Posts Tagged ‘CEO reputation’

Because I am off from work for the holiday, I have a little time to catch up on things I meant to read in the months before. I was particularly interested in some research on CEO transitions and its impact on the value of the enterprise conducted by FTI.  A few facts jumped out at me from their study among the financial community. They found that one-third (32%) of investor decisions are impacted by the reputation of the CEO. Moreover, the reputation of the CEO was more important to investors than the reputation of the company’s products and services.

The research covers the value at risk depending on what type of CEO transition occurred. The greatest risk to the enterprise is when a CEO is forced to resign.

Because of my work on CEO tenures and how to build CEO reputation, the findings confirm my own research over the years that CEOs need to show success by that 12 month marker. FIT found that investors give new CEOs about six months to assess the challenges and opportunities facing the company, setting a vision and strategy.  They give new CEOs more leeway to improve market performance and valuation — about 12 months. After the first year, all engines need to be firing.

Another particularly interesting finding was what investors look at in their first 100 days to further establish the CEOs credibility in their eyes….here is what they said was of “significant importance.” Despite the ranking for “charisma,” it is still interesting that it is still estimated to be of high importance and only 16% said it was of limited importance.  FTI concludes that investors take a multi-dimensional view of new CEOs. They expect to see it all.

 FTI Consulting

Interesting to hear that The Wall Street Journal is outright asking subscribers how the Murdoch scandal at News Corp might be impacting its own reputation. Many companies prefer not to bring up an issue they are facing, even when it is often the elephant in the room.  Some companies, however, think that surveying customers about an issue or self-inflicted crisis is a smart way to demonstrate that they care enough about their reputation to ask the tough questions or they simply want to know in the name of transparency.  Apparently the WSJ is asking subscribers, of which I am one, “What impact, if any, do the illegal acts by News of the World journalists have on your impression of The Wall Street Journal?” or something close to that. And my favorite question from what I have read this morning is whether the CEO of a company should be held responsible “for all the actions of all its employees, no matter how large the corporation is” on a 1 to 10 scale (disagree completely —>agree completely).  I think I know the answer to that one. My guess is that 75% to 85% of subscribers, AKA business executives, will give this statement an 8/9/10.  All in all, as my colleague said to me….a brave move.

  How much does charisma affect leadership reputation today? It seems to be an age old debate. Too much? Too little? Just about right? When we asked this question years ago in my research on how to build an enduring and long-lasting CEO reputation, we learned that it is was important –  better to have than not have.  Charismatic leadership is not what you say but how you say it.  It’s not just what leaders communicate that makes them charismatic; it’s what they elicit from others. I think I read this somewhere and it stuck in my mind.

Among the new breed of CEOs today, a quieter charisma is now more important. It is not about CEO celebrity but building CEO credibility. Maybe we should call it “slow charisma.” Credibility or authenticity coupled with charisma can be electric.  When you see it, you know it. However, it is not all there is to leadership. Leadership also includes sound judgment, ethical conduct, the ability to listen and serve others. Lets not kid ourselves.

The Economist just wrote an article about what we can learn from Lady Gaga and Mother Teresa about leadership. Apparently there is a lot to learn.  The article infers that brilliant and flawless communications helps enormously, particularly with these two charismatic (in their own way) women.  Here is an excerpt.

Mother Teresa was a “PR machine” who, whether talking to a dying leper or a rich donor, “always left her imprint by communicating in a language the other person understood”. Lady Gaga is “one of the first pop stars to have truly built her career through the internet and social media.  Lady Gaga has what Messrs Anderson, Kupp and Reckhenrich call “leadership projection” and a layman would call charisma. The authors think this is because she tells “three universal stories”. First, a personal story: who am I? (She stresses that she was the weird kid at school, but driven to be creative.) Second, a group narrative: who are we? (She calls her fans “my little monsters” and herself “Mama Monster”, and she communicates with them constantly via Facebook and Twitter.) And third, a collective mission: where are we going? (She promotes gay rights and celebrates self-expression; she tells her fans that together they can change the world.)

