Posts Tagged ‘Fortune’

We have been very busy this month. We also released a survey on where the most powerful women in business spoke in 2011. Using the Fortune Most Powerful Women in business list that includes U.S. and non-U.S. professional executives, we audited where they spoke to determine how much they were in demand and what podiums they were invited to.  There were several interesting findings that are worth noting since one way to build professional reputation, get company messages across to important audiences as well as build corporate reputation is to leave those four walls of the C-suite.  In fact, I was speaking to someone at Forbes the other day who confirmed to me that the executive conference business was booming. As it were, women are in great demand.

• These most powerful women spoke at 218 unique events in 2011.
• The leading speaking forums in 2011 for these top women executives included Fortune’s Most Powerful Women Summit, The World Economic Forum/Davos, India-US CEO Forum, Women Corporate Director’s Global Institute, the Paley Center for Media International Council Summit and the APEC Women and the Economy Summit.
• We also provided insights on what types of conference events they spoke at – from industry-specific events (e.g., World Food Prize Conference and FICCI-IBI Conference on Global Banking) and conferences geared toward job function (e.g., Techonomy and ANA Conference), followed by women’s leadership and academic forums.
• Our research also found that the digital category (e.g., Digital Life Design and South by Southwest) is starting to emerge and is crossing women business leaders’ radar screens.

We do this type of analysis every year and sometimes we analyze all CEOs and top level executives –men and women. However, we thought that looking at where executive women spoke was past due. So here we are.

Globalization. Everything is different and everything is the same.

In an interview with the Dean of Harvard Business School, Nitrin Nohria noted: “When I came to Harvard Business School in the 1980s, the vast majority of people were interested in studying America, because this is where they hoped to have job opportunities. As late as 1988, when I joined, less than 5% of our case [studies] were outside of the United States. Last year more than a third of our cases were global.” Similarly, Fortune‘s Most Admired Companies survey used to be broken into the America’s Most Admired and World’s Most Admired lists as if they were two different beasts. Fortune now combines them into one big list of the World’s Most Admired and rightfully so. As we are seeing with the ups and downs of the stock market, we are all interconnected. The reputation of UBS or Sony or Procter & Gamble matters the world over.

Global everything is on my mind because I am off to Asia to give a speech on reputation and how to build it, safeguard it and defend it. I’ve been catching up on how reputation plays out in Asia Pacific so that I can be a bit more relevant to my audience. As I am preparing, an article I found struck me as a good example of how things are the same and yet different.

As a keen observer on how reputations get damaged in a crisis, I am always on the lookout for estimates of that damage.  A recent article provided me with some valuable information on how Chinese companies perform when scandal touches them. Scandal plays out slightly differently in China and on their balance sheets than it does in the US and Europe/EMEA. An academic study examined hundreds of scandals linked to companies traded on the Shanghai and Shenzhen stock exchanges between 1997 and 2005. Revelations of financial fraud and various other similar crimes, such as embezzlement and kickbacks, definitely impacted share price as it does in the US.  The researchers found, however, that to really create a cataclysmic collapse of a company’s stock among Chinese companies, there had to be an additional element. “The study found that companies caught up in mere accounting scandals saw their shares drop by an average of 8.8% over the six months on either side of the incident. In those involving the bribery of government officials or theft of state assets, on the other hand, the stock fell by almost a third.” As they conclude, “In China and other less developed markets….business is done on the basis of political and social relationships, not numbers.”  Companies are all impacted by financial scandal but if you undermine the government in China or any of its officials, expect that your financial damage will be compounded by losing discounted financing, access to trusted suppliers, loss of customers, land acquisitions and other benefits that can come with good government relations. Thus, being on good terms with government is critical to success in China. In many ways, this is also becoming the norm in the US as government plays a more visible hand in business affairs.

