Posts Tagged ‘Financial Times’
Just came across some research from ReputationInc that holds some very interesting information. Here are the main facts they discovered by examining the curriculums of the leading Executive MBA programs identified by the Financial Times. They were looking to see how reputation was incorporated into the course work.
• 1 in 5 leading EMBA programs teach none of the 10 core reputation disciplines
• Just one of the 50 leading EMBAs has ‘Reputation’ as a core module
• Communications & relationship building skills are taught in less than 20% of programs
• Government & policy relations is covered by fewer than 1 in 5 EMBA program
• Governance and ethics is the most popular reputation discipline being taught to business leaders today (no surprise there)
ReputationInc cites McKinsey research that found that one-half of global CEOs say managing external affairs is one of their top-three priorities. Yet one fifth of the world’s top 50 global Executive MBA programs do not offer any training in the core disciplines of reputation management. They report that the missing disciplines include CSR, stakeholder engagement, government relations, communications, and reputation management strategy.
More worrying still, just two of the top 50 business schools surveyed offer a dedicated reputation
module and 80% offer no training on either public affairs or external communications – the two core “hands-on” skills executives need to build reputation. “The results reveal a frightening gap between the reputation skills business leaders must possess in 2012 and the cursory attention they get in the traditional executive MBA.”
The programs with the highest ranked scores for including reputation are Henley Business School, Essec/Mannheim, and the University of Texas at Austin: McCombs.
I wholeheartedly agree with this statement: “On this evidence, companies and shareholders should be concerned that Executive MBA programmes risk creating ineffective business leaders who leave academia without the skills to actively manage the precious asset of corporate reputation,” said John Mahony, CEO, ReputationInc. “Reputation management skills are vital for today’s CEO who sets the tone and mood for a corporation and must lead from the front in communicating the purpose of the brand and its value to society. Many managers are not born ready to meet this challenge and will benefit from coaching and confidence building in reputation, something today’s Executive MBA courses fail to adequately provide.”
Took me a few days but finally found a chance to read a fascinating review in the Financial Times of the impact of the insider trading scandal at management consultant McKinsey & Company and its impact on their reputation. Andrew Hill did a fine job providing a historical review of McKinsey’s ups and downs over the many years of its storied existence and finding former partners and employees to offer their perspectives. As you already know from the trial of Raj Rajaratnam of Galleon Group, the hedge fund CEO is accused of insider trading using tips from former McKinsey partners’ Anil Kumar and Rajat Gupta, global managing partner who left after several terms in 2003. What intrigued me of course was how McKinsey was recovering from this reputation catastrophe and how it fit with the best practices in my book on reputation recovery. This is not just a bruise but a serious injury to McKinsey’s reputation. Here is what they did so far:
- Communicated regularly with employees and former employees
- Initiated an independent inquiry with the help of a law firm
- Improved processes over protecting confidential client information
- Reviewed its ethics policies and standards
- Redefined what constitutes ”material non-public informtion”
- Built a formal “stop-list” of client stocks that no McKinsey person can trade (not just those assigned to the account)
- Added new training procedures
- Strengthened governance
True to its highly analytical way of attacking corporate challenges (they work for 90 of the top 100 companies in the world, among others), they looked back at how they handled prior problems. Coincidentally, the article points out that they had been putting together a comprehensive internal history of the firm which luckily offered them insights on how they have historically dealt with challenges to their reputation and livelihood. The latter best practice is one I highly recommend to others. In my book, I talk about the importance of the Rewind period where companies study their mistakes to from the past to create a better future. Lord John Browne of BP did so after the refinery fire in Texas City and asked the question of how they did not see the pattern of errors that turned deadly sooner. Looking in the rearview mirror may take time that leaders do not think they have but critical warning signs are often present. Retromining is a critical piece of recovering reputation. As the new McKinsey global managing director, Dominic Barton, also did, he studied other thriving cultures that failed. As Barton said in the article, he had been “thinking what happened with the suppression of the Jesuits in the 1700s. This may seem strange, but [it was] an organisation that was thriving and doing well and all of a sudden was severely challenged.”