Lady Gaga has the “ability to build emotional commitment” in those she leads, says Mr Reckhenrich. This ability is increasingly valuable in today’s business world, he believes. In “The Fine Art of Success”, a book he and his co-authors released last year, they examine it at length. They are now working with Egon Zehnder, an executive-recruitment firm, to figure out how to identify whether candidates for top corporate jobs have the ability to “project leadership” the way Lady Gaga does.

Charisma can be critical when a leader has to deliver an important message, whether the individual has it or not. I think former President George W. Bush demonstrated charisma when he faced the nation after 9-11, both on television from the oval office and when visiting the site of the World Trade Towers site in New York City. All eyes were on him and he delivered, as required.  However, that charismatic leadership soon faded with the war in Iraq and debacle of Hurricane Katrina because the empathy, emotional connection and authenticity were AWOL.  Former President Clinton has it in spades. President Obama has it and especially when he puts it to good use.

In this day and age, it is not enough for CEOs to bark orders or to manage the bottom line only. Being able to deliver meaning and purpose along with a dose of slow charisma and empathetic communications is required. It is a tall order, I know.

  Last night I was asked how long I had been blogging. I threw out a number without thinking about it.  However, since I was not sure, I went online to determine how long it might actually be and I was curious about whether I had hit an anniversary of sorts. Should I be celebrating my 5th or 8th or 10th year anniversary of blogging about reputation?

My first web site was CEOgo.com.   I defined it as “The premier site on chief executive officers, leadership and management trends.” Actually, there was no other comparable site so I could have easily said it was “The site on chief executive officers, leadership and management trends.”  CEOgo is no longer live since it was closed down after I left my previous position and I joined Weber Shandwick, starting anew with reputationXchange.  I started CEOgo in February 2000 (according to when it was registered) which answers my question on how long I’ve been blogging — 11+ years. Who would have thought I had so much to say on CEOs, CEO reputation, corporate reputation, CEO transitions, leadership and all things reputation-related. CEOgo was the site to go to on CEO turnover, whether CEOs were insiders or outsiders, average tenure, reasons for departure, reputation-building, etc.  It certainly chronicled my thought leadership in this area and eventually rolled itself all up into my book, CEO Capital. And although much has changed (the more common division of the Chairman and CEO role for one), much has stayed the same. It is among the hardest jobs there is, next to being President of the U.S.

I have anniversaries on my mind today because I am looking at my five-year anniversary at Weber Shandwick. Although I like to think that annniversaries come and go and corporate life has its good-and-plenty ups and downs, I have to say that my past half decade at Weber Shandwick has been fulfulling, productive and full of pleasurable surprises. The leadership and collegiality are truly the real deal and I am thankful for what I have been encouraged to accomplish. And I have also been lucky enough to work with Liz and Jen who make all the difference to my ability to face those very early mornings that are my habit.

It is important not to let important milestones just pass — whether 11 years of blogging about reputation or 5 years at Weber Shandwick. I consider myself lucky.

Came across an interesting statement about CEOs this morning. It was in a Justmeans  blog post about how CSR needs to get more humanized, meaning making a stronger link between the CSR director or manager with a company’s CSR initiatives and thereby giving it a face. The author Akhila Vijayaraghavan wrote:

This year will see the beginning of a shift from CSR itself to the CSR practitioner. Just like brand image is beginning to collate itself with CEO image, so will CSR with the CSR practitioner/manager. I believe this could be an important trend because putting a ‘face’ on CSR makes it not so ‘corporate’. CSR practitioners deal with far-reaching environmental, social and ethical issues on a daily basis that are profoundly human. Taking the corporate out of CSR will bring to the spotlight of what the people in businesses are really capable of . This is a good thing not just for CSR but also CSR practitioners.

