reputation redemption

  Usually when I write about what CEOs should do in their first 100 days, the listening tour pops up. CEOs are advised to travel to facilities and ask employees and customers what's on their minds, what the company could be doing better or not doing at all, what they wish the CEO would do or not do, and where they think the business is headed in general. Even "insider" CEOs who have been with the company for three or more years need to go on listening tours. People will tell CEOs things they would never tell anyone else. I always recall how Xerox's former CEO Ann Mulcahy went on a listening tour when she was first named CEO although she had been with the company for 25 years. She quickly sent a message that there was plenty for her to learn. So I chuckled to myself when I read a recent article about Governor Sanford -- the one who had the affair with the Argentine woman while conveniently telling everyone that was hiking and unreachable.  The Governor is now going on a "forgiveness" tour around the state of South Carolina asking for repentance for his sins. Despite having written a book on reputation recovery, I guess that this is one kind of recovery tactic that I had not thought of.  Most people in public relations would advise someone in the Governor's situation to get the bad news out all at once and put an end to it at once.  But the Governor continues to extend his front page scandal beyond the pale of reality. I kept waiting to hear that he has started a "forgiveness blog." I tried to think of other red-faced CEOs or politicians who went on forgiveness tours and none leaped to mind. Former NY governor Eliott Spitzer had the wisdom to stay out of the spotlight and slowly emerge one year later  to redeem his reputation. I have always contended that he will manage to redeem himself over the long term. Michael Miliken redeemed his reputation by participating in very worthwhile and noble deeds but not with a forgiveness tour. Enron's Ken Lay and Jeffrey Skilling never went on a forgiveness tour although they had time before their trials began. They must have crossed the idea off their lists. The idea of a forgiveness tour might be one and the same with a listening tour because Governor Sanford's constituents probably have alot of advice to give him on the topic of marital infidelity. I just hope he listens carefully while asking for atonement.

We just released the results of a survey we did with KRC Research among 151 executives in Fortune 1000 companies in April/May on the reputation of CEOs in general. Although we have seen several surveys on what consumers think and it is not pretty, we thought it would be useful to understand what the executive class thinks about this elite group of officers. Since it is critical that the next generation of leaders do not abandon ship and decline any “chieftain” jobs if offered, we thought we’d inquire about their perceptions. As many CEOs gather in Detroit this week to come up with solutions on American competitiveness (National Summit), this would be a good time. Here are some of the findings:

 

*The majority of executives in America’s biggest companies – 66% – believe that the reputation of CEOs today is largely negative. Only 14% give CEOs a positive rating and the remaining 20% are non-committal.

 

*Despite CEOs’ low approval rating, approximately one out of two executives (49%) report being interested in becoming CEO one day, virtually unchanged from earlier aspirations. Even those executives who rate CEOs’ reputation poorly are surprisingly upbeat about one day accepting a CEO position (48%).

 

*Executives overwhelmingly believe that the road to CEO redemption requires publicly taking responsibility when their firms are in crisis and tying CEO compensation to performance (knew that was coming). Other critically important steps include holding more face-to-face meetings with employees, publicly speaking up for themselves and their companies, being more transparent, and issuing regular CEO updates about their business outlook. No surprise that internal and external communications figure large in CEO reputation salvation. It is important to now begin filling the void.

 

The good news is that our next generation of CEOs appears eager to sit in the corner suite and for the right reasons (making a difference, growing business and meeting the toughest challenges of the day). CEOs have their work cut out for them but I think we will see reputation recovery in due time.  In fact, when we asked when we’d see CEO reputations redeemed, it looks like 2013 is the year. Mark it on your calendars. I did on mine.

