Ethics

I was lucky enough to attend the Arthur W. Page Society meeting a few weeks ago and hear some thought-producing  speakers on reputational issues in a complex world. I believe I promised in my last blog post that I would write more about the 10 lessons learned from the global corporate communications officer at Toyota, Jim Wisemen.  One of the statements he made which deeply resonated with me was how he used to think that he was among the top corporate crisis counselors – pre-recall, that is.  He candidly and I must say very humbly said that he learned once the crisis began that he had a thing or two to learn about crisis in today’s world.  Wisemen said that when the recall began, they were receiving 500 calls a day from the media! And although they had a 1-800 number for customers to call regarding the recalls and that they had been used to getting 3,000 calls daily on average, that figure jumped to 100,000 per day when the recall began.  And this 800 number had only been programmed to manage 15,000 per day.  Imagine managing in this type of reputation-on-fire environment.  So here are the 10 lessons he gave to the audience of senior corporate communications officers at the meeting. Worth keeping in a safe place to pull out when the fire bell rings at your company. His lessons are good guides to our collective futures. Thank you to Jim for sharing with us.

1. Listen to customers
2. Communicate internally, fast and frequently
3. The new media breeds hysteria, deal with it
4. Get help from friends
5. Understand the politics and fight back
6. Swallow pride and communicate with legal (you are now joined at the hip)
7. Educate the media (consider informing reporters on automotive issues beforehand such as safety)
8. Emphasize social media
9. Stay true to your principles (The Toyota Way)
10. Don’t let it ruin your life –try not to take it personally

A double whammy this week.

Just saw that a new corporate reputation survey by Prophet come out today and tomorrow Fortune’s World’s Most Admired Companies survey hits the airwaves. Prophet surveyed consumers in the U.S. and found that “attributes related to openness, ethics, and the kind of public dialog companies foster in response to marketplace events and circumstances were deemed most important.” Companies’ behavior in response to crisis and difficult times apparently makes a difference in perceptions.  How people deal with adversity matters in our perceptions of friends and colleagues, why not companies? I was not surprised reading this since a company’s character and values are most on display when companies are under assault or scrutiny. You learn alot about people and companies when they are in the spotlight or shadows.

I finally found a moment on the train to read McKinsey’s latest research on how well companies manage their government relations. In fact, today I was talking to someone about this so it was definitely top of mind. He made the point that reputation matters even more today because government has such a big role in business affairs and can affect economic outcomes.  There is one CEO I quote often who said that government affairs was his 7th line of business. Love that line.

The McKinsey survey was conducted among corporate executives around the world and this was my favorite part. When asked which stakeholders would have the greatest effect on corporate economic value over the next 3 to 5 years, 74% named customers. Makes sense. But second on the list came government/regulators at 53%.  This highly influential group ranked higher than employees (49%), investors (28%), suppliers (17%), media (measley 9%, ouch), NGOs (mere 3%, ouch) and organized labor (2%, definitely ouch).  When you look at industries such as health care, energy and financial, government/regulators are #1 for each….ahead of customers and all the rest when these executives are thinking out 3 to 5 years from now. Now that says something about where reputation will be headed too.

Korn/Ferry just released some new research among executives and board members worldwide. Risk management is clearly a topic du jour among the executive class. The survey found that nearly six in 10 (57%) are spending more time and attention on risk management. In light of the rolling crises that seem to be playing out in the media over the past eight months, it pays to be prepared and know what’s on the horizon. In our business at Weber Shandwick, crisis response and crisis preparedness seems to be on the upswing, thereby highlighting top execs’ concern over being in the “hot seat.”

Two findings stood out. First, a full 59% said that the recent scrutiny on reputation risk has had a good effect on how Boards perceive the need for crisis preparedness and reputation management. Steve Mader at K/F says that the survey “shows the majority of companies have already taken practical steps to enhance their risk management practices and awareness.” I agree.

Secondly, as you have heard me say and post, the CEO is the guardian of the company’s reputation which includes such components as people, products/services, responsibility, financial performance, leadership and “values” or “ethics.” K/F asked these executives who at the company has direct responsibility for risk management and the lead candidate was the CEO at 43%. Next to the CEO came the COO at 19%. CEOs continue to get all the blame for ethical or reputational transgressions and all the credit when things go right. That’s the deal.

  It must be Saturday. My head is clearing after a short week’s work. Got some work done this morning which is why I can now blog guiltlessly. Wish I knew more about James LeBron so I could comment here on his reputational downfall on the streets of New York? Or I could move on to comment on the nuclear reputational fallout of Mel Gibson after a new domestic violence  incident circulated this week. Oh, I forgot Lindsay Lohan who I saw in a newspaper headline while on the subway crying about spending 90 days in jail for bad behavior. On the whole, celebrity reputation does not interest me as much as company and CEO reputation and there’s plenty to think about when it comes to that misbehavior. Seems like the heat wave has fried celebrity brains this week (wherever they were) or they are jealous of the corporate scandals grabbing all the attention.