As a long-time CEO reputation watcher and if I understand what she meant in her post (people often speak about brand and corporate reputation/image in the same breath), brands — not just corporations — will increasingly be linked with CEOs. For many years, the research I did found that nearly one half of a company’s reputation was tied to that of its CEO. However, the reputation of the brand was not as tightly correlated until the Internet came along and changed the game. Now that anyone anywhere can find out the parent company of a brand and also who its CEO is, that is most probably changing. And I expect it will change quickly.

  In an interesting take on reputation damage control regarding the new movie (The Social Network) about Facebook’s founder Mark Zuckerberg in the Wall Street Journal today, I came across the following quote by the producer Scott Rudin about Facebook’s involvement.

 ”They were trying to figure out a way not to tie Mark’s personal identity to the identity of the company. Because they were and are talking about an inevitable IPO and clearly want the company to be bigger than Mark Zuckerberg.”

There is no way that Zuckerberg’s personality is not tied to the company. When it comes to founding CEOs and when it comes to companies in the technology industry, the link is inextricable and unbreakable. It is a double whammy when the product, in this case Facebook, is so stupendously successful. It would be nice if this were not the case but there is no arguing about this. Think about Steve Jobs and Apple, Bill Gates and Microsoft, Larry Ellison and Oracle and Scott McNealy and Sun Microsystems, to name a few.  That’s the way it is. Each of these is endlessly interesting in how these young men started these colossally large firms and changed the industry forever.

Yes, the company is bigger than Zuckerberg, technically-speaking. But as I have said so many times before, the CEO or founder is the public face of the company and no more than it is in this new and exciting social media age. It has a storyline with grand proportions which is why a book has been written and a movie made.

I thought that the New Yorker interview with Zuckerberg added further dimension to the founder’s personality and probably counterbalanced some of the negativity that is in the newly released movie.

Go with the flow.

 A few interesting reputationally-related items crossed my desk or should I say my network.

First, David Larcker and Antastasia Zakolyukina of Stanford University analyzed 30,000 conference calls between 2003 and 2007 to determine if the Q & A period offered clues to when CEOs are being deceptive. They reviewed financial restatements to determine whether CEOs or CFOs were misleading or being untruthful.  The researchers believe that these top execs know if they are manipulating results and clues can be uncovered in their spontaneous comments in the Q&A session. They based their findings on “deception detection research” — a field I had not heard of!  Who would have known. The findings are relevant to those of us in the communications business since it is all about words. It is hard not to recall former CEO of Enron Jeff Skilling cursing on the phone during an investor call near the end. Cursing is probably another telltale sign. So what are the cues they found in this robustly-researched undertaking?  The Economist summed it up best so will borrow their words: 

“Deceptive bosses, it transpires, tend to make more references to general knowledge (“as you know…”), and refer less to shareholder value (perhaps to minimise the risk of a lawsuit, the authors hypothesise). They also use fewer “non-extreme positive emotion words”. That is, instead of describing something as “good”, they call it “fantastic”. The aim is to “sound more persuasive” while talking horsefeathers. When they are lying, bosses avoid the word “I”, opting instead for the third person. They use fewer “hesitation words”, such as “um” and “er”, suggesting that they may have been coached in their deception.”

Congrats to David Larcker who I met a few years back when I was researching the impact of CEO reputation on corporate reputation. David was at Wharton and he was able to help me demonstrate that it was indeed impactful.

Second, I just browsed a  report that came across my desk from MIT Sloan Management Review on The Business of Sustainability which was conducted by Boston Consulting Group (BCG). It is their first annual study and provides some very interesting results among 1500 global corporate executives. Overall they found that 92% of this executive class believes their companies are addressing sustainability issues now and less than 25% reported that their companies have reduced their commitment during these tough economic times. Reputation-wise, these executives said that the greatest benefit to company sustainability commitment was “improved company or brand image.”  This benefit far exceeded other pluses such as cost savings, competitive advantage, employee satisfaction, etc.

