Posts Tagged ‘new CEOs’

Every week I think nothing new is happening in the world of reputation. And I am always wrong. There are always CEOs coming and going, companies that get into trouble and lose reputation points and new things to learn. That’s the best part. Here’s a few:

1.     Booz Allen released their fabulous CEO Succession report. I read it every year and welcome the insights. This year they focused on new CEOs, a topic dear to my heart and book. This year they found that 14.2% of CEOs of the world’s 2500 largest public companies changed over. This is a sizeable increase from last year when the turnover rate was 11.6%. This increase makes sense because as boards battled the recession, it was not the opportune time to change chief executive reins. Better to batten down the hatches when times are tough. Strikingly, Bozo found that outsider CEOs are making a comeback. In 2011, 22% of all new CEOs were outsiders compared to 14% in 2007. That’s definitely surprising to me since the trend has been in favor of insiders for a while now. The possibility is that companies need fresh new ideas and outsiders with global experience as they now look to grow. You should check out the report because there always is a lot of fascinating information on the world of CEO transitions. For example, outsider CEOs are more likely to lose their jobs, the number of CEOs being appointed chairman has declined and nearly 90% of new CEOs have not been a CEO before. That last fact is astounding and perhaps why we get asked about our services on CEO First 100 Days as often as we do. In another post, I will provide Booz’s insights on advice on CEO’s first year in office.

2.     Reputation Institute released its worldwide reputation findings on the Most Reputable Companies. Their headline reads, “Reputation Is Impacted More By What You Stand For Than What You Sell.” In their research, they found that “People’s willingness to buy, recommend, work for and invest in a company is driven 60 percent by their perceptions of the company and only 40 percent by their perceptions of their products.” That’s an important finding and mirrors Weber Shandwick’s results on the importance of the company behind the brand. We are on the same wavelength, clearly.  They also found that only 11% of the top 100 companies have better reputations abroad than at home. “It’s because reputation isn’t something that’s easy to export,” says Nicolas Georges Trad, Executive Partner at Reputation Institute. Love that quote.

3.     I also attended Spencer Stuart’s CMO Summit this week on innovation. It was illuminating in how innovation gets baked into companies from the head marketing honcho. Whereas one company CMO panelist was analytical in her approach, another was more artistic and qualitative. Goes to show that culture drives execution. From the panel, I learned about another usage of HIPPO which is always a bonus to me – it is a reference to the Highest Paid Person’s Opinion. Everyone in business knows what that means.

Just read this article in Forbes about Amazon’s Jeff Bezos’ number one leadership secret. I’ve followed him for years and enjoy reading about how Amazon has grown from a bookseller to an everything store online.  I had already been thinking about about the importance of employees and customers for new CEOs when I read that Bezos’ number one leadership secret is that the customer is always right. There is this example described in the article that when Bezos calls meetings, he leaves an empty seat at the conference table for what he calls the customer’s seat.  A potent reminder to bring the customer’s point of view to the table. The article hints at the fact that Bezos has built his hugely successful business bent on “coddling his 164 million customers, not his 56,000 employees.”  This has me wondering that in this age of the Internet and social media galore, if customers are now more important than employees, maybe because of sheer size? The pendulum seems to be swinging again anyway. It used to be that all business activities were primarily all about customers, then all about employees and now… it’s all about equal parts’ employees and customers but with customers gaining the upper hand again.  The Internet has created a sense of urgency about how satisfied your customers are.  Probably because they spread word of mouth more quickly and seem to have more power than employees. They can advocate or criticize your business approach or customer service online for all to see. They have more power because they have so many choices from which to buy from.  The answer for new CEOs, however, appears to be focusing on employees with a healthy dose of understanding what your customers want and quickly scaling to reach them online to confirm what employees are telling you. Something to think about over the next few weeks. Whose more important — employees or customers for new CEOs and CEOs who’ve been in office for some time?

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