Leadership

While I am on the subject of the corporate brand, I thought I would mention another interesting group of findings from our research. We asked consumers several questions on what influences them when it comes to company perceptions. They report that among other things, the importance of awards/recognition (63% of consumers mention) as well as leadership communications (59% of consumers mention) are influential.  As expected, word of mouth ranks at the top of the influence list, regardless of region.  Clearly, despite the fire hose of information aimed at us every day, some things are getting across when it comes to distinguishing companies from one another and influencing our decisions to buy some products over others easier. Recognition of companies for doing good or just simply doing well is making a dent after all these years. And leadership communications seems to matter to consumers if CEOs are talking about something that matters. Figuring out what resonates with the public is the hard part for communicators although jobs and education would be two good starts.  And a third good start would be the safety of our natural resources.  One additional factoid to add for a Sunday in January: In Brazil, awards and leadership communications are even more influential than what consumers in the U.S., U.K. and China say in our study. Brazilian consumers seem to be more receptive to what leaders say in Brazil. Will have to figure out why. Perhaps the connection between the economy and business is more direct than in the U.S. and U.K and China while we are at it.  More to come on this challenging subject of the interdependence between the corporate brand and product brand.

Weber Shandwick, The Company Behind the Brand: In Reputation We Trust

A few interesting things crossed my mind and desk this week that I thought I would share. All reputation-related of course.

1. The World Economic Forum released its report on the top risks facing the world in 2012. Social unrest and income inequity were at the top. Natural disasters such as the earthquake in Japan were also high on the risk list. And as pointed out, one risk affects another creating a domino effect. “The Internet, meanwhile, can magnify and spread the effects of a disaster in other ways. Rumors, even if incorrect, spread quickly on social networking sites — sometimes more rapidly than emergency services can communicate accurate information. As word of disasters like the terror attacks of Sept. 11 or the earthquake in Japan spreads globally, consumers hunker down in front of their computer screens or televisions, rather than going about their daily lives. This increases the economic effects of a crisis, even in areas far removed from the source.”  Disasters such as the horrific earthquake, tragic 9-11, death-defying financial crisis, massive oil spills and nasty ash clouds coming from Iceland all heighten other risks in some way. And risk spells reputation damage depending on how a company or country responds and solves the problem.

2. The report from WEF also mentioned that risks are on the horizon as leadership transitions are in full force this year. It is not just the U.S. presidential election that poses risk and stirs up emotional angst. There are leadership transitions underway this year in France, Russia and China as well. Add to that the sudden transitions in the Arab world this past year and we see upheaval and uncertainty. When CEO transitions are underway, the first few months can be risky so as we see world leaders change, tighten your seatbelts. The public will be more socially active than ever. We’ve already seen that in Russia.

3. I’ve written here about rankings and so-called “worst of” lists where companies, CEOs and environmental records are put on notice that they are not making the grade. In most Januarys, TripAdvisor.com comes out with its “dirtiest hotels” in the world.  No more. The CEO Stephen Kaufer says, “We want to stay more on the positive side, so we’ll continue to feature the best destinations, the top hotels.  We’re slicing and dicing the ‘best of’ in different ways this year, more than focusing on the negative.”  Although the article where I learned about this says there were potential legal considerations and competitive reasons for abandoning the January list, it also mentioned that the original “worst of” list was done for PR reasons and that TripAdvisor is less interested in that now.  Perhaps there is a reputation-reason afoot here. There is so much negativity online on some of these sites and it is so easy to find what you are looking for that a list of the 10 worst may be hardly worth alienating visitors to your site. Everyone worries about the detractors and the praisers. Maybe it is time to just worry about the average site visitor who does not want snarky comments and lists, but just the plain old straight forward facts to plan a plain old relaxing get-away.

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.

Same goes for reputation.

“The value of things is largely determined by their rarity.”