I was quoted by Fortune‘s Geoff Colvin in the August 15th issue. He wrote about the Murdoch scandal and mentioned how “large ideas emerging from this story so far will influence companies of all types for years to come.” One of those large ideas is that we have officially arrived at the pivotal point where reputation has an edge over financial performance. As Geoff says, this is Reputation’s Moment. Companies may not have fully noticed but reputation is indeed “the new currency of corporate success.” Music to my ears.

In the article, Colvin makes a few points that could not be truer. I excerpt some below which includes my take on reputation as the new metric of corporate success.

“Previous major scandals were mostly financial; the numbers were lies. Not this time. The damage so far derives en­tirely from behavior—phone hacking and possible police bribery—that ap­pears to be illegal but has nothing to do with reported financial results. Wheth­er it’s illegal doesn’t matter anyway; it’s slimy, and that’s enough. News Corp. is deeply tarnished, and the financial ef­fects could be significantly bad.

The company has lost about $5 bil­lion of value in the few weeks since the scandal hit. Longer-term effects could be much worse. “The greatest reputa­tional threat to News Corp., aside from criminal prosecution of Murdoch fam­ily members, lies within regulatory and policy circles,” says Rupert Younger, director of the Centre for Corporate Reputation at Oxford University’s Said Business School. News Corp.’s televi­sion businesses—TV networks, TV sta­tions, and satellite broadcasting ser­vices worldwide—are together a major source of profit, and they’re all subject to government regulation. Govern­ment leaders have treated News Corp. gingerly for years, but now “politicians who have been afraid to tackle such an important company are starting to feel that it may be possible to do so,” says Younger. “This could literally destroy News Corp.,” in the sense that the com­pany could be broken up.

Long-term damage to the company’s reputation among customers, employ­ees, communities, and others could also hurt. “In this new reputation economy, people care about whether a company shares the same values as they do,” ob­serves Leslie Gaines-Ross, chief reputa­tion strategist at the Weber Shandwick communications firm. Her reading on the scandal so far: “A clearer demon­stration of the direct relationship be­tween corporate reputation and cor­porate well-being is hard to imagine.”

 These two ideas, the one-man prob­lem and corporate reputation, are ob­viously related. At News Corp. they’re two sides of the same coin. Yet Rupert Murdoch never seemed to put them to­gether. Long before this scandal, he said, “Our reputation is more important than the last $100 million.” He was right.

 In this brave new recessionary world, we have evolved into a reputation economy where companies are trading on their reputations like never before. They are trading for better regulatory favor, more loyal customers, higher skilled talent, more positive word-of-mouth and more capital. Reputation has become an account in credit that you can draw down on or add to. In this new reputation economy, people care about how decisions are made and whether companies share the same values as they do. It is not just value, as in dollars earned, but also values, as in standards maintained, that has become a crucial element of corporate success.

   The new CEO at Nalco, Erik Fyrwald has this to say about being an outsider CEO and getting up to speed. I think that all this advice is right on target, especially his statement about thinking you have all the answers at the start and then unlearning those assumptions so you can learn how things really are. Fortune interviewed him about water and carbon but I liked the part about being a new CEO best. Most outsider CEOs come into a job knowing what the board has told them. As we know, the board is usually the last to know (so says Warren Buffett).  In my research, I have heard over and over from CEOs that their perspective 100 days later is usually 360 degrees different from what they thought day one. This probably goes for anyone starting a new job. If you want to build a good internal CEO reputation, try to keep your opinions to yourself for a couple of months until you REALLY know what you are talking about. First impressions are usually just that, first impressions.

You came into Nalco as CEO from the outside. What was at the top of your to-do list?

I spent the first weeks and months listening a lot — to the leadership of Nalco, talking to people across the organization. Traveled a lot. Got out there with customers all over the world trying to understand what we do well, what we didn’t do well, where they saw the opportunities. Spent time with my leadership team, getting their view on what we needed to do and also assessing the leadership and who we really needed, and what other capabilities we needed to bring in.

