safeguarding reputation

  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.

   Crisis is the ultimate reputation destroyer. Rarely does any company exit without a bruise. For those communications professionals at the heart of the crisis, the lessons learned take you to unimaginable places and arm you with irreplacable insights and experience. Jon Harmon, a former Ford corporate communications executive and someone I know,  just released his aptly titled book, Feeding Frenzy, about the well-publicized Ford-Firestone crisis. Jon provides more information about the book on his blog as well. Jon tells the tale of the two companies — Ford and Firestone – colliding over deadly tire and safety issues that grabbed headlines and public attention for weeks on end. His minute to minute descriptions of the frenzy keeps you on the edge of your seat (if that is how you read).  I remember hearing that the corporate communications department received 800 calls or more within minutes of the news breaking. Managing reputation when your house is on fire is one hell of a job.

For all of us anticipating or living through reputation recoveries and crises now, it is a must read.

Interested in building and protecting your corporate reputation? Boston College Center for Corporate Citizenship , along with support from The Hitachi Foundation , issued its fourth 2009 State of Corporate Citizenship report. The report  provides valuable insights from nearly 800 U.S. senior executives about their attitudes and perceptions on the value of corporate citizenship. Rightfully so, the authors preface the report by describing the difficult year that faced senior executives and the high expectations about continuing their support of corporate responsibility and giving initiatives. The good news is that nearly half of the executives surveyed believe that corporate citizenship is even more important in tough times and kept up their corporate citizenship efforts. Boston College Center says that this finding underscores how corporate citizenship has passed the value test. What do executives mean when they report on corporate citizenship? To them there are three important areas — ethical business practices (91%), treating employees well (81%) and accurate financial management reporting (76%).

When it comes to reputation, we have known for some time that reputations are enhanced when a company’s words match its actions in the corporate responsibility space.  Also, Weber Shandwick’s Safeguarding Reputation research found that companies with better corporate citizenship track records recovered their reputations faster than those with poorer corporate citizenship records.

Interesting to me is that the survey found that CEOs are now leading the corporate citizenship agenda in three out of four companies. Understandably and not surprisingly, CEOs recognize that their reputations need improvement and corporate citizenship is one way to communicate to employees and other stakeholders that they are concerned about doing the right thing. The survey also identified REPUTATION as the number one driver of corporate citizenship (70% for all executives, 82% for large-company executives). Reputation shares that top spot for the first time with company traditions and values.

 Reputation is increasingly becoming a driving force in shaping company and leadership action. That can only be viewed as a positive. Glad to hear that senior executives agree.

Apologies for not writing during the past week. I started a posting but this week was a long one.  I had wanted to mention a compelling article that I have been carrying back and forth in my work bag and now is a better time than ever. No surprise but it came from The Economist and the topic was about how some companies thrive in the worst of times.  Despite the challenging days and months we’ve all been through, crises give birth to opportunities and this is surely one of those times when new companies rise or established ones leap frog ahead of competitors, reputation-wise. We can all read the tea leaves on how certain companies within particular industries are facing major shake-ups as to who is on first, second and third base.

The Economist article noted a few key points that I want to commit to memory (which is why I am writing it down):

• “Recessions shake things up rather than slowing them down. They reward strengths and expose weaknesses, create new opportunities and kill old habits, release pent-up energy and destroy old business models.” Is that what is happening with Wal-Mart and Amazon fighting over $10 best-sellers? Interesting turf wars.
• Several companies thrived or arrived during the Depression — P&G, Revlon, HP, Polaroid and Pepperidge Farms. FedEx, CNN and Microsoft first breathed life during earlier recessions.
• Bain management consultants reported that twice as many companies made the jump from laggards to leaders in their industries in the early 1990s recession AND the vast majority (70%) kept that momentum going in subsequent years.  Pity the 30% who did not.
• Nothing wrong with being big (although conventional wisdom seems to think that big companies are bad and too big to fail. Why does no one remember that the largest companies employ the most people? And as follows, they manage through adversity fairly well.) “The most obvious winners are established giants: market leaders that entered the recession with cash in their pockets and sound management systems under their belts. These companies are reaping rewards from investors who are skittish about shakier rivals. They are also using their corporate muscle to squeeze their costs (for example, by negotiating cheap rates for advertising) and so win market share from their competitors. BCG, another consultancy, notes that 58% of companies that were among the top three in their industry had rising profits in 2008 and only 30% saw their profits decline. In contrast, only 21% of companies outside the top three had rising profits, and 61% had falling profits.” Makes sense then to make it hold on for dear life if you are at the top of your industry. The same goes for reputation. Being highly regarded and among the top three most admired in an industry gives companies a second and sometimes third chance. Stakeholders are willing to look the other way and continue buying your products and services. I am not so sure about a third chance however. Reputation erosion almost always sets in if the third chance is wasted.
• Challenging recessionary times also are good for repositioning a company, according to this article. Cisco is repositioning itself as the Human Network, IBM as a Smarter Planet and according to Fast Company’s recent article about Intel, they too are pushing boundaries with their new Atom mobile chip.
• The last line of the article got me: “Indeed, business is more likely to take advantage of this ’serious crisis’ than the world’s politicians.” Let’s hope not.

