Posts Tagged ‘McKinsey’
A new McKinsey survey among board members reports that members acknowledge knowing little about risk. Nearly three in ten (29%) say their boards have limited or no understanding of the risks their companies face. Even more compelling, members say their boards spend just 12% of their time on risk management, an even smaller share of time than two years ago. Not sure about you, but I’d say that the business environment has become more complex and risky, not less complex and risk-free.
This is not good news for executive teams. When it comes to risk management, reputation is high on the list of vulnerabilities that can damage a company’s good name. This has me thinking that if board members are not focusing enough on risk, executive teams are going to be held even more responsible for any misdoings and misdeeds. They had better been attuned to crises and risks that are lurking around the corner. CEOs and their direct reports should make reputational issues an A-1 priority on their management agendas.
I received an email about two weeks ago asking if I had information on whose most to blame when crisis strikes. Years ago, I asked that question of executives and if I recall right, CEOs received most of the blame, regardless of whether they knew about the problem or not. The McKinsey research is hinting at the same blame chain. The CEO takes all the credit when things go right and all the blame when things go wrong. The board is looking in all the wrong places. CEOs, beware.
I mentioned this new survey on reputation from McKinsey on my blog a few weeks back but what I did not mention was how perplexed I was by the artwork they chose in the report. This is not to knock the great work they do but to raise the question about why they would not question artwork of men saluting each other when it comes to a serious business topic. I know that they regularly use this artist and look in their reports but I flipped through the pages to see if there was a mirror image with a woman or two in it. There was none. And I realize that this harkens back to an earlier style when men ruled the business suite. I understand the style because I saw plenty of it while at Fortune and still love the look. Yet, all in all, I was surprised that they chose this image when we have a paucity of female CEOs and women at the top. Women are getting ahead but glacially so. And in defense of women, women are already adding value to the reputations of some of our largest, most prestigious corporations.
McKinsey is coming out soon with their new research on defining and developing reputation. I was one of the 3,601 executives who responded when they sent questionnaires out in September and I was eagerly awaiting its release. They kindly sent the final report to those who had completed the survey before distributing it more widely. However, in their note to panelists, they mentioned that the report can’t be republished without permission. For that reason, I am not linking to the report results although I bet that public release will come soon in the new year. I do think that I can mention a few of the results that I found most interesting and will add the link when they are made available. Stay tuned.
McKinsey obviously leads the opening paragraph with what they consider the most important findings and that is that many executives do not think their companies’ reputation management strategies are effective. Only one-fifth of executives think their companies manage reputation very effectively. Then they look at reputation management through the lenses of these “effective managers” and report that these companies are more likely to say that reputation management is among the top 3 objectives for their CEOs and that their companies formally track reputation among key stakeholders. It is always interesting how when CEOs focus on something, it becomes company mantra for all. Overall, that is the job of the CEO to focus the organization on what will advance their company’s success.
As I would suspect, two-thirds (64%) expect the scrutiny on their external reputations to be more intense in the years to come. No doubt the belief that there will be increased scutiny on corporate reputation is directly tied to the fairly high percentage (47%) of companies who say they have experienced a reputation threat in the past two to three years. The industries that are above average in having experienced reputation threats are telecom (67%), pharma (60%) and financial (56%). Interestingly, executives in the healthcare sector reported that they were just about average (46%) in having experienced a reputation threat in the past few years but are way above average in what they expectto see in their sector over the next two to three years — 81%.
There are some other findings I will report on when the final report is released. This is just for now. Back again soon. Have a merry Xmas.
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.”
A double whammy this week.
Just saw that a new corporate reputation survey by Prophet come out today and tomorrow Fortune’s World’s Most Admired Companies survey hits the airwaves. Prophet surveyed consumers in the U.S. and found that “attributes related to openness, ethics, and the kind of public dialog companies foster in response to marketplace events and circumstances were deemed most important.” Companies’ behavior in response to crisis and difficult times apparently makes a difference in perceptions. How people deal with adversity matters in our perceptions of friends and colleagues, why not companies? I was not surprised reading this since a company’s character and values are most on display when companies are under assault or scrutiny. You learn alot about people and companies when they are in the spotlight or shadows.
I finally found a moment on the train to read McKinsey’s latest research on how well companies manage their government relations. In fact, today I was talking to someone about this so it was definitely top of mind. He made the point that reputation matters even more today because government has such a big role in business affairs and can affect economic outcomes. There is one CEO I quote often who said that government affairs was his 7th line of business. Love that line.
The McKinsey survey was conducted among corporate executives around the world and this was my favorite part. When asked which stakeholders would have the greatest effect on corporate economic value over the next 3 to 5 years, 74% named customers. Makes sense. But second on the list came government/regulators at 53%. This highly influential group ranked higher than employees (49%), investors (28%), suppliers (17%), media (measley 9%, ouch), NGOs (mere 3%, ouch) and organized labor (2%, definitely ouch). When you look at industries such as health care, energy and financial, government/regulators are #1 for each….ahead of customers and all the rest when these executives are thinking out 3 to 5 years from now. Now that says something about where reputation will be headed too.