A lot of people in your position, coming in as CEO, have told me that focusing on the team is critical …

Step one.

… and in many cases focusing on the culture. From the outside you’ll see that it needs to be steered a little bit. Was that the case?

Yeah. The positive is, we had a great culture to build on, a culture of service, customer comes first. But we had not been nearly aggressive enough going after the growth geographies and bringing more of the water system solution to the customer. Talking to the leadership, it was very clear that that was a huge opportunity.

You only get one chance at those first few months. When you look back, what did you learn?

I learned that as you get into the job and start to think you know the answers, don’t get locked in. You haven’t been in the company that long. You think because you’ve been in other places that you can figure it out quickly, start to form a theory of what the right answer is. Keep testing that theory, because it does two things. One, it gets the management team aligned. And two, you can get deeper into the organization, you can get customers connected to it, and then you get a much better answer. So don’t make conclusions too quickly. At first I thought I knew the answers, but then the answers got much better as we dug deeper. That was very important.

  Rankings are moving up in this world. I noticed the statement from Fortune in their recent announcement on the World’s Most Admired that they received their best response rate in history. Hmmmm.  After years of falling response rates, what’s the deal here? And this week my colleage told me that the entries for Ethical Corporation Awards were delayed by a few days because of the outsized volume of entries. Is this a trend? Are these rankings rising in importance because what’s better than having an independent third party saying you are #1? There is definitely a trend here worth watching.

*** IMPORTANT ANNOUNCEMENT: SHORTLIST DELAYED ***

As a result of the sheer volume of entries for the inaugural Ethical Corporation Awards, we have been forced to delay the announcement of our shortlist.

This announcement will instead take place in the afternoon of Monday 8th March.

Fortune‘s World’s Most Admired Companies survey comes out tomorrow if I have my information right. Not soon enough. After a year like we just had, it will be sobering to see how the world’s largest companies have fared. Several months ago I wrote that there would be a new world order in the reputation space and I think it has arrived. A number of the world’s golden children will lose their perch atop the golden pyramid of fame and fortune. I suspect too that overall ratings scores will be deflated year over year.  It is hard to be overly enthusiastic about the showing we have seen this year, especially in the minds of  C-level executives doing the ratings. I also look forward to seeing what they choose for the cover. For many many years, we had CEOs grace the cover of Most Admired because they were once popular and received the kudos for a job well done. No longer. The past several years had products as the feature on the cover. Last year we saw Steve Jobs, CEO of Apple, a CEO in a class of his own. Wonder what we will see this year? The good news is that this year’s reputation kings and queens might serve as ground zero for the next few years to come. My general sense is that we are starting over with a reordering of reputation royalty. I look forward to seeing the changes among the most admired, my favorite yardstick of world business. Always something new to ponder.

  Fortune has an article in its latest issue on the newest CEO accessory – a chief of staff. Some of the CEOs with office consigliores are Tim Armstrong (CEO, AOL), Tom McInerney (COO, ING), Paul Amos II (president and COO, Aflac) and Susan Lyne (CEO, Gilt Groupe). These chief of staffs serve as part advisors, gatekeepers and mountain movers. They get the jobs done that CEOs don’t have the time to do but would like to do if only they had the time. For corporate types, this is a whole new way of operating and perhaps a hard one to imagine here in the US. They are more common in Europe I believe.

I first learned about chiefs of staff at my previous employer. The CEO at the time was a political type and he and our COO each had chief of staffs. These attractive women (probably more common at the time) had super tough jobs managing the ins and outs of their bosses’ days – research on who was visiting, writing letters to clients and prospects, follow-up documentation, reviewing presentations, and making sure that things happened on time and as planned. They sat in on meetings and were endlessly busy and stressed out beyond belief. The women, however, were startling good at their jobs and I have to say utterly impressive. A few years later, I met another chief of staff when a new CEO arrived and again, this individual (a woman) was a powerhouse working several blackberries at once, scheduling every minute of the day and night for her boss, drafting emails and memos, deliberating at meetings, reviewing proposals and just being the surrogate spokesperson for the CEO when he was unavailable. She was the ultimate gatekeeper and in many ways, people interacted with her most of the time. As the Fortune article points out, these people become their bosses’ alter egos, mouthpieces and decision-makers because they know exactly what their bosses would want. There have been times when I have wondered why more CEOs don’t have chief of staffs to make companies run more smoothly and make them look efficient. In fact, for new CEOs, an assigned chief of staff who knows the company inside and out might not be a bad thing.

