth noting when you want to recover your reputation post-crisis:
1. Stay out of the way of those who have a job to do such as the clinical care teams
2. Surround yourself with good people
3. Anticipate challenges
4. Make yourself available. Clear your calendar.
5. Plan for the short-term. Ask Rudolph’s question, “What am I missing?” and take answers from everyone.
6. Be prepared for misinformation that circulates in the media or online. (The crisis was incorrectly tied to a viral meningitis scare in the area)
7. Give your team talking points for them to explain what is happening to their families.
8. Watch your team carefully. The psychological effects can be tough to swallow.
9. Pointing fingers and trying to explain who is at fault is not going to be well understood when people’s lives are in danger. (The hospital and clinic are different entities but Rudolph did not spend her time making the distinctions for people who were worried about the health of their family members. Very civil and very impressive.)
The best part of the interview was what she said about what she wishes she had done, “I would have immediately grabbed an administrative person and had them pull a chronological list of what had occurred that day relating to the crisis. We did that in spots, but things evolve fast. I would have said, ‘you’re designated to be the record keeper and check in several times a day with team leads,’ because it was so multidimensional.’”