Posts Tagged ‘CEO reputation’
Someone recently said something to me that had me thinking. They were describing a CEO and said that they were amazed how willing he was to show his vulnerabilities. Leadership humility is very attractive these days because so many CEOs and leaders are being cut down to size as events careen out of control around them. A recent article in the Guardian echoed this same sentiment although the writer, Lynnette McIntire, referred to this trait as “humanity,” not humility. She says: “But the most persuasive CEOs are those who show how their personalities, histories, values and feelings are aligned with company culture. I have been charmed and disarmed when CEOs talk about what they’ve learned from their children, how a mentor changed their lives, how a hard lesson from life knocked them into gear or how a frank comment by an employee reset a decision.” McIntire struck a chord with the examples she gave. One was about Tom’s Shoes which has a business model of “buy one, give one” whereby a free pair is given to children in need when a customer buys a pair. She pointed out how the CEO, Blake Mycoskie, spoke about how unprepared he was for the criticism the company received about providing free shoes. People were criticizing how this policy was hurting local shoe producers. Tom’s Shoes is now committing to having a proportion of these giving shoes made in Haiti. She also wrote: “Now, Tom’s giveaway programs have a shoe replacement component, dispelling the in-and-out charitable giving image. For many children having black shoes – a school uniform requirement – means their education is not interrupted when their feet grow.” All very interesting to me because I did not realize that Tom’s Shoes’ reputation was being bruised by these criticisms. But also how the CEO listened, learned and began reshaping policy. And how the entire lesson made the CEO appear more human,vulnerable and teachable.
[I should add that I also was pleased that they quoted our research on CEO reputation.]
CEO reputation is still incredibly important. As I have always said, it’s nice to say that it should not be so important or to say that it is should be more about the company than the CEO, but ultimately the CEO sets the tone, style and destiny of a company. A recent survey of top communications officres in Europe confirms the uber-importance of the CEO to a company’s success. What I found most interesting, however, were the findings on CEOs and communications. Considering that these are communications officers, the study has some good inside info on CEO activity:
- 83% said that their communications teams are working on positioning their CEO
- 67% are working on the CEO’s profile (probably online) and a CEO-focused communications strategy
One of the more interesting articles I have read recently describes how the conference business is surging and providing better outlets for CEOs and other executives to speak. All this “live media” or “live journalism” (what it is now being called since you can repurpose it, livestream it, twitter it, YouTube it, etc) is perfect for positioning CEOs (reflecting the findings above) and other top executives you want to shine a light on. Weber Shandwick has a thriving business run by Carol Ballock helping CEOs and top executives find the right platforms to speak at and helping shape content. Our research on the best conferences has finally put some metrics behind this burgeoning phenomenon. Here are a few examples if you don’t believe me. The Huffington Post is hosting three conferences of Arianna Huffington’s marvelous Third Metric idea, Atlantic Media now does over 200 events per year including exclusive dinners and week long conferences. The New York Times is convening 16 conferences in 2013, up from one last year. The Wall Street Journal is hosting its 6th CEO Council. Tina Brown left the Daily Beast to get into the conference business. Many of these conferences, including Fortune’s Most Powerful Women in Business, are expanding overseas too. Digital media companies are also hosting live events that help position executives, pundits and influencers. It is a gold rush. As the New York Times says, “Live events promote their brand” and “..conference centers are considered just another social platform with Twitter, Facebook and online video.”
When I first heard this story last weekend about AOL CEO Tim Armstrong publically firing the Patch creative director on a conference call, I was not sure what to think. It was quite the uncivil thing to do. At Weber Shandwick, we had just released our annual survey on Civility in America and I was troubled by the finding that one in four Americans (26%) had quit their jobs because of an uncivil workplace. This figure was higher than it was in 2010 (20%). When I heard that the public firing before 1,000 people was recorded and leaked to a web site, making its way across the world wide web, I thought that too was uncivil. All in all, not good news for Armstrong’s reputation.