Third, this funny subject line came through on my email at work.  “Why do business executives feel doubtful, even tired?” It just struck a chord with me. I think it describes most people I work with these days….isn’t everyone in business tired? My favorite question to ask people I meet is how many hours do you work on the weekend? I am always trying to place myself on a spectrum of weekends spent working. So far, I have not figured out how people turn it off.

 I remember distinctly a few years ago when the first few movies/documentaries came out about the pharmaceutical and tobacco industries.  My first reaction was that there was going to be an entirely new film genre in due time – the business class. I think I was right.  Years ago, it would have been preposterous to think that people would pay to go to the movies to watch a story about some CEO or executive behaving poorly.  What could be more boring!  Now it seems that a whole slew of movies are coming out about bad CEOs and executives or politicians (they seem to be all mixed up together today in people’s minds).  Hard not to agree that this is  where all the drama is these days. Unfortunately, the reputation of big business and their chieftains are at an all time low. Weber Shandwick’s research found out several months ago that only 14% of Americans think positively of CEOs. So now we get to watch the bloodletting on the silver screen. And the reputation of CEOs don’t get even a chance to redeem themselves a little.

This all came to mind while reading an article today in The New York Times about several documentaries now showing at the Toronto International Film Festival and soon to coming to the U.S.   They do not paint a pretty picture of business. The title of the article said it all — “Documentaries Zero In on Wall street, and They Show No Mercy.”  The films are Client 9 about Eliot Spitzer, Inside Job about Wall Street’s role in the financial collapse and Casino Jack about Jack Abramoff, the former business person and lobbyist now finishing up his prison sentence in a half-way house for defrauding Indians. This is not to mention Michael Douglas coming back as Gordeon Gekko in Wall Street directed by Oliver Stone. He too arrives on the scene from prison to advise a young trader.

Ironically, I had a conversation earlier today about how to rebuild trust in the CEO position. After learning more about these movie debuts, it seems that CEO rehabilitation has a long way to go among the general public and filmmakers.

   Interesting fact about BP CEO Tony Hayward’s departure and I have to agree with the WSJ here.  He is not departing the position with a huge payoff as many other big time CEOs do. Yes, he is getting a severance package but it is not even close to what we have seen over the years when troubled CEOs leave their offices. As the Journal says:  “While Hayward may, inwardly, be smarting, he is stepping down with dignity. A lesson other corporates would do well to note.”

I think that CEOs who act with dignity and integrity can help restore the state of CEO reputations today. Of course, as the Journal points out, there are many other reasons that this may have come to past but I think that the message is clear that BP now starts the recovery period of repairing their once-esteemed reputation and even a departing CEO can play a role beyond his or her tenure.

  Author and columnist Thomas Friedman wrote today: “In this kind of world, leadership at every level of government and business matters more than ever. We have no margin of error anymore, no time for politics as usual or suboptimal legislation.”  Leadership matters is one of the cornerstones of great company reputations. There is no getting around it. The destiny of the CEO is inextricably linked to the company’s reputation. If you have ever worked with a CEO who was not the right fit for the company and who worried about themselves more than the company, you know the damage that the wrong CEO can do. It is almost better to work for a so-so or good, not great, CEO than the wrong one.

Also in today’s New York Times’ business section is some advice from the CEO of The Calvert Group, Barbara Krumsiek . She was asked for her best advice to executives starting out.  She said to ask each executive on your leadership team the following question,  “Tell me about your job, but now tell me about what you think you do here that is not in that job description that you think is really critical.”  Good starting out question but I actually like the second question better, “Tell me one thing that’s going on at Calvert that you think I don’t know that you think I should know.”

The best advice for CEO newcomers is that there is no such thing as a stupid question. One CEO told me that. You get about 3 or 4 months to ask those “stupid” questions.

Getting back to the importance of leadership, we don’t need Thomas Friedman or even me to relay this important news about what drives the global economy and business today — good leaders. Every day we get examples of the impact of good and bad leadership. Unfortunately there are so many examples of bad leadership decisions that we forget to notice the daily good deeds of many company CEOs.  Is too bad. The margin of error might actually be wider than we think.