A few items crossed my desk [or should I say desktop] this week having to do with corporate governance. The first is an interesting article in the Financial Times about banning blackberries from boardrooms. The argument is that board members are charged with fiduciary responsibilities to shareholders and blackberrying or texting during meetings might be considered a breach of contract. Board members are not doing their jobs if they are busy typing replies or reading scores of emails in meetings. I enjoyed the article because authors’ David Beatty and J Mark Weber also got into the idea of “inattention blindness” and how that might interfere with the weighty decisions required of board members in this tough business climate. One neuroscientist in the article is quoted saying that humans can not concentrate on two things at once. I recall reading that people can only hold seven things in their head at once which is a reason most of us experience infofog a good part of the time. At least I do. Anyhow, the point is that board members need to pay full attention during board meetings today, particularly when the stakes are so high, and responding to electronic messages can only direct attention away from the hard work at hand. Since board reputations are already in jeopary as one company after another failed this year, I wholeheartedly agree with the authors’ advice that boards enact “no wireless” policies in meetings for now.
I was also reading Karen Kane’s blog on corporate governance and totally concurr with a quote from Stephen Davis of the Yale Millstein Center that she cited. Davis said that today “directors need the tools of a politician.” In other words, as Kane says, they need to persuade and explain why they took the actions they did. I think that in the future we will be seeing more explaining as Obamanomics works its way down to boards. Greater transparency and clarification for stakeholders as well as shareholders will become more common in the years ahead.
Now to tie the two items above together….if President Obama can do without his blackberry at times, so can board members.
Some random notes on reputation from the past few days….
1. “Green” is having a hard time when it comes to reputation. Greenwashing claims are piling up as more advertisers try to appeal to socially conscious consumers. According to the U.S. Advertising Standards Authority’s public affairs department, “We received a record number of complaints about green claims last year, which had more than doubled from the year before, to over 300.” Companies need hard and clear evidence to make statements about their products being carbon-neutral, sustainable, organic, non-toxic, ozone friendly, 100% recycled. The reputation of “green” is quickly losing its power over consumers if it continues to be used irresponsibly. The Financial Times article where I read about this evolution of green’s reputation said that there are certain terms that are more passable than others such as “kinder to the environment,” “ecologically improved,” and “more environmentally friendly than before.” These might not satisfy consumers and marketers although they may be more credible. More stringent rules are on their way in the U.S .and U.K. Greenwashing charges against “green” could dilute its reputation altogether if we are not careful.
2. As our research on managing reputations online revealed, executives are very worried about the leaking of confidential documents. Another article I read recently in the Financial Times states that networking security is at greater risk than ever before. Executives seem aware but will be surprised at how easy it now is to break into company networks and steal information. The CEO of NCC Group, a network security firm, says that his team of “ethical hackers” has a success rate of 97.8% in hacking into corporate networks. Not only are wireless networks making it easier to break into corporate networks but so are stolen or lost laptops and devices. I thought it was very cool to read that one of the safety recommendations was for companies to use a “remote device wipe” so that all the data on a lost device could be obliterated on demand. Sounds very 24 to me (the program with Jack Bauer). After reading this article, I vow to never leave my laptop out on the desk of a hotel room just waiting to be taken. The article says that we should never assume we are safely covered network-wise. The executives in our study are right to be worried.
3. In today’s WSJ, an article on CEO turnover in the financial sector helps make a point that surfaced in our other recent survey on CEO reputations. We learned that nearly one-half of rising executives (49%) say that they would take a CEO position if offered. We stated that this was good news because positive CEO succession is critical to our nation’s economic recovery. The authors wrote, “ There aren’t any highly attractive CEO prospects in the financial-services industry. The best players won’t risk their careers going to a troubled enterprise.” Therefore the job number one for companies right now is to increase their leadership development programs and groom rising executives for the long-term. According to the Booz & Co. terrific survey on CEO turnover, 18% of financial services firms lost their CEO in 2008 and of these, more than half were pushed out. As the WSJ reports, several firms are now looking for CEO replacements – AIG, Hartford, Freddie Mac. The reputation of the financial services sector is in great need of repair and only when we have willing, seasoned and values-driven executives in the corner suite, will we be able to talk about a reputation recovery in the financial services sector.
The Financial Times columnist Stefan Stern wrote an article about a CEO who went undercover for two weeks before he was announced as the new chief executive. He pretended to be an office worker who was sent around to several locations. During these two weeks, he was being filmed for what his co-workers thought was a documentary on how office types cope with hard labor assignments. In truth, the film they were producing was part of a new series called Undercover Boss to be shown in the U.K. It is coming to the US next fall. What was fascinating about the undercover CEO’s two weeks was that he overheard the real conversations that employees exchanged about their company and its reputation. When asked what his greatest learning was, the undercover CEO said, “Our key messages were not just getting through to people. People working a shift on a large site do not have time to read newsletters or log on to websites. You have to communicate with people on their terms, and it is different for every location. One size does not fit all.” The critical lesson learned was that all the finely crafted messages from the top are often not received or are totally misunderstood. The new CEO realized that when he was officially instated as CEO, he had to over-communicate, especially in bad times like these. Reputations cannot be built internally without reaching employees on the front lines or end lines.