I was wondering how this would all shake out or when an apology or statement would come from above and here it is. Unfortunately, the reputation of the workplace is highly impacted by the actions of the CEO and especially by how a CEO behaves during tough times which Patch is experiencing as they prepare for layoffs at the end of this week. His taking responsibility, regardless of the situation, and acknowledging his accountability was the right thing to do to bring some equilibrium back to the situation. You cannot explain away incivilty when it comes to CEO leadership because most people will regard it as just an excuse. Therefore, Armstrong’s apology does not dwell too much on why he fired Lenz the way he did. Since apologies are increasingly common among CEOs and leaders, I thought I would post below in case anyone is looking for an example in the weeks and months to come.
I am writing you to acknowledge the mistake I made last Friday during the Patch all-hands meeting when I publicly fired Abel Lenz. It was an emotional response at the start of a difficult discussion dealing with many people’s careers and livelihoods. I am the CEO and leader of the organization, and I take that responsibility seriously. We talk a lot about accountability and I am accountable for the way I handled the situation, and at a human level it was unfair to Abel. I’ve communicated to him directly and apologized for the way the matter was handled at the meeting.
My action was driven by the desire to openly communicate with over a thousand Patch employees across the U.S. The meeting on Friday was the second all-hands we had run that week and people came to Friday’s meeting knowing we would be openly discussing some of the potential changes needed at Patch. As you know, I am a firm believer in open meetings, open Q&A, and this level of transparency requires trust across AOL. Internal meetings of a confidential nature should not be filmed or recorded so that our employees can feel free to discuss all topics openly. Abel had been told previously not to record a confidential meeting, and he repeated that behavior on Friday, which drove my actions.
We have been through many difficult situations in turning around AOL and I have done my best to make the best decisions in the long-term interest of the employees and the company. On Friday I acted too quickly and I learned a tremendous lesson and I wanted you to hear that directly from me.
We have tough decisions and work to do on Patch, but we’re doing them thoughtfully and as openly as we can. At AOL, we had strong earnings last week and we’re adding one of the best companies in the world to the team. AOL is in a great position, and we’ll keep moving forward.
The pendulum is always swinging when it comes to CEO reputation. All of a sudden, there’s more frequent discussion about empathy, humility and the softer side of things. I have mentioned this trend a few times already. Today there’s an article in the WSJ about a new crop of boring CEOs in the financial sector. Boring with a small “b.” Underneath it all is the desire for boards to hire CEOs that sport no controversy by how they behave. These boring CEOs don’t necessarily command big bonuses (one CEO refused bonuses til 2015). They give eye-rolling, yawn-inducing presentations, focus on words such as integrity and stewardship, work well with regulators and are employee motivators behind the scenes.I bet that they also focus primarily on their company reputation and less on their own reputation. I liked the example given of how one CEO had to play CEO-for-the-day as a final test. “The candidate had to give a webcast presentation and get ambushed by actors dressed as television journalists, among other tests.” The article ended with a warning of what we can expect from our future CEOs: “Boring is the new black.” I give it three years and we’ll be back to the charismatic CEO winning the day. Maybe not.
In a recent article on CEO compensation, there was a graphic that caught my eye. You can see it here. Obviously, it reflects the general reputation of CEOs — sitting on a throne of cash , talking on the cellphone while sunbathing. He does not looked too taxed. Scarily, he looks like Don Draper of Mad Men. Wonder if that was intentional.
The graphic is interesting because it never seems to change. Perceptions of CEOs in general are overwhelmingly negative. However, in research we have done, the results are quite different when you ask employees about their own CEOs. Mostly they give them fairly positive ratings….it’s just all those CEOs out there that no one works for that gives them a bad name.
Either way, whether they get paid too much or not enough for the sweat and tears of the job, CEOs usually receive negative and unflattering portraits like this one.
A thought for the day. Some reputations never change.