 

[Check out an interview on the results in BusinessWeek online]

 

 

 

 

 

Although I still have a lot to share re what we learned about managing online reputations, I thought I would  refer back to how Maple Leaf Foods’ fared since the listeriosis outbreak in August 2008 among their deli meats. The CEO of Maple Foods handled the crisis with aplomb and straightforwardness – CEO apology on air, recall of all meats, progress reports, Q&A, etc. I have covered the remarkable transparency on this blog several times. Therefore I was pleased to hear that Maple Leaf Foods’ reputation rebounded and risen even further than pre-crisis levels within five months. According to research from Leger Marketing and mentioned in the 2.2.09 issue of PRWeek, positive opinion of the company went as follows:

 

	May 2008	August 2008	January 2008
Good opinion	74%	57%	88%
Bad opinion	7	34	7

 

For those caught up in the throes of crisis, take a deep look at how this was handled. Reputation can be restored quickly if the leadership does the right things.

So the Spanish mega bank Banco Santander announced today that it is repaying customers who lost money in their Optimal Strategic US Equity Fund which was invested with fraudster Bernie Madoff. The bank is paying 100% to the victims (not to institutional investors) by handing out €1.38 billion in shares. This move puts off legal actions and helps to preserve its reputation.  As I see it, the reputation premium is at work.

It is not every day that someone gets kudos for resuscitating a company reputation so I thought it is worth noting. The Economist praised CEO Lee Scott for “reviving” Wal-Mart’s reputation. Lee Scott just announced that he is retiring at the end of January 2009. And in these bleak times, not everyone can say that they are leaving on a “high.” According to the article, Wal-Mart’s sales are expected to increase by 8% in a year that no one will soon forget. Scott has had to deal with more publicly humiliating challenges than most CEOs – law suits by female employees, discrimination charges, low wages and treatment of employees, bad benefit packages, etc.  Then lo and behold, Lee Scott took it all on, listened to his critics, changed direction and succeeded.  I could not agree more with The Economist'spoint of view. And I have to say that I also feel somewhat vindicated because over the past 18 months I have told skeptical reporters that Scott was on the right trail and making the right moves. Everytime he stumbled, he picked himself up and kept his eye on the prize for Wal-Mart. One CEO once said that reputation recovery is the “strategy of small gestures” and this is the path taken by Scott for Wal-Mart. All his actions have added up incrementally to getting the giant retailer back onto the road of restoring the company’s reputation.  His sustainability platform for the company have been commendable and if executed properly will make a tremedous difference to the environment. As the Economist said, “Wal-Mart’s performance and reputation have never been better, and there is little for him to gain by staying on. The culture is transformed; the strategy is in place; his reputation glows.” The best part was the title for the article – From Bad to Great – a takeoff on Jim Collin’s Good to Great blockbuster book.  Good for them and good for us in the reputation space to see that reputations can be regenerated.

 

I was wondering the other day whether CEOs and boards were paying too much attention to what was measurable and not enough to what mattered. As companies increasingly focused on complex financial instruments and sub-prime fast money, leaders seemed to have lost sight of what mattered. If boards spent more of their time asking questions such as how the company’s values were being followed each day and whether customers were satisfied enough, perhaps we would not be in the economic mess we are in now. Imagine how businesses might run if the bottom line was core values and net promoter scores (would you recommend this company to someone else). At least corporate responsibility is now part of the triple bottom line (economic, social and environmental). As I was thinking about this blog post, I came across an interview by Maria Bartiromo who has a BusinessWeek column. She interviewed former Time Warner CEO Jerry Levin. Bartiromo was asking Levin about lessons learned since being the maestro behind the failed Time Warner-AOL merger. Levin says: “First of all, I think I realize now that there was a rather parochial zone of interest where all of my relationships—maybe even my relationship with myself plus or minus—were based on Time Warner's destiny. If something didn't touch on any of the businesses of Time Warner, then I didn't have any interest. The other thing is: There wasn't a sufficient understanding that it's O.K. to be open and vulnerable, to ask for help. To state it in different terms, it's probably helpful to invoke the feminine principle and be compassionate, empathetic, understanding, give respect to everybody, don't get deluded by the natural hierarchy. And don't get too self-satisfied that you have all the answers. I believe the importance of the capitalist system, the way it's been structured. But there is such a focus on delivering those returns almost without any understanding that there are deeper issues that management is also about—humanism and respect for people in the company; serving the public interest; higher obligations to yourself and to the world. Very few mission statements take that into account.” Levin helps me make my point. Maybe we need to figure out how to focus on what matters in addition to or (at least equally to) what we measure.