  Reputations are sometimes left in the hands of the media, bloggers or Twitterers. And that is not always good. In a WSJ interview with the turnaround CEO of Delphi, Robert “Steve ” Miller, was asked about communicating when your company is in bankruptcy. He replied:

“I was very outspoken when we went into Chapter 11. But there was a lot of pushback and criticism. We made the decision to shut up. But if I had to do it all over again, I would keep speaking out. When you are in a controversial situation, you are going to be criticized whatever you do.

The critics said, “Steve Miller is the devil incarnate,” and we said, “No comment.” The only thing left out there for the public was the notion of a devil.”

Miller underscores the importance of engaging critics because if not, your enemies get the last word. CEOs are constantly confronted with this conundrum and especially when legal counsel is involved or regulators are part of the equation, as they are today. However, sometimes it makes sense to figure out what you can talk about that is not controversial and speak up.  Thought leadership platforms are tailor-made for these times. The best antidote is having a senior management team with a thick skin because the critics will always be out their with their pitchforks.

   Someone asked me where I got 99 tips to safekeeping reputation. I thought it was a good question and it made me think about the process. I started by reading the books I wrote, reread various reports we have done at Weber Shandwick on safeguarding reputation and reviewed our most recent study on online reputation. I then yellow-highlighted all the steps to safeguarding reputation that I thought were important in preserving reputation and keeping reputations safe.  I stopped at some number around 65 and thought that maybe I should pare the list down to 50. However, I liked the number 99 because that is what I originally set out to do. So I went back to articles I have written over the years to find more tips and before I knew it, I had about 103 reminders. It did not take much to reduce the 103 to 99 tips.

Looking through all the 99 tips to safekeeping company reputation, it appears to me that the mainstays of lasting reputation are transparency, ethics, leadership, culture and responsibility. Regardless of what companies do online or offline, these values must be in place and religiously adhered to to sustain reputational trust during good times and bad. Of course, reasonable financial performance must be in place as well. As someone else has said, flat is the new black.

As the recession lingers and trust in business erodes, company reputations are at greater risk than ever before. Since October is around the corner, my mind turns to the distribution of Fortune’s World’s Most Admired Companies ballots which should be out the door momentarily.  Respondents are soon to be asked to rate the world’s largest companies on their reputational success or failure over these past difficult 12 months. What will it take to gain admired status in times as unprecedented as these ? Not an easy question to answer but some of the answers are in those 99 tips.

 Today at Weber Shandwick we just issued a new reputation offering that I particularly like. As safeguarding company and brand reputation continues to rise to the top of executive agendas, 99 Tips to Safekeeping Reputation provides a simple visual roadmap to navigating crises and restoring reputations. We think it will come in handy for anyone interested in reputation. Enjoy and let me know what you think or would like to see added in our next version. I am thinking of doing this annually.

McKinsey had an interview recently with Kenneth Knight who is the national intelligence officer for warning. I thought that was a great title and a tough job. As he says, avoiding surprises essentially defines his job description. When he was asked how he balances short-term with long-term analysis, he replied:

I always use the analogy: my father was a DC policeman. And some of this is about the difference between a stakeout, where you’re watching some known activity that you’re interested in—say country A invading country B—and more walking the beat, where you’re going through your neighborhood looking for signs that don’t look right to you. Maybe it’s anomalies, maybe it’s some kind of activity that is new, and potentially maybe you just want to understand it.

But that balance between the horizon scanning—walking the beat—and then the standing warning issues, where you know you’re concerned and want to watch, there’s a range of analytic techniques. And I think one size doesn’t fit all there.

I feel much better about the, what I would call, enduring warning concerns—the stakeout problems, where I know to watch, and we built an analytic process, and we watch the area, and we typically have designated people watching it. I think we can still get surprised there, but those I feel pretty good about. It’s the emerging issues that we didn’t imagine or didn’t know to watch. And that’s what my staff is trying to push and engage and uncover out of that tremendous daily and weekly, monthly product that our community churns out.

Sustaining good reputation requires the same kind of diligence and scenario planning. Watching carefully or staking out your stakeholders and shareholders while making sure your peripheral vision is in check is required to safeguard reputation. Keeping an eye on the industry, competitors, partners and now government is necessary to maintaining reputational balance.  As I have repeated here before, hope is not a plan.