The more that companies lose reputation, the ones that keep it and build it and enhance it will be the ones that are most esteemed. For that reason, reputation will be one of the holy grails that the best leaders vie for.

Good reputation is becoming one of those rarities.

Because I am off from work for the holiday, I have a little time to catch up on things I meant to read in the months before. I was particularly interested in some research on CEO transitions and its impact on the value of the enterprise conducted by FTI.  A few facts jumped out at me from their study among the financial community. They found that one-third (32%) of investor decisions are impacted by the reputation of the CEO. Moreover, the reputation of the CEO was more important to investors than the reputation of the company’s products and services.

The research covers the value at risk depending on what type of CEO transition occurred. The greatest risk to the enterprise is when a CEO is forced to resign.

Because of my work on CEO tenures and how to build CEO reputation, the findings confirm my own research over the years that CEOs need to show success by that 12 month marker. FIT found that investors give new CEOs about six months to assess the challenges and opportunities facing the company, setting a vision and strategy.  They give new CEOs more leeway to improve market performance and valuation — about 12 months. After the first year, all engines need to be firing.

Another particularly interesting finding was what investors look at in their first 100 days to further establish the CEOs credibility in their eyes….here is what they said was of “significant importance.” Despite the ranking for “charisma,” it is still interesting that it is still estimated to be of high importance and only 16% said it was of limited importance.  FTI concludes that investors take a multi-dimensional view of new CEOs. They expect to see it all.

 FTI Consulting

 Employee communications will undoubtedly be the hot topic of the next few years, especially in the reputation space. As leaders come to terms with the fact that employees can be their best advocates and worst badvocates, internal communications will rise to a new level. That’s a good thing because I think leader-to-employee communications is more immature than the art and science of external communications.  With all the technology we have, you’d think that employee communications would be more advanced. But it is not.  Research by Dov Seidman and the Boston Research Group surveyed thousands of employees at all levels. One of the more startling  findings was that 27% of bosses think that employees are inspired by their firm, when in fact only 4% of employees agree.  And 41% of bosses say their firms award people based on values rather than financial performance.  Only 14% of employees agree. Bosses have  much to do to get employees inspired and willing to go the distance to make their firms successful and a place others want to work at. Talent, leadership and culture are drivers of reputation. Time to inspire before it is too late.

You’ve heard this statement before. “What you spend years building, someone can  destroy overnight.” I have probably written this several times on this blog when talking about crisis and reputation risk and I certainly wrote something very close in my book on reputation recovery. Well today it was cited in an article about GM‘s former CEO Rick Wagoner. The article was about his graduation speech made at Virginia Commonwealth University. A short 12 minute speech about “taking risks and accepting defeat gracefully.”  He has been silent for over three years. Talk about grace.  But in his closing lines, he made the statement about building and losing reputation which Mother Teresa apparently said (I did not know and am glad to have learned the origin of this statement). And he added his own two cents at the end to this famous piece of advice about reputation. He said “Build anyway.” A good reminder to those who wonder if being CEO is worth it or leading a country, I might add.

I met Howard Schultz at a luncheon years ago when I was at Fortune. His company was pretty much in its infancy and we talked about Brooklyn.  Needless to say, he’s a great one to follow when it comes to reputation-building, engagement and reputation recovery. In an article I read about him recently where he was named businessperson of the year, Bill Bradley, the senator, basketball star and board member of the coffee company, noted how reputation was central to their success. Bradley said, “You don’t get millions to support your social networks just by selling coffee. People have to admire the company.” 

I have been pretty enamored by Schultz’s political action where you can buy an American-made Indivisible wristband in the stores as a thank you when you donate to the Create Jobs for USA Fund. Last week I bought one in our local Starbucks because if my $5 can make a difference for even one person, I’m in. 

As I may have mentioned before, I also met the head of Starbuck’s Ethics & Compliance several months ago at a meeting and was impressed by his thoughtfulness and mission. And a young woman I have mentored for many years and is now working her way through college works at a Starbucks in midtown. She adores it and it has introduced her a decent job that has influenced her interest in majoring in business.

