We all know that there are dog years and human years. Then there are reputation years. An article in PRWeek (UK) has this quote from Dell’s EMEA communications head Kerry Bridge about its reputation emergence from Dell Hell: “We lost sight of the importance of conversations with customers. The ramifications could take us ten years to overcome.” Bridge was referring to Jeff Jarvis’ BuzzMachine Blog criticizing Dell’s customer service that attracted over-the-top media attention. I must applaud Bridge for being realistic about how long it takes to restore reputation. Although our research has shown that it takes about 3.5 years just to get back on your feet, it probably takes a good 7 to 10 years for a company to go from poor to good to great. Reputation years are tiresome because leaders feel every minute of pain and suffering. Ten years probably feels like 20 years when it comes to reputation calendars. However, reputations can be restored. That’s the good news.

Reputation erodes in many ways. One sure-fire way is when employees spill the beans. A working paper from the National Bureau of Economic Research found that employees lead the list of corporate whistleblowers when it comes to fraud.  Companies often wonder how they get themselves into these jams. It is actually pretty simple. Perhaps if they kept the lines of communications wide open or just a little open, employees would not have to resort to tattle-telling. Remember Sharon Watkins and Enron’s Kenneth Lay. If he had only listened and acted sooner.  We continually see reputations dashed as negative things come to light. The worse is when it surfaces little by little.  I wait every day to hear the Societe Generale story continue to unfold. Now we hear that another person may have been involved with rogue trader Jerome Kerviel. This week we heard that there were early warning signals alerting Societe Generale officers about the fuzzy transactions. Employee fraud is usually suspected by other employees but no one says anything out of fear. The article in BusinessWeek (January 28, 2008) where I learned about the corporate whistleblowers reports that 82% of them are ostracized, fired or demoted. Not much incentive for telling the truth.  

Source: National Bureau of Economic Research

My new book is out officially today (as I hinted last night).  It is titled Corporate Reputation: 12 Steps to Safeguarding and Recovering Reputation.

There is more information on a dedicated site — www.corporatereputation12steps.com. It is based on our discovery that the corporate reputation “stumble rate” continues to rise.  Over three-quarters (79 percent) of the world’s number-one most admired companies lost their crowns over the past five years in their respective industries. While reputation loss may now be inevitable, my new book offers a realistic roadmap to reputation recovery that can help any leader stabilize and regenerate a company’s most competitive asset.

It is pretty simple: recent corporate crises have demonstrated that a company’s reputation can be destroyed in seconds. A mishandled response, inappropriate act, product tampering, or poorly timed financial disclosure all have the power to instantly tarnish a respected reputation. As I see it, the well-managed and reputation-conscious company need not stand defenseless when faced with a damaged reputation.

Tomorrow we officially launch my new book on safeguarding and recovering reputation. All the details will be here as well as on our Weber Shandwick’s home page. It’s exciting and I invite you to check it out. Couldn’t be more timely, don’t you think?

We regularly get curious about things that happen in the communications and reputation space. Recently we were wondering if the frequency of “the company declined to comment” in the global media had risen or fallen in light of the intense media scrutiny that accompanies corporate crises and companies’ growing recognition of the need to be transparent.  My hypothesis, which was proven wrong, was that there had been a preciptious decline in “no comment” over the past several years. I based that assumption on the fact that “no comment” is increasingly perceived to be “guilty as read.” Instead no commentitis has risen steadily and although it has seen a few dips, remains standard operating procedure in the business world. Of course, every situation is different but reputations can be chipped over those two simple words.

I have always thought that the movie industry would turn its lenses on companies and their practices. I have also always thought that it would become its own genre (which it has). Michael Moore certainly was a driver behind this new communications channel on corporate affairs.  I was rather surprised by how quickly this came to past for private equity. The New York Times reported that a new movie is about to appear on the industry – “The War on Greed, Starring the Homes of Henry Kravis.” The industry now joins other industries under the Hollywood spotlight.

Last night when I got home late from work, we had CNN on while hastily eating dinner. It is rare that I watch TV but I wanted to clear my mind. They were broadcasting the CNN Heroes awards at the Museum of Natural History. What a gala! It was like the Academy Awards. The first award of the night went to Chevron for environmental neglect. Talk about reputation damage. I checked out Chevron’s web site this morning and there was no response which is not surprising since criticism of all company wrongdoing is 24/7. While visiting their Web site, I did look at Chevron’s Energyville learning game which was fun. I actually picked up a few things about powering cities. Worth a look at and a good educational tool for classrooms. 

All I can say is that reputation is tricky business these days.

We just released our new findings on Global 500 CEO Departures. Just as it was released this week, I see the news that Motorola’s CEO Ed Zander stepped down. As I have noted many times, being CEO today is a treacherous job. The shelf life is short and reputations quickly tarnished. Here are some of the key findings.

• Over 10 percent of the world’s largest companies lost their CEOs in the first three quarters of 2007. This departure rate amounts to a CEO departure among the world’s largest-revenue producing companies nearly every 5 days.

Global CEO Turnover by Region: First Three Quarters 2006 vs. 2007
	2006		2007
Region	Total (#)	Percent (%)	Total (#)	Percent (%)
North America	16	8.7%	12	6.7%
Europe	17	9.3%	24	12.6%
Asia Pacific	19	15.5%	20	16.4%
Latin America	0	0%	1	10.0%
Total	52	10.4%	57	11.4%

2007 saw more chief executives exit during the first quarter than the following two quarters (26 vs. 15 vs. 16, respectively) and when compared to the first quarter of 2006 (26 vs. 16, respectively).   

Overall, 28 percent of chief executives who left office in the first three quarters of 2007 exited involuntarily. European CEOs were more likely to be pressured to leave their jobs than their regional counterparts.  While only two European CEOs were forced out of office by the end of the third quarter in 2006, nine European CEOs exited involuntarily during the same time period in 2007 – a 350 percent increase.  

Ousted Global CEOs By Region: First Three Quarters 2006 vs. 2007
	2006		2007
	Total (#)	Percent (%)	Total (#)	Percent (%)
North America	3	18.8%	3	25.0%
Europe	2	11.8%	9	37.5%
Asia Pacific	8	42.1%	4	20.0%
Latin America	0	0%	0	0%
Total	13	25.0%	16	28.0%

For the first three quarters of 2006 and 2007, insider executives continued to outnumber outsider executives when new CEOs were selected to lead the world’s largest companies.  Interestingly, 2007 had an even greater proportion of insider CEO successions than seen in 2006 (70 vs. 64 percent, respectively).

Am off and running to Switzerland tomorrow for business meetings. Therefore I wanted to get you some reputation news before I pack my bags.

 I just was handed a wonderful report from AON on risk management. The survey is among 320 respondent organizations that have revenues of nearly $1 billion or more across many sectors and all regions of the globe. The findings are astounding as to what it says about reputation. Global business executives were asked about the top 10 risks they see today. Here they are in rank order:

Reputation damage reigns at the top. As the AON report says, “Damage to reputation is an enterprise -wide event that can lead to negative publicity, a decline in market share and the inability to recruit and retain top talent.” And that’s only half of it. Companies with eroding reputation lose customers, investors, easy access to new markets, ability to charge a premium, goodwill from the community, benefit of the doubt in time of crisis, and the list goes on.

Even more remarkable, reputation damage is the greatest threat no matter what region of the world. The Global Risk Management Survey also found that few companies are prepared for reputation damage.

AON, thanks for this report. I can use these findings in many places for my talks and writings. It is nice to have what I believe so strongly be confirmed.