Posts Tagged ‘reputation redemption’

  The trading scandal at UBS brings to mind the long journey that companies undertake to recover and restore reputations. UBS is now back at square one as they deal with the recently revealed $2.3 billion rogue trading. This reputation disaster brought me back to the days of the Societe Generale SA rogue-trading incident three years ago. If you recall, Jerome Kerviel managed to lose $7.2 billion on his derivatives scheme. The reputation drag on SocGen's reputation today and on UBS tomorrow is quite real. The SocGen scandal has not entirely faded in the past three years. In fact, everytime one reads about what happened last week at UBS, the SocGen scandal gets replayed. This is unfortunate for those who go down the path of reputation recovery like SocGen. SocGen's recovery program was quite extensive when you look at it from a three year vantage point -- they dismissed Kerviel's bosses, demanded that the bank move slower as new security systems were put into place and launched an internal controls program called "Fighting Back."  In addition, other measures were set forth such as spending on new IT security, starting a newly independent accounting group, beginning a SAFE (Security and Anti-Fraud Expertise) program to oversee financial operations and training 7,800 employees about fraud. Ultimately the CEO and chairman stepped down one year later.  All these remedies for recovering reputation came from an article in yesterday's WSJ and I was glad to be able to list these steps for other companies contemplating what to do when faced with sky rocket type scandals. Yesterday morning started off with an email to me from Netflix's CEO Reed Hastings. I immediately went to the Netflix's CEO apology on the blog.   What confused me however was the tone of the video. Although I am a loyal customer and fierce advocate of what Netflix has done for delivering movies to my home, I thought that the video apology was abit too cheery (outdoors in sunny California. albeit a parking lot) and efficient.  Maybe too rehearsed is the right word. I did not get the sense that this was a very repentent CEO who had seen his stock value decline 52% since the change in pricing occurred. But what really threw me was that he did not share the stage alone. In the video, CEO Reed Hastings had the new head of the DVD spinoff, Qwikster, Andy Rendich, joining him.  I always say that CEOs get all the credit when things go right but all the blame when things go wrong. Why did Hastings deflect some of that blame on this poor soul. I cannot remember the last time (if ever) I witnessed a CEO apology tied to the announcement of a new spinoff. I sincerely doubt that was a good launch plan for Qwikster. My sense is that there's more apologizing to come. This poor guy Andy looked like he too was somehow responsible for the communciations debacle. Despite these ramblings, the article on the Netflix problem in today's New York Times made me smile. The authors wrote, "But in the short term, the risk to corporate reputations is palpable."  It is not often that I even see the words "corporate reputation" in a top tier publication. Usually it is referred to as brand health or brand reputation or positioning.  It is fairly rare to see corporate reputation used as a commonly understood concept.  My two cents is that short term feels like long term these days when you are in the spotlight. As someone said to me, it's like a nuclear assault whether it is 6 days, 6 weeks or 6 months. Ultimately, Netflix will be forgiven but like the SocGen example above, reputation damage takes its toll and lingers longer than most CEOs care to imagine.

  Reputation building is walking in the front door of The White House.  A recent New Yorker article on the Navy SEAL mission to capture and obliterate Osama Bin Laden is captivating and spell-binding, to say the least.  But now there is some discussion that the The White House okayed the dramatic recounting to make them look audacious, brave and effectively taking care of the nation's big hurt (9-11). Then I learned that there is a movie under foot with apparently deep access from The White House. Oscar-winners' Kathryn Bigelow and Mark Boal of "Hurt Locker" fame are producing the big-time screen version of the killing of Bin Laden.  Due in theaters October 12, 2012.  Isn't that near election day? Duh. The White House is taking reputation-building seriously. A good thing. Everything seems pretty shaky right now. No doubt about it, there is going to be an all out assault and reputation redemption campaign for our beleaguered president.

  Usually when I write about what CEOs should do in their first 100 days, the listening tour pops up. CEOs are advised to travel to facilities and ask employees and customers what's on their minds, what the company could be doing better or not doing at all, what they wish the CEO would do or not do, and where they think the business is headed in general. Even "insider" CEOs who have been with the company for three or more years need to go on listening tours. People will tell CEOs things they would never tell anyone else. I always recall how Xerox's former CEO Ann Mulcahy went on a listening tour when she was first named CEO although she had been with the company for 25 years. She quickly sent a message that there was plenty for her to learn. So I chuckled to myself when I read a recent article about Governor Sanford -- the one who had the affair with the Argentine woman while conveniently telling everyone that was hiking and unreachable.  The Governor is now going on a "forgiveness" tour around the state of South Carolina asking for repentance for his sins. Despite having written a book on reputation recovery, I guess that this is one kind of recovery tactic that I had not thought of.  Most people in public relations would advise someone in the Governor's situation to get the bad news out all at once and put an end to it at once.  But the Governor continues to extend his front page scandal beyond the pale of reality. I kept waiting to hear that he has started a "forgiveness blog." I tried to think of other red-faced CEOs or politicians who went on forgiveness tours and none leaped to mind. Former NY governor Eliott Spitzer had the wisdom to stay out of the spotlight and slowly emerge one year later  to redeem his reputation. I have always contended that he will manage to redeem himself over the long term. Michael Miliken redeemed his reputation by participating in very worthwhile and noble deeds but not with a forgiveness tour. Enron's Ken Lay and Jeffrey Skilling never went on a forgiveness tour although they had time before their trials began. They must have crossed the idea off their lists. The idea of a forgiveness tour might be one and the same with a listening tour because Governor Sanford's constituents probably have alot of advice to give him on the topic of marital infidelity. I just hope he listens carefully while asking for atonement.

    One could not help but be moved by watching the eulogies for the late Senator Ted Kennedy today at the Lady of Perpetual Hope Basilica in Boston today. I watched the moving service thinking about how large a reputation he built in his 77 years. Reputation is all about character and Ted Kennedy’s character was complex -- both flawed and exceptional, like many human beings.  His impact on people and our country was profound and searingly evident when listening to his sons, daughters, neices, colleagues, peers, and all.  Reputation redemption has come up several times which made me think how lucky he was (and us) to have had the time in his life to resurrect his reputation. The service reminded me of a quote I saved  that I read a few years back….

"Real leaders, in a phrase, move the human heart."