I do think that despite chief of staffs’ abilities to help build their CEOs’ reputations as good leaders, employees in the U.S. might look askance at this function. Employee grumblings would go like this — “Hey, can’t you do your own job? I don’t have anyone helping me. ” and “Isn’t that why you get paid the big bucks?” and “Who does he or she think they are – President Obama?” So despite its many benefits, chiefs of staff could be a hard sell on these shores.

In October, the WSJ wrote about how Fortune was cutting back on its heroic CEO magazine covers as it revamps itself in light of the changing media and anti-CEO landscape. The article said, “One casualty will be the CEO-as-god magazine covers that have been a staple of the magazine, whether with Jack Welch or Warren Buffett.” As a Fortune lover, former employee and CEO-watcher, that quote remained firmly imprinted in my brain. Despite the negative perceptions of many CEOs today, CEOs still hold great interest to business people, investors, employees and other key stakeholders. They still help to determine the destiny of companies by picking the right teams, building best-in-class cultures making the tough decisions. So as the year comes to a close, I decided to look into whether the business magazines and Time have been pushing CEO mugshots on or off their covers during this tumultuous year  and compared to the past several years. The results are below. 

 As you can see, there was pullback in the business magazine category except for Fortune. Fortune had 8 covers in 2007 and in 2008 and one more in 2009. Besides Bernie Madoff of Ponzi fame, the CEOs on Fortune’s covers were the likes of champions such as Warren Buffett, Steve Jobs, Jeff Bezos and Mark Zuckerberg — leaders that all accomplished amazing deeds and built good reputations.  It would be hard to argue that they did not deserve to grace a Fortune cover. Time actually added one (Rupert Murdoch of News Corp.) in 2009.  Will be interesting to see where the new Bloomberg BusinessWeek falls out one year from now.

We’ll take a look again in 2010 as CEO reputations hopefully begin to rebound (a little).

PS. The cover in my post is one of my all-time favorites and I have a large one framed in my office at home. It’s spectacular.

  Always try to get my CEO fix and today turned out no differently. For inspiration, went to Fortune‘s Pattie Sellers who has a super blog named Postcards.  I always learn something from her and I get my CEO jolt that helps me through the day. I was breezing through her postings this afternoon on an inspiration break and read what Susan Jacques, the CEO of Borsheims Fine Jewelry and Gifts, said about the best advice she has gotten from owner Warren Buffett. Buffett writes his top team a memo along these lines every year. The advice also contains a piece of my favorite quote regarding reputation. If you know me, you’ve heard me quote it. Had to get it down on this blog for posterity’s sake:

We can afford to lose money–even a lot of money. We cannot afford to lose reputation–even a shred of reputation. Let’s be sure that everything we do in business can be reported on the front page of a national newspaper in an article written by an unfriendly but intelligent reporter. In many areas, including acquisitions, Berkshire’s results have benefitted from its reputation, and we don’t want to do anything that in any way can tarnish it. Berkshire is ranked by Fortune as the second-most admired company in the world. It took us 43 years to get there, but we could lose it in 43 minutes.

