Wednesday, December 07, 2005

The Ticking Clock


Two interesting CEO pieces today in The New York Times (December 7, 2005). One has to do with hedge fund manager and chief Ed Lampert of Sears and a plea for him to speak up and out. An analyst is quoted as saying, "We would like it if management talked more." Clearly a strong message is being sent. A similar remark with the same innuendo appeared in The Wall Street Journal about Lampert's written notes (read as inaudible) report on earnings. All the work that I have done on CEO reputation and CEO communications points to the need for CEOs to be accessible and communicative. Our new research among global business influentials found that company reputations are driven by quality of products AND quality of external communications. Transparency is the name of the game. My sense is that the Street will be all over Lampert as the months progress. They do not like surprises and do not like silence. Hence The New York Times title, "For Sears Shareholders, Silence Stirs Anxiety."

As for Mr. Pressler, CEO of the Gap, an equally unflattering article in The New York Times. The formula for these articles is always the same -- executives departing, poor sales, no turnaround yet and lingering doubt from analysts. Another CEO on the media's watch list.

Previous research we have done indicates that new CEOs have about 18 to 22 months to prove themselves. By the close of the second year, the board and shareholders are restless and the clock starts ticking. A warning to all.

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