Reputation is all about having advocates to support you in time of crisis. An article in today’s Wall Street Journal on Lehman Brothers CFO, Erin Callan, supports this side benefit of building relationships before you need them. “To squash fears that Lehman could face the same kind of liquidity squeeze as Bear (now being acquired by J.P. Morgan Chase & Co.), Ms. Callan has had hundreds of face-to-face meetings and phone calls with investors and trading partners. She aggressively roots out rumors, even while pushing her bosses to disclose more financial information.” Sounds to me like she is out winning the vote every day. The risk is often worth the reward.

Yesterday turned out to be a fun day. I was a panelist at BlogHer Business ’08 conference in New York City. BlogHer is a community of women bloggers and the annual conference has become quite successful. The case studies presented were truly amazing.I was joined by fellow panelists Mary Clare Hunt (www.ecolutionarySelling.com), Janet Eden-Harris (CEO of Umbria) and Tara Anderson (evangelist for Lijit) and moderator Elana Centor (blogger and independent marketing consultant). Our topic was “Who You Are, Not What You Do.” However, it was fairly obvious to all us gals that we do what we are. As panelists, we were passionate about our jobs and what we were advocating (whether it was sustainability, reputation, online research, and start-ups). The audience was equally passionate, engaged and articulate about their entrepreneurial enterprises, blogs, or businesses. Lots of companies were there in support – Google, Hearst Digital, Fast Company, Kodak, Wiggly Wigglers, General Motors, Graco, HP. Although us panelists were not sure how all of our disparate jobs were going to tie together for the panel discussion, Elana made it seamless and fluid. I could tell that we all had fun which surprised us all. Of course, I got to talk about reputation and how to manage it online and offline. My company Weber Shandwick videoed the entire conference so it should be available online shortly. Take a look. I will post the link once I get it.

Please excuse my tardiness in writing of late. I was traveling in Europe to our offices, visiting clients and talking about reputation recovery. My laptop’s wireless broke and I was unable to post to my blog. Now that I am back in the U.S., I asked myself what fascinated me the most about my visit. Without a doubt, I have to say that I was shocked that the first question I was usually asked was about Eliot Spitzer. Prior to my visit, I had seriously prepared myself to talk about European corporate scandals such as SocGen, Deutsche Post and Northern Rock. Imagine my surprise when the first question was often about the governor of New York. I did not expect Spitzer’s reputation and moral downfall to reach so far so quickly. But then again, who is surprised by anything these days? Since my new book is about reputation recovery and redemption, I guess it should not have been such a surprise. (I was also asked why wives in the U.S. stand by their disgraced husbands. I was not sure why this is so.) Here is what I think. I do not believe, like most everyone, that Spitzer can ever rebuild his reputation in the political arena. That chapter is now closed. But I do believe that he can repair his reputation in time by dedicating himself to the common good. Years from now, we may actually hear Spitzer say that this colossal public failure (even crime?) gave him an opportunity to do something with his life that he would never have imagined possible or contemplated. Yale’s Jeffrey Sonnenfeld has written extensively about individuals who recover lost reputations over money, sex (less often) and other improprieties. Sonnenfeld's recent book is called Firing Back: How Great Leaders Rebound from Career Disasters. In his chapter on "Lessons Learned from Legends and Losers" is his advice to “Know Your Own Story” -- “…all of this entails knowing, telling and constantly retelling the leader’s story and to have an explanation for the downfall such that it enables faith in the leader’s ability to rebound.” Spitzer now has to find his own narrative to explain how his lost his way, betrayed his family and colleagues, and let New Yorkers down. He then has to find his own personal route to redemption and earn forgiveness. Reputation forgiveness should not be ruled out.