Where do I start?  Several people sent me a copy of the recent McKinsey Quarterly article on Rebuilding Corporate Reputations.  Its sub-headline read, “A perfect storm has hit the standing of big business. Companies must step up their reputation-management efforts in response.”  Sounded like a home-run article to me.  It was already in my inbox because I subscribe but I had not had a chance to read it. My heart sank thinking that McKinsey had come up with the perfect strategy for rebuilding reputations and that all my advice and research in this area was for naught.  I Twittered the article on my ReputationRx Twitter saying that here’s an article that had to be read. After all it was from McKinsey which I greatly admire and religiously read. Soon enough I began reading the article. I stopped in my tracks. I deleted my Twitter instantly.

There are two major problems with this article.

First, the authors misunderstand the business of public relations.  A few select quotes from the article reflect a misunderstanding about the business of public relations when it comes to reputation-building.

“Now more than ever, it will be action—not spin—that builds strong reputations. Organizations need to enhance their listening skills so that they are sufficiently aware of emerging issues; to reinvigorate their understanding of, and relationships with, critical stakeholders; and to go beyond traditional PR by activating a network of supporters who can influence key constituencies.”

“Moreover, traditional PR spin can’t deal with many NGO concerns, which must often be addressed by changing business operations and conducting two-way conversations.”

“Reputations are built on a foundation not only of communications but also of deeds: stakeholders can see through PR that isn’t supported by real and consistent business activity. Consumers, our research indicates, feel that companies rely too much on lobbying and PR unsupported by action.”

Authors’ Sheila Bonini, David Court and Alberto Marchi are under the general impression that PR practitioners actually believe that reputations can be built on words, not deeds or action. This could not be farther from the truth. In addition, the authors imply in several sentences that PR is only about the one-way conversation, not the two-way dialogue.  Again, far from the truth.  Public relations has always been about the art of conversation with and perceptions of one-to-one or one-to-many stakeholders. The business has always been about developing relationships with many publics, no matter how small, how large or how hard-to-reach.

The second argument I have with the article’s direction is its premise that there are three new ways to manage reputational threats in uncertain times. They are 1) understanding key stakeholders and what matters to them (e.g., benchmarking competitors, quantitative research); 2) being transparent and action-oriented (e.g., more business activities, less lobbying); and, 3) engaging a wider portfolio of influencers through a variety of means to spread word of mouth (e.g., grassroots, partnerships with NGOs). These are good strategies for advising companies and their leaders about restoring and rebuilding reputation. No doubt about it.

These practices, however, are all commonplace in the public relations domain and have been for many years now. In fact, I would argue that this has always been the business of public relations – understanding a company or organization’s many publics, researching stakeholders on perceptions and concerns, getting the true story out, changing corporate behavior by doing the right thing, and engaging influentials in conversations that lead to deeper understanding.  These recommendations are part of the everyday toolbox employed by most PR professionals working now (and for decades). And in fact, PR professionals greatly expanded on these three recommendations years ago, particularly in the general public, corporate responsibility and social media space.

Today’s Financial Times had an article on business’ role in restoring reputation and mentioned the McKinsey article. The author seens to agree with me. Whew. Michael Skapinker wrote “This is all sensible but it strikes me as yesterday’s advice.”

Moving on….I do agree wholeheartedly with McKinsey’s conclusion that CEOs should lead a company’s reputation strategy. I have always said that CEOs are the guardians of company reputation. My first book on CEO reputation, CEO Capital (2003), argued exactly this point, as I am sure many others have too. 

After letting off some steam here, it occurred to me that PR firms have clearly not done a good enough job communicating what we do for clients or McKinsey’s authors would have known that their recommendations are core to PR engagements today. When I first joined the PR field from Fortune, I too had a limited understanding of what the industry did. Now that I have been in the field for nearly a decade, I recognize that PR is often misunderstood and we are partly to blame.

In short, it seems that McKinsey has succumbed to the stereotype of PR as an industry of spin doctors and no more. This is not true. And probably has never been true. McKinsey’s recommendations are not new and the best of them have been used by PR for some time now. What is needed is not as McKinsey proclaims, less PR but probably more PR.