Some advice was given in the article about what works best besides over-communications when it comes to getting messages heard. They are quite clear…keep it simple, break it down into easy pieces what you are asking employees to do and show empathy. Good reputation-builders.
Good news. Corporate responsibility makes it through the recession. Hurrah. An article in the Financial Times by Michael Skapinker supports his argument by citing that despite the recession where people are cutting down on premium foods, only about 10% have cut back on ethical produce. And Marks and Spencer (M&S) who made a big bet on sustainability with its Plan A (there is no Plan B!), is saving money on its CSR practices. So that’s all good news for those of us who believe that corporate responsibility is an integral component of reputation and one that has not let us down (nor have we let it down). The last paragraph of Skapinker’s article says it well:
“This [saving money] is the key to companies’ stubborn adherence to corporate social responsibility. They have worked out how to make it pay. Many of their initiatives help to cut costs or sustain supplies. They allow customers to continue to regard themselves as ethical during difficult times. They also help the companies to improve their public reputations at a time when business is widely held to be responsible for the downturn.”
Not surprisingly when I first read this paragraph, I read public reputations as public relations. In a way, this confirms why I am in the public relations field – to improve public reputations. Since there is no such thing anymore as an UNpublic reputation (everything internal is external today), I can really say that I am in the field of public reputations. I like this twist.
On another but somewhat importantly-related subject, I was reading about last year’s Sichuan Earthquake in a newsletter published by knowledge@wharton (you should subscribe if you don’t already). I was in China weeks after the earthquake and wrote about it on my blog at the time. In fact, a lot of the media coverage I received was in response to whether I thought companies were doing enough. The recent article does an excellent job of explaining what I experienced about the fiercely negative images of some multinationals (MNCs) in terms of corporate giving perceptions. I saw that some MNCs were on these shame lists that were being circulated online and inciting boycotts and negative opinion. The general consensus in China was that MNCs were not contributing enough and not in a timely manner to the 70,000 earthquake victims who lost their lives and five million left homeless. At the time, I did not know that there was a term for these maligned MNCs but the article references them as “international iron roosters” – that is, birds that do not give up one single feather. In other words, tightfisted. Being sensitive to negative public sentiment, many of these MNCs increased their charitable donations and met with the Chinese Ministry of Commerce to understand what was expected of them in China. I should note, and so does the Wharton authors, that even Chinese companies were criticized for insufficient donations to earthquake victims.
The article points out three must-dos when it comes to China and maintaining your reputation in challenging times. These should be on every company’s What to Do list if something like this happens again and you want to keep your reputation intact. They are:
1. Get Straight to the Top or Distribute Decision-Making. Since many MNCs have multi-layered levels of management and multi-faceted reporting lines, companies need to have a clear, direct lines to the top when decisions are urgent and reputations are at stake. Companies should prepare processes for determining when a decision is urgent. Much of the problems that beset MNCs were the bureaucracy that needed to be hacked through to get a decision made about how much could be contributed. If this is too hard, companies should give local managers the necessary decision-making authority.
2. Decide Fast and Make Visible. Some companies were criticized because their contributions came late or they did not make their donations known. When Hurricane Katrina hit New Orleans, some U.S. companies kept their donations quiet because they did not want it to look like they were only donating to improve their public images. In addition, many companies in the U.S. are torn between being humble or vocal when it comes to corporate responsibility. But in China during an incident of such horrific magnitude, those companies that kept quiet were seen as non-contributors and blamed for being insensitive and profit-mongers. So speak up.
3. Find your Advocates and Use Your Online Resources to the Max. Since such a large proportion of Chinese citizens are online, make sure you know what is being said about your company and its contributions. Your reputation matters and myths and rumors spread like wildfire. For all you know, you are on some boycott list and people are picketing your stores and products. Find your fans or advocates and make sure they are there to support your efforts or correct misunderstandings, online and offline.
Thanks to Skapinker and to knowledge@wharton for making this a good learning day when I should be outside.