Back to the real stuff. A new study by NYSE Euronext found that 3 out of 4 CEOs believe that they are doing a reasonable job protecting their company reputations. That’s a pretty confident group because if you asked me, I’d say that if that is the case, why are there so many reputation stumbles every day? I would need more than two hands to count how many major reputation disasters occur in a week’s time. And those CEOs would probably swap 90 days in the slammer with Lindsay Lohan if someone could tell them that there would be an end to all he scrutiny on their reputations. Reputation damaging headlines linger for far more than 90 days with the Internet’s neverending longevity of wrongdoing.

The study also found that the leading criteria of building positive company reputation are Honesty, Integrity, Ethics, Transparency and Leadership By Example. These qualities never seem to change (for good reason) although I would hasten to add that Integrity is making a comeback as a reputation driver. Certain words come and go and I have not heard Integrity for some time…so welcome back. Transparency, Ethics, Honesty, Transparency and Leadership have made their rounds for some time now. As many of you who read my blog know, I think that Effective Communications deserves more credit as well as anything to do with promoting a reputation for Safety. Post 9-11, safety as a reputation driver is key whether it is keeping food safe, our privacy safe, our shores safe, our medicines safe, our toys safe, our kids safe, and our skies safe.  I could go on and on.

As a follower of reputation and builder (I like to think) of the importance of reputation in the world of business, I come across new sites on the topic all the time. A site called Reputation Repair Services caught my eye.  If it were only this simple.  This company promises it can help with finding you an Internet lawyer, cease and desist notices, copyright and trademark infringement notices and domain dispute lawyers.  It can protect your reputation by improving search engine suggestions, create positive blogs, good reviews and more. [This company says that they have been around for many years and the alert below is from their site.]

 There are various packages ranging from $500 per month and upwards. For $500/month, you get site evaluation, keyword research, five promotional pages and content that are optimized by the online company, full site optimization, inclusion in reciprocal linking systems and search engine submissions. You can move up from this minimum service fee (with an 8 month committment) to $750 per month service. The additional fee provides you with a shared techie “live” and at your service who is devoted to your reputation until the negative information no longer appears on page one of Google. And onward and upward.

 I have no doubt that there are people who want negative information about themselves or their company deeply buried or removed from the Internet.  I am not sure however that this takes care of the hard work of reputation building which almost always involves creating high quality products and services, engaging in corporate citizenship, ethical behavior, financial soundness, innovation and leadership development.

Oops. If you are also worried about your CEO’s reputation, they can help you too.  Any CEO missteps can be wiped off the face of the earth. As Reputation Repair reminds us, “A CEO’s reputation is directly linked to the reputation of the company. The CEO is the face of the company and a leader who provides direction and inspiration.” These words sound familiar since I have written about this topic for years.

I often wonder if these online reputation repair and protection sites can help you build reputation faster by damaging your competitor’s reputation instead. If I wanted to do some harm, maybe I should just spread rumors about my toughest competitor and get that on page one of Google. Could I find someone to do that? I doubt that it is easy to find companies willing to compromise themselves but this has crossed my mind. Might be less expensive.

All this is to say that online reputation management is important but if this is all that is done to build enduring reputations, this is a short-lived proposition. True reputation management deserves more consideration, planning, depth and years of hard work.

Thankfully it is getting near the end of the year. No better time than now for Ethisphere to come out with its 2009 list of the most influential people in business ethics.  I thought I would look at how many chairmen and/or CEOs made the list during these past 12 months of dismal business scandals and economic news. Only six CEOs of Fortune 500 companies made the business ethics leadership list in 2009. This is a comedown from 2008’s list where nearly three times more CEOs were considered influential business ethics leaders.  A larger 16 Fortune 500 CEOs were included in 2008. No comparison and hey, no surprise.  This is an indicator of why CEO reputation has been so low and getting lower. The CEOs who made the 2009 list are below.

Ranking*Name*Title*Company

6. Mike Duke – CEO, Walmart

15. Sharon Allen – Chairman, Deloitte

17. Jeff Immelt – CEO, General Electric

19. Herbert Fisk Johnson, III – Chairman & CEO, SC Johnson

26. William Ballhaus – CEO, DynCorp

63. Ed Breen – Chairman and CEO, Tyco

Former GE CEO Jack Welch made the list at #65. I did not include him above but it is worth noting what Ethisphere said about him for making the list: “Welch makes the list for admitting in an interview with Financial Times that his focus on ‘shareholder value’ was ‘the dumbest idea in the world.’” I wish I had remembered this quote for my recent posts on why CEOs matter. If you have been reading, you’ll know that I commented on the Wall Street Journal and Financial Times stories on the most worthy CEOs. (See previous posts) Their yardstick was financial performance. Point made.

