safeguarding reputation

When asked whether CEOs take as much action as they should to protect their company reputations, CEOs came back with a resounding yes in research by NYSEEuroNext. A full 76% believe that they are on top of safeguarding their reputation. The remaining 24% probably thinks they are not doing enough which is also a good thing.  However, considering that it is the job of the CEO to be the company’s reputation guardian, why would 2010′s figure be lower than what CEOs believed in 2006 (84%) about being ready to defend their reputations.  Could it be that CEOs recognize that as prepared as they may be, there is always something around the corner that will surprise them.  They are not as confident perhaps as they were several years ago when they may have thought that reputation protection was about branding well and getting their Web site up to par. I think the past year has humbled the best of them.

  Accenture just completed an impressive research study among global CEOs and other influentials around the world for the UN Global Compact Leaders Summit in 2010.  They say that it is the largest survey ever among CEOs on sustainability. Some of the key findings are worth thinking about as sustainability defines the corporate reputation landscape in a few short years to come:

1. Brand/trust/reputation is the strongest reason why CEOs say they are taking action on sustainability (72% say so). The next best reason lags fairly far behind at 44% –  potential for revenue growth and cost reduction. Reputation seems to be behind the motivation for many CEO and corporate actions these days.

2. CEOs recognize that the consumer is the most influential stakeholder on the issues of sustainability in the years ahead — 58% of CEOs say so and it is a perception that ranks even higher than employees (45%).  They believe that consumers are King despite the mixed evidence on whether consumers are demanding products that are sustainability-true (a word I just made up).

3. Collaboration is critical to the sustainability movement.  Here I have to agree since I am seeing a greater focus among clients on partnerships and coalitions in all areas, including CSR. As Accenture writes, “…global challenges are too broad and too complex to go it alone.” Multi-stakeholder partnerships are the new trend in corporate reputation building.

4. One of the more significant findings was that 81% of CEOs say that sustainability is now embedded into the strategy and operations of their companies — a big jump from 50 percent three years ago.  New to me was that sustainability is being built into executive compensation packages today.

5. CEOs believe that by 2015, sustainability will be fully integrated into company footprints. A large 80% believe that by then, this dynamic will be commonplace. That is not far away and it is about time. I was telling someone who interviewed me recently that although 2015 feels as if it is upon us, the truth is that this has been a long way coming. I recall back in 1990 when I first learned more about the Fortune Most Admired Companies survey how surprised I was that environmental/social responsibility was so low on the totem pole of reputation drivers. I thought there had to be a mistake. But that is what it was then. All in all, it has been a long progression to get to 2015.

  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.

  I have been mighty busy of late. I think about posting all the time but the days seem to leave little time for reflection. Several items of interest have been collecting in my reputation-obsessed brain so here are a few for an early Sunday morning.

It seems that many people are learning about “leadership” these days. Because people know about my keen interest in the reputations of leaders, I get asked when I am among friends what I think of Obama’s leadership. The discussion usually gets heated because everyone is now an expert on the topic as we read and hear about how President Obama is dealing with the oil spill in the Gulf of Mexico. For me, President Obama is exhibiting “no drama” leadership. I do not need him to be overly angry, emotional and making a human spectacle over the man-made disaster now at his doorstep. The majority of the American public that elected him did so exactly because he was reasoned, calm, rational and thoughtful. We got what we voted for. 

Yesterday’s WSJ had an interesting article about the importance of “near misses” or close calls in the science of disaster. This type of study is really the science of risk assessment, something that many industries do regularly to calculate the chances that something will go wrong.  Nuclear power companies are big fans as are industries such as aviation, NASA and more. For example, NASA puts the chance of any shuttle mission ending in disaster at 1 in 89. Sounds like risk-y business to me.  The concept of assessing a company’s “near misses” is appealing to the reputation protection business. If a company could regularly tabulate and review  its near misses, it might be able to prepare for improbable events and develop strategies that come in handy when a crisis arises. I recall reading about a hospital that meets monthly to review its near misses where things could have gone much worse for patients and other members of the facility.  The regular discussion among hospital staff sensitized them to how human error could raise the risks they face every day and make them more alert for problems that might surface. I think it would be a good idea for companies to regularly practice “near misses” meetings to review how they would react quickly, who would do what, what else could go wrong and what would protect their reputation from  full-blown disaster. We might have fewer reputation scars if we practiced better.