I think bad news comes in threes. Thinking about President Obama and the recent bad news he has received regarding the terrorist attack in Benghazi, the IRS targeting of conservative groups and the secretly snatched AP reporters’ phone records, it has to be true. It is the culmination and convergence of these three reputation hits that changed the political balance in favor of the Republicans and Tea Party members for a change. Not a full tilt but enough to rain on the President’s parade.
When I talk to company leaders about what drives a reputation into the ground, I often use the baseball metaphor that all it takes is three strikes and you are out. The first mistake happens to just about everyone these days. The second reputation hit is basically unforgivable but no one wants to put you out of business. The third hit takes you down because it is clear that leadership was absent and judgement was non-existent or negligent (even worse). When I think of the perfect example of the Three Strike Reputation Rule, I think of BP. First, they were tied to 15 deaths when the Texas Refinery blew up in 2005 in the US. Second, an oil leak in Alaska from their pipeline in Prudhoe Bay captured negative attention. But third, and for the final straw, the horrific Gulf of Mexico oil spill that ultimately drove their reputation into the ground, along with their CEO’s Tony Hayward. After the third strike, it’s time to call it quits.
Yet, from what I’ve been reading, President Obama’s approval ratings have barely budged from their high marks. Perhaps we will see the proof in the pudding at the next election cycle. Hard to tell. And BP, after much soul searching, is coming back again with new leadership, better values and a new heartbeat. The rest is yet to come.
As you already know, I am keenly interested in how CEOs manage their tenures. In my book on CEO reputation, I referred to the various stages of a CEO’s tenure as the seasons of a CEO. When I wrote it several years ago, it started with the Countdown period (pre-announcement), the first 100 days, the first year, the middle years and ends with the last 100 hours and legacy-setting. Since then, I have continued to follow CEOs closely but have been particularly fascinated by how CEOs can use social platforms to build their companies’ reputations and to some extent, their own. That is what I explained in this new article on CEOs getting social in their early tenure. (See also Weber Shandwick’s Socializing Your CEO II)
Surprising to me, despite billions of people communicating and socializing online, little has changed in experts’ advice to CEOs or other executives on how to navigate their early tenure by taking advantage of social tools. In three separate research investigations on how CEOs spend their time by Harvard Business School, the European University Institute and the London School of Economics, and Fondazione Rodolfo Debenedetti, the words “social” or “digital” did not appear once in the nearly 30,000 words written. Management consultants’ white papers on CEO transitions reveal little attention to how to effectively use social platforms. I have about 15 articles with smart advice on CEO successions and transitions that I send to new CEOs and not one mentions using social media. Further still, an online search of the most relevant 30 hits for “how CEOs should use social media in their first 100 days” does not retrieve a concise blueprint whatsoever. Instead, the mentions consist of lists of Twittering CEOs, reasons why CEOs don’t use social media, events and primers for getting into the social game, articles written by CEOs of digital agencies, and do’s and don’ts for CEOs who use social media.
Social media should be incorporated into new CEOs’ early playbooks. Whether CEOs are communicating, engaging in two-way conversation or simply listening in, social media platforms should be gradually adopted. As technology increasingly permeates all aspects of business and society, CEOs cannot afford to be out of touch with their cultures, how their products or services are being received and what their competitors are up to. Moreover, as the next generation of technology-literate CEOs start taking office as 77 million baby boomers leave the stage, being socially-literate will become the norm, not the exception.
For these reasons and because all these management consultants seemed to be overlooking social media as a leadership tool in their early CEO days, I wrote this article titled Get Social: A Mandate for New CEOs. It just appeared this week on MIT Sloan Management Review’s nicely redesigned Social Business site. Please take a look if you are a new CEO and getting the social bug! Or if you are advising CEOs to jump on the social bandwagon even a little. I firmly and proudly believe that this might be the first (or among the very first) articles on how and why CEOs should be social citizens at the start of their tenures and not wait til their seasons come to an end. There are some great examples from CEOs and presidents of companies such as Aetna, Etsy, GM, MassMutual, Best Buy and BAE.
