Leadership

While I am on the subject of Social CEOs (see my last post), I wanted to mention a study that was released by BRANDfog, a firm that helps executives get social.  Survey respondents report that more than 80% of respondents believe that CEOs who engage on social media are better equipped than their peers to lead companies in a Web 2.0 world. What’s more, 93% of respondents believe that CEO engagement on social media helps communicate company values, and grow and evolve corporate leadership in times of crisis.  Similarly, 82 percent of survey respondents said they were more likely to trust a company whose CEO and leadership team engage in social media. Since reputation is all about trust, it sounds like the demand is there....we've just got to supply it with examples and role models.

CNNMoney recently asked the question about whether CEOs should be speaking out on hot issues of the day. It is a fair question to ask. Years ago, CEOs would never really speak up or out about global climate change, saving the whales or getting girls to become engineers. The article cites the Human Rights Campaign video that has several CEOs speaking out on very hot issues such as same sex marriage (CEOs from Nike, Goldman Sachs, Starbucks and Microsoft).  As we witness the growing incivility in Congress, it is not terribly surprising that people are turning away from government to business to lead on some of the greater issues of the day that affect the greater good. Note that Senator Olympia Snow from Maine's resignation yesterday after three terms due to the political "lack of comity." Companies and CEOs take on more political issues to attract the best talent, align the values they preach to employees with their actions and to reach common ground with their customers who care more about these issues than they used to when purchasing products. So far, I have not seen terrible backlashes from consumers in the positions that some of these CEOs have taken. Maybe now is the right time.

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.   [caption id="attachment_2464" align="alignleft" width="460" caption="Weber Shandwick, The Company Behind the Brand: In Reputation We Trust"][/caption]                    

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.

During First 100 Days Of A New CEO	“Significant importance”
Grasp of the company’s challenges and opportunities	96%
Knowledge of/experience with industry dynamics	92
Vision	88
Operational focus	88
A strategic plan	88
Leadership style	76
Charisma/personality	54

 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.