Interested in building and protecting your corporate reputation? Boston College Center for Corporate Citizenship , along with support from The Hitachi Foundation , issued its fourth 2009 State of Corporate Citizenship report. The report  provides valuable insights from nearly 800 U.S. senior executives about their attitudes and perceptions on the value of corporate citizenship. Rightfully so, the authors preface the report by describing the difficult year that faced senior executives and the high expectations about continuing their support of corporate responsibility and giving initiatives. The good news is that nearly half of the executives surveyed believe that corporate citizenship is even more important in tough times and kept up their corporate citizenship efforts. Boston College Center says that this finding underscores how corporate citizenship has passed the value test. What do executives mean when they report on corporate citizenship? To them there are three important areas — ethical business practices (91%), treating employees well (81%) and accurate financial management reporting (76%).

When it comes to reputation, we have known for some time that reputations are enhanced when a company’s words match its actions in the corporate responsibility space.  Also, Weber Shandwick’s Safeguarding Reputation research found that companies with better corporate citizenship track records recovered their reputations faster than those with poorer corporate citizenship records.

Interesting to me is that the survey found that CEOs are now leading the corporate citizenship agenda in three out of four companies. Understandably and not surprisingly, CEOs recognize that their reputations need improvement and corporate citizenship is one way to communicate to employees and other stakeholders that they are concerned about doing the right thing. The survey also identified REPUTATION as the number one driver of corporate citizenship (70% for all executives, 82% for large-company executives). Reputation shares that top spot for the first time with company traditions and values.

 Reputation is increasingly becoming a driving force in shaping company and leadership action. That can only be viewed as a positive. Glad to hear that senior executives agree.

   Someone asked me where I got 99 tips to safekeeping reputation. I thought it was a good question and it made me think about the process. I started by reading the books I wrote, reread various reports we have done at Weber Shandwick on safeguarding reputation and reviewed our most recent study on online reputation. I then yellow-highlighted all the steps to safeguarding reputation that I thought were important in preserving reputation and keeping reputations safe.  I stopped at some number around 65 and thought that maybe I should pare the list down to 50. However, I liked the number 99 because that is what I originally set out to do. So I went back to articles I have written over the years to find more tips and before I knew it, I had about 103 reminders. It did not take much to reduce the 103 to 99 tips.

Looking through all the 99 tips to safekeeping company reputation, it appears to me that the mainstays of lasting reputation are transparency, ethics, leadership, culture and responsibility. Regardless of what companies do online or offline, these values must be in place and religiously adhered to to sustain reputational trust during good times and bad. Of course, reasonable financial performance must be in place as well. As someone else has said, flat is the new black.

As the recession lingers and trust in business erodes, company reputations are at greater risk than ever before. Since October is around the corner, my mind turns to the distribution of Fortune’s World’s Most Admired Companies ballots which should be out the door momentarily.  Respondents are soon to be asked to rate the world’s largest companies on their reputational success or failure over these past difficult 12 months. What will it take to gain admired status in times as unprecedented as these ? Not an easy question to answer but some of the answers are in those 99 tips.

  An article I read in today’s Wall Street Journal  left me shaking my head in disbelief. I read the article right before I gave a presentation to a communications team on the new rules and metrics on reputation today.  Since I could not comprehend how something like this could happen, I blurted it out when I met the head of the communications department prior to the start of the meeting.  I still cannot assimilate it so I am hoping that sharing this news will help me get back to work. The article is about attacks on the home of Swiss pharma company Novartis’ CEO allegedly by animal rights activists. The story is that activists have been targeting Novartis to discontinue animal testing of drugs, something that Novartis says they have taken “strong steps” to reduce. What is so terribly alarming is that the suspected attackers stole the ashes of CEO Daniel Vasella’s mother from her grave. This is in addition to a suspicious fire at his summer home in Austria this week.  All I can say is that there are some rules that no one or no organization should break. Stealing a loved one’s ashes or consecrating a grave is immoral. Everyone, including activists who feel strongly about a topic, should follow a moral code by which they live and communicate with others. Violence of this type ultimately harms the reputation of all activists.

    The letter from well-known New York attorney Marc Dreier to the Judge regarding his sentencing is illuminating. Dreier committed fraud of nearly $400 million and this week was recommended by the government to receive a sentence of 145 years behind bars. The good news is that he wrote this letter explaining how his ponzi scheme started and ultimately ended when he was caught red-handed. At least Dreier provided a window into why someone would harm so many people and ruin so many lives only to be recognized more. He says he felt that he was not receiving the recognition and financial rewards that he deserved at age 40. Dreier said he wanted to make the letter available to all so that others might learn from it. The letter might provide some insight into why Bernie Madoff did what he did. Madoff must have suffered from the same disease of needing to prove that he was more than he was. Sadly, Dreier’s letter is an example of the downside of reputation building. Reputation is earned. Reputation at any cost is deadly. Reputation without merit is a falsehood.