Imagine my surprise when I saw this infographic from CEO.com titled “The CEO’s Guide to Reputation Management.” I also saw it on another site with the daunting title, “The Staggering Significance of CEO Reputation.” Here is why I was taken aback. Several of the facts in the infographic come from my research over the years. The first, that the CEO’s reputation contributes to nearly half of a company reputation comes from our study this year although they could be referring to my work from years ago at another agency. The results were similar showing the steady importance of CEOs on reputation. Kindly they cite us in the next chart about customers caring about CEO reputation. However, the study in the chart about investors comes from a study I spearheaded many years ago so I do not think it is a fair comparison putting them side to side. But perhaps I am reading the chart too literally. And the five pointers at the bottom about polishing a CEO’s reputation comes from my book written in 2003, CEO Capital. Although I still agree that these factors are important in building a good name for CEOs, I do not like the word “polish” or ”image.” Image implies something fleeting and temporary. CEO reputation management is built on a serious exploration of what drives CEO perceptions that benefit a company’s reputation. I address this issue in my book because people used to confuse reputation management with “image” management. Today especially, online critics can detect within nano-seconds if CEOs are being in-authentic within second and are all too happy to tell you so. I just think it is the wrong choice of words for 2012/2013. Either way, thanks to CEO.com for featuring our research at Weber Shandwick and my prior work at Burson-Marsteller.
Another reason for why CEOs matter. Today’s story in the WSJ focused on how investors are increasingly demanding CEO face time in order to get greater insights into the company’s strategy and future and determine whether it is worth their investment to take a stake. One of the CEOs complained said that meeting with investors and analysts is taking up too much time. This should not come as such a surprise. The job of CEOs today is not to only run the business but be that communicator-in-chief with its portfolio of stakeholders which I grant is expanding by the year. The article seems to point out that these meetings are getting more granular than the larger-sized ones of years past and taking up more and more time. One CEO says he meets groups of 50 investors in batches, one after another, or in private 30 minute sessions.
The article provides a few interesting stats on the pressure on CEOs to make time for investors…
- C-suite executives in North America attended 70% of private investor meetings over the past 12 months, up from 64% one year earlier.
- CEOs and finance chiefs spent 14 days and 17 days, respectively, on these meetings.
The article provides many different reasons for why meeting the CEO is important but one that wrapped it all up for me was when a president of Fidelity Investments said that meeting the CEO provided “nuances” about the company that does not come through in an earnings call and helped him “put the entire mosaic together.” I thought that the “mosaic” idea was useful in understanding what role the CEO and his or her reputation does actually play. Although the CEO is just one part of the picture or mosaic in this case, the CEO’s leadership, transparency and credibility helps glue together the partial perceptions of a company we all have and fit them into a pattern that yields a reputation. Getting to meet the CEO and gauge his or her character through the whites of his/her eyes is a critical piece to the puzzle of reputation that adds to a valuation about a firm’s future performance. After all, isn’t that part of the CEO job description today — to balance the external and internal?
I could have told them so. Research (noted by WSJ’s Leslie Kwoh) from Lehigh University found that shareholders do think CEOs matter. They analyzed shareholders’ reactions to the unexpected deaths of chief executives by measuring the stock performance the day after the announcement as well as at other intervals leading up to 30 trading days afterwards. There was a 5.6% swing in share price on the day after the announcement that the CEO unexpectedly died (i.e., heart attack, plane crash). The swing was even more pronounced one month later, at 14.6% on average. Interestingly, this swing has grown considerably since the 1950s, 1960s and 1970s. CEO reputation and the CEO’s impact on the company’s performance MATTERS. Decades ago, people believed that companies ran themselves pretty much. The CEO’s decision-making, strategic direction and ability to motivate employees and outbeat the competition is clearly understood today to have a profound effect on corporate performance and by extension, reputation. Good proof to add to my deck on why CEOs matter. Thanks to Lehigh’s Tim Quigley and researchers!