There have been many touchpoints with the brand over the years and they all seem to add up.  Just like the wristband says, reputation is indivisible. The whole is greater than the parts but the parts, the touchpoints, can all add up to a halo-like shield that makes a company’s reputation harder to destroy and easier to admire. That’s reputation at its best. It takes years to build and many bumps along the way. But when it gels, it is a wondrous thing to admire.

I just read this wonderful interview with Vineet Nayar, CEO of HCL Technologies. He has written a book titled Employees First, Customers Second: Turning Conventional Mnanagement Upside Down.  And that he does. The reputation of employees seems to be gaining more steam lately. More CEOs are asking how to engage employees better and more creatively and harness their advocacy. Nayar’s strategies and tactics are compelling — not only are detailed financial performance delivered directly to employee desktops but all (ALL) employee appraisals or performance reviews are posted on HCL’s internal website for all to see. And get this, this includes the CEO’s review. His theory is that he too can learn from direct feedback.

The CEO seems very plugged into the employee component of the value equation. Here are a few things that really stood out to me. He must have a fine reputation among his employees to bear his soul so publicly and turn everything on its head. There are other good examples in the article so I recommend you read it. And here’s to all those dancing CEO bloggers out there!

“We also looked for symbolic ways to be a model of openness. One thing I did was publicly dance in front of all my employees. This was to remove the halo that a CEO has around his head. Meaningful conversation happens after you have set the stage in this way, after you make clear that you are as open as anyone else — crazy but effective.

I started writing a blog called “You and I,” in which I encouraged employees to ask me questions in the open. The only rule I made was that when you ask the question, it must have your name attached. All 60,000 employees should see your question and my answer. At first, I was depressed by the result, because I mostly received negative questions that made HCL look bad. People said things like, “Vineet, I don’t accept what you’re saying.” Or, “You lack vision; you haven’t articulated what the company’s size and scale will be in 2010.”

So I held an open house with a group of employees. “I’m feeling pretty bad,” I said. “Nobody is saying what is positive about our company. Do you think I’ve unlocked a genie that is spreading demotivation?”

Their answer was interesting. They said it is good to wash dirty linen in public, in this case on the blog, because it builds trust. There are no rumors. We discuss everything openly and honestly. We don’t always have solutions to problems, but at least we expose them. Out of that, I began to share the financial numbers and give my perspectives, and the tenor of the blog comments began to change.”

  It has been a very hectic week as we travel around to the many markets in EMEA to discuss Socializing Your Brand, our new research on what it takes to be truly social today. As always, I try to keep up with other news and events and that has been harder than usual as my laptop crashed between markets.

Caught an article citing Michael Silverleaf, legal counsel hired by News Corp., saying that it would be harmful to air information related to “a culture of illegal information access” because it would be “extremely damaging to NGN’s public reputation.”  (NGN=News Group Newspapers) I had a double take when I read the last two words of this sentence. Is there such a thing anymore as a public vs. private reputation? It seems to me that there is no longer a divide between private and public. There are no secrets and we are all public figures and public institutions. Let`s get real.

The other article that caught my eye came about while taking a train with my colleague to a mountain top village near Geneva.  Instead of day dreaming as I had hoped, this brought me back to reality. The article is terribly interesting because it is about women CEOs and how their husbands support them in their quest to the top.  James Stewart wrote it probably because he was thinking about the new female CEO of IBM who recently joined the exclusive – and small — club of women CEOs.

“Asked at a Barnard College conference what men could do to help advance women’s leadership, Rosabeth Moss Kanter, a professor at Harvard Business School and author of the landmark “Men and Women of the Corporation,” answered, “The laundry.””

Hah. If only it were that simple. Made me realize that I had to get back to the hotel and get some laundry done quickly for the next leg of the tour.