The third item I thought I should mention this morning was that Booz & Co. released their comprehensive CEO succession annual research. Many years ago, I started a database on CEO turnover when I realized that CEOs were losing their jobs by the boatload. It may have been in 2001 when Enron exploded but it became a major source for the media on who was in and who was out. It was a great deal of fun compiling all the stats on why CEOs departed, the average tenure of departing CEOs, regional variations and all the many reasons for the rising turnover rate.  I have to say that I miss being in the quarterly departure rate business. We stopped doing it because it was so time intensive. But I was one of the first to report on CEO turnover and for that reason, I totally enjoy the Booz report every June.  A few details are worth noting because CEO turnover is explicitly tied to company reputation recovery. One way to get a company’s reputation back on track is to bring in a new CEO over a CEO who did not do the job. It is one way of providing a clean slate and giving the company a grace period to correct failings and start anew.

• The number of forced CEO turnovers declined indicating that boards are getting better at picking the right candidates and supporting them.
• There has been a “harmonization” of CEO turnover rates regionally with 10 year averages between 12 and 14%. The US used to be known for its rising CEO turnover rate but it seems to have evened out worldwide.
• The trend towards a separate Chairman and CEO is real and growing. North American companies are now splitting the role more often which is quite a change from years ago. Comined roles (where one person holds the CEO and Chairmen job)  in 2009 fell to 16.5% in the US and 7.1% in Europe. Years ago, the figure in the US was about 50%. Interestingly, Booz reports that no one governance role (separating the roles or combining them) outperforms the other.
• More companies are having their outgoing CEOs become chairmen and annoint the incoming CEO as an “apprentice” CEO. The chairman oversees the growth of the CEO this way.
• Insider CEOs continue to be the norm, perform better and last longer.

There are many more interesting details in the research which I hope to cover in another post. This one is getting too long for casual reading. Enjoy your Sunday.

  Hard to believe but the reputation of the workplace has gotten tougher. The Corporate Leadership Council found that employees’ jobs have expanded by a third since the recession. And The Hay Group reports in their survey that two-thirds of workers say they have been putting in unpaid overtime. That is to be expected since everyone doubled and tripled up as the economy spun out of control and job freezes set in. The Hay Group goes on to report that 63% of workers think their employers do not appreciate their extra work and 57% feel like they are disposable as far as their employers are concerned. And alarmingly,  one-half of workers don’t think they can keep up their onerous workloads like they have anymore. Last night I was speaking to someone who told me exactly that after working seven days a week,11 hours per day. He said he just told his boss that he could not keep it up anymore. What did his boss say? Go get yourself some help which he did. Impressive. Wonder if all it takes is asking?

What can employers do to boost their reputations as kind and caring? A few suggestions appeared in an article in The Economist. Cap Gemini has a golden awards program where people are publicly thanked every six months for their work. They also give people blackberry type devices to use while traveling to help them get their jobs done while on the road. Thoughtful. Flexible hours is another favorite employer reputation enhancement that some companies use. I never had flexible hours early in my career but sure wish I had the option since I would have used it well. And the other strategy for building a strong workplace reputation is paying attention to the high-potentials like HP does. HP invites rising stars to important strategy meetings and asks them for suggestions.

All of these ways of recognizing employees cost employers next to nothing but make their employees more loyal and more likely to put in the extra time to come up with new ideas to grow the company.

When employees start leaving their jobs for better ones as soon as the economy picks up, employers will have to get creative about retaining employees and letting up on the workload once again. But there are plenty of inexpensive ways to improve workplace reputation and there is no better time than now when employees are on the fence about leaving or staying at their jobs. It is a good reminder to us all that recognition goes far and costs next to nothing. This is probably the real ROI everyone is always asking about.

  With all the coverage and discussion on oil spills, I keep thinking about a conversation I had a few years ago with the head of communications at an oil major in Europe. We were talking about crises that the industry had suffered and he mentioned that there was nothing like the “panda effect.” I told him I was not sure what he meant. Now I do. He said that in high risk industries such as oil, safety risks are just part of the job. Deaths are expected and they happen. But, he said, when animals or wildlife are harmed and the pictures are blasted across the media, the “panda effect” does its most serious damage.  Hard not to see his point as visual after visual pictures wildlife affected by the recent Gulf of Mexico oil spill. 

On a similar note, I was talking to someone just this past weekend about the oil spill and she mentioned birds she saw on TV covered in oil slick.  “I am an environmentalist and this really upsets me,” she said. I reminded her that 11 families lost their loved ones as well and somehow that single fact does not get the same attention and outrage from the public and media.  She looked at me somewhat sheepishly and I felt a bit guilty for making the point. But here was an example of the panda effect in action.

The panda effect on reputation is unavoidable but now more powerful than ever with the spread of news online.  Every day I am reminded of  this one fact.

   A few things reputation-related that I wanted to blog about today.

Saw an article in Fortune about what Wall Street analysts think about the importance of CEOs. The survey from DDI found that analysts consider the CEO the only executive worth their time and attention. One of the quotes cited in the brief article went like this, “I don’t spend my time worrying about how companies are fostering their next generation.” Talk about short-termism. [Note: I tried to find the survey so I could cite properly and could not. Neither could I find on Fortune's site, possibly because it was a short piece.]

Also took a look at McKinsey Quarterly’s new global survey on sustainability. Definitely worth a read because the information is very rich and noteworthy for those of us interested in how reputation and sustainability work together.  The findings that I found most compelling are:

• 72% say sustainability is “extremely” or “very important” for managing corporate reputation and brands
• 55% say that investment in sustainability helps build company reputation
• 36% believe that reputation-building is a top reason for addressing sustainability

No surprise to me was that NGO pressure was very low on the list as a reason for dealing with sustainability (3%). I used to think that the lack of attention paid to NGOs when this question gets asked demonstrated that executives were fooling themselves for not paying attention to NGOs and trying to engage them.  But now I am starting to think that results like this reflect executives’ unwillingness to admit that NGOs have an effect on their sustainability initiatives. Hard to sort out because I do not see how NGOs could not be a primary reason for pushing companies to see their role in greater issues facing society.

Astonishing as well was that 62% of executives surveyed say their companies do not report sustainability metrics externally to investors or are unaware of how they are used.  When reputation is so important today, why not?  Why not combine financial and non-financial performance into one annual report as Professor Robert Eccles explains in his new book, One Report?

The report also looks at the differences between companies who consider sustainability a top three priority for their CEOs and are effective at managing it . The differences are quite considerable — more “proactive” companies publish sustainability sections on their Web sites, embed sustainability data in their communications with investors, participate in sustainability rankings, issue sustainability reports and communicate with socially responsible investors. My sense is that companies who are more proactive are also more profitable over the long-term.

There is no doubt that the past 18 months of recession have stalled some of the great sustainability initiatives that companies have embarked on to improve the world at large and build reputations. However, I have no doubt that these programs will come back full force with a vengeance in the long-term.

  I have written before about different rules or guiding principles that leaders recommend to protect reputation. Warren Buffett’s advice about imagining your planned actions on the front page of The New York Times is a classic. However, here’s another that should carry equal weight. In an interview in the Wall Street Journal, SunGard Data System’s CEO Cristóbal Conde says he’s learned a lot about bad bosses by reading “Dilbert” daily. Now before sending a company-wide e-mail, Conde asks himself, “How would Dilbert react to this?”  Imagining your communications missive or plan as the subject in a Dilbert strip is a smart way to prevent doing something that could quickly go awry.  Try really hard to imagine how what you want to do looks from the perspective of that fellow sitting in the cubicle.

This brings to mind an encounter I had with a CEO awhile back. He asked me to review a memo he wanted to send as his first form of communications.  My response was that the memo was fine but that there were too many “I’s” and not  enough “we’s.” I said that nearly all CEOs use the royal “we” to infer that we’re all in this together and need to collaborate to get the job done. For example, he should be saying “We’re going to set a new direction,” NOT “I’m going to set a new direction.”  The new CEO looked me in the eye and said, “But I’m the CEO and people have to understand that.”  I replied that employees knew that he was the CEO and that it was the CEO’s job to create unity and reduce the distance between the CEO and everyone else if he wanted to be successful.  It truly was a Dilbert moment. Happy new year!

   The test question. Warren Buffett says he uses a New York Times example to advise leaders in his company whether they should take certain actions and risk ruining their reputations overnight. He warns them that if they think they’d feel uncomfortable seeing whatever they did or said on page one of the New York Times, they shouldn’t do it. He could add another verion — think about your mom reading what you did or said on the front page of your local paper. (Somehow I don’t think Tiger Woods took this test.)  In our social media guidelines for employees at Weber Shandwick, we have a more intuitive but equally important test. We remind people that if they are posting online and have any doubt about what they are doing or saying, that’s evidence enough not to go ahead.  If they are not sure, we suggest asking their supervisor.  Believe me, this guidance is not as easy as it sounds.  There are times I doubt what I am about to write and steer away from it after thinking twice. I usually ask myself what my boss would say and that usually does the trick!

In recent weeks as executive bonuses have become the talk of the town, a new test was suggested by David Wessel in one of his columns for the Wall Street Journal.  He quoted Britain’s finance minister, Alistair Darling (I always think of the Darlings from Peter Pan when I hear his name) who remarked at a WSJ Future of Finance conference in London packed with financiers that “you have to pass the next-door neighbor test. You have to be able to look at your next-door neighbor and justify what you are doing.”  Wessel’s commentary on this new test was right on the money: “And many of them cannot. They cannot even explain what they do. They promise better ‘risk management,’ but to many of their neighbors the past few years were all risk, no management.” All risk and no management….I love that!

I would have changed the Darling test question to something along the lines that if you can explain to your neighbor why you should get a bonus in the millions when the economy is failing, unemployment is high and public outrage is off the charts, then maybe you actually deserve it. But I agree that many, not all, financiers cannot explain how they actually managed risk well enough for most of us over the past 18 months and helped make our economy more productive and safer for future generations.  

All this makes me wonder what the next test question will be 12 months from now.  How about….if you don’t want to see what you said or did on the home page of the Huffington Post, don’t do it!  A possibility.

I heard about an interesting blog post the other day. Julia Kirby, an editor at Harvard Business Review, blogged about the Maclaren stroller recall last month. I live in more-fertile-than-thou Park Slope where Maclaren strollers probably have the highest density of any borough. Park Slope is the neighborhood in which Amy Sohn just wrote a best selling book, Prospect Park West, about the lives of chic and cranky mommies, plentiful playgrounds and majestic brownstones. As you may recall, Maclaren announced a recall of every baby stroller made in the US over the past decade. If a baby’s fingers were in the wrong place when the strollers opened, there was risk of damage to the child’s fingers (amputation!). The blog describes what Maclaren was doing about the situation as it became a media frenzy. The best part were people’s responses to Kirby’s question about what would you do if you were the president of Maclaren USA? Definitely worth a read if you want to brush up on crisis response strategies (how to make the hinge repair kits available to owners, working with the CPSC – Consumer to Product Safety Commision’s Office of Compliance, working with retailers, engaging outside investigators, producing a video on how to use the strollers properly and the new hinges, confusion over misinformation, competitive issues, etc.)

What truly fascinated me is that the CEO of Maclaren USA posted on Kirby’s blog in response to the comments made. They were his first substantive remarks. Here is just a piece of his blog response.

“I cannot but benefit from all the contributors for the value they are providing to my perspective as the CEO of Maclaren USA. I note with interest the comments from Ian Mitroff and Robin Cohn. Only if we could get Alan Schoem of the CPSC to participate. There are many comments that will shortly appear on our website and through a blog site that I am setting up for direct communication with any and all consumers therefore I would be sparse with my words here [although the posting promises to be long]. It goes as follows, in short, and I hope people would not take these out of context: 1. The biggest issue we are facing now is that the products are safe ‘in-use’ 2. The issues that revolve around the unfortunate injuries are issues that are industry wide. 3. In unit terms, there are 20 times more strollers sold in the USA than Maclarens each year and they ALL have the same issue. What do you do when you face a situation like this? This is what we are trying to manage. On the other hand, what is the ultimate aim of an industry regulator such as in this industry. I would submit that the aim of such an exercise would be: 1. Provide “corrective action” to ensure safety of consumers 2. To raise awareness in respect of the issue amongst ALL consumers of such products 3. To raise standards in the industry by highlighting weaknesses in regulation or industry practice In my view, none of the above were achieved and this was mainly as a result of an early leak in the agreed joint recall announcement planned for November 10th. This leak was as a result of inadequate procedures to protect the necessary confidentiality of process in order to ensure that the objectives are not compromised. The result of this early leak was panic amongst parent and tens of thousands of calls and website visits to the wrong addresses. All of this with a company team that was preparing for the following day.”

Not only is it amazing that the CEO felt the urgency to post about the stroller problem before his company’s blog was up and running (most CEOs restrain themselves) but he told us about the leak that unraveled their plans. The BIG lesson to be learned here is that companies should plan for leaks because it is nearly inevitable today. In fact, our research among executives on safeguarding reputations online found that confidential leaks are one of the night terrors that keep them awake at night. All communications professionals should build the possibility of a leak into any crisis planning because it happens more than we anticipate. I applaud the CEO for defending the Maclaren reputation and getting some of the facts straight. I wonder if he would have revealed as much as he did on the blog if he had waited. Quite possibly, he received several tips on managing the crisis from the thoughtful commenters and tested out a few messages himself before the company blog appeared. Might have been a very smart strategy. However, it will be interesting to hear more about how the crisis impacted their reputation and subsequent sales.