reputation*watch

Starting Over

2006-05-20T17:01:00.000-04:00

Dear ReputationWatch readers,

Thanks for visiting my blog over the past several months. It has been a pleasure sharing my thoughts on reputation with you. (If you just started, thanks too.)

I have moved to a new firm. You can find my new blog at www.reputationXchange.blogspot.com. I hope you will join me.

Google Trends

2006-05-11T22:01:00.000-04:00

Google Trends was launched today. I thought I would try it and typed in "reputation." I am not sure what I learned from looking at the chart. The "reputation" trend is most prominent in New York followed by Chicago. Not surprising. Then I typed in Ford and General Motors. Ford had many more trend mentions (if that is what it is called) than General Motors. The most common mentions were in Detroit. Not surprising. My sense is that there is as much coverage of General Motors as Ford which makes me suspicious of what the chart reflects. I will have to go back and figure out how to make better use of the new service. Sounded like a good idea.

Also tried CEO Reputation but a chart was not possible because the volume was too low. Again surprising.

Sounded like a good idea.

Buffet's Lonely Successor

2006-05-07T21:19:00.000-04:00

Interesting and endearing article on Warren Buffet's thoughts on what will happen when a new CEO is chosen to lead Berkshire Hathaway sometime in the future. The article appeared on MarketWatch and was written by Alistair Barr.

Apparently Buffet gives his chosen successor about "one year or so" to prove to the marketplace that Berkshire Hathaway will carry on with business as usual. Buffet forecasted that his successor would not get as many calls at first from businesses looking to sell to Berkshire Hathaway but that would only be temporary. I could not help but think of the lonely Maytag repairman who received so few repair calls due to the dependability of Maytag appliances. By the way, how does Buffet know that this loneliness will last only one year? I would give it two years at best.

As Barr quoted Buffet: "Indeed, Berkshire may emerge from succession stronger than before. Once it happens, Berkshire may even be stronger because people will then realize that the culture was institutionalized and not just tied to one person."

Ironically, Buffet was quoted in Fortune a few years ago on what makes a most admired company: "People are voting for the artist, not the painting." The sage of Omaha was making the point that leadership matters. It will be hard for any CEO to stand in Buffet's shoes but his forecasts have traditionally been right.

Only time will tell.

Healthcare Reputation

2006-05-04T09:38:00.000-04:00

PRWeek posted some findings in its April 24th issue about healthcare CEOs' perceptions on reputation. Thanks to FischerHealth, Porter Novelli and PRSA's Health Academy for adding to the reputation research stockpile.

Interestingly, 73 percent report that negative shifts in a company's reputation impact the bottom line "significantly." That we know to be true and I could not agree more.

What struck me "significantly," however, was the reported finding that about four out of 10 (39 percent) have NEVER measured their company's reputation. My sense is that these CEOs are not Fortune 100 type companies or that they are just plain clueless. The pharmaceutical and health care industry suffers daily from poor public perception and CEOs need to better understand how to communicate the good they do. There is a saying that people do what you inspect. If measuring reputation is not on the agenda, employees will not share the responsibility for protecting reputation as if it were their own.

New CEO at ADM -- A Girl!

2006-05-01T09:28:00.000-04:00

Good news that ADM -- supermarket to the world -- hired a female CEO, rounding out the number of women in Fortune 500 companies to "10." Sounds like Patricia Woertz is ready to take on the challenge.

Although the media always provides a chart on how few women are at the top, research shows that women are ambivalent about climbing to that top rung. One of the major deterrants often cited is the lack of work/family balance.

An article in today's Wall Street Journal reminded me once again how difficult it is to combine family and career. The article described the difficulty companies have in recruiting women to run manufacturing plants. The women managers interviewed turned down more senior jobs because of the lack of flexible hours, too much travel and child care problems. When these women are single mothers, the work/family issues are compounded multifold.

From what I read, Patricia Woertz has three grown children which makes her choice only somewhat easier. Every new CEO says, however, that there is no preparation for the CEO position. We will have to check back on her progress on her first anniversary. I wish her luck!

Repairing Bush's Reputation

2006-04-27T21:33:00.000-04:00

BusinessWeek's Diane Brady asked several management gurus what President Bush should do to repair his reputation. She reports what they said in the April 17th issue (I am just abit behind). Some of the suggestions include bringing in more outside voices, pausing before making big decisions, building a team that consists of more than "yes" people, and bringing in some thoughtful critics. Many of these suggestions focus on bringing people to the president. Seems that it would be better if it were the other way around. How about taking President Bush out of the White House to meet with people from all walks of life in their own environments. Could help to provide fresh perspective. Or set up a Citizen Advisory Panel made up of ordinary Americans who could meet with the President quarterly and exchange points of view.

Like new CEOs who sometimes turn to retired CEOs, perhaps Bush could call on some retired presidents who might have some insights. His father might be one good source. Former President Clinton? Former President Carter? Might be worth a try.

Just wanted to add my two cents on repairing the President's tarnished reputation.

24 Hours Makes All the Difference

2006-04-26T09:26:00.000-04:00

Today's papers are now featuring new Sun Microsystems CEO Jonathan Schwartz's picture finally. So I was a day ahead with my comments on his photo-absence. Would have been nice to see the two together in yesterday's papers but they obviously wanted to give McNealy his day in the Sun.

Sun Screen

2006-04-25T20:11:00.000-04:00

This morning I read with interest the coverage on Sun Microsystems co-founder Scott McNealy's handing over his CEO title to Jonathan Schwartz. McNealy is one of the longest-standing CEOs in Silicon Valley. What fascinated me was that the only picture that appeared in The New York Times, Wall Street Journal and Financial Times was that of McNealy. You would think that a photo of Jonathan Schwartz might have surfaced somewhere. Afterall, he is the new CEO. And Schwartz is no typical CEO -- he sports a pony tail and is a mere 40 years old. Just those two factors alone merit a photo in the major business media. It is not like he is so shy that there were no photos available. Just go to the Sun Microsystems web site where there are several digitally-enhanced photos of the new CEO begging to be used.

Not sure what to make of the MIA young CEO but let's hope he gets some photo ops soon.Thought I would give him some free advertising on my blog so that's him up above.

Old Fortune Rhyme

2006-04-24T21:33:00.000-04:00

I saved this business poetry from when I was in charge of marketing at Fortune. When someone left the company, he gave me this promotional brochure that I saved for posterity. The brochure was magnificently designed and elegant as could be. That I distinctly recall.

The words below certainly speak of days gone by. Business in the 1960s was all about men. My how things have changed (and not changed).

I can not figure out if the rhymer was actually thinking about "change" as in cents or as in "change management." Tend to think it is the former. Who knew about organizational change then? The world was so much more manageable.

The Rhyme of The Ancient Manager (1969)

“For the men who manage business,
Wherever they may range,
Are the Men in Charge of Dollars
And the Men in Charge of Change.”

CEO Apologies

2006-04-20T08:04:00.000-04:00

When I entered "CEO" into Google images, one of the pictures at the very top was an illustration (shown here) about CEO apologies. I found that ironic since I had cut out an article from today's New York Times (April 20) on "The High Cost of the Korean Mea Culpa." Two companies with Korean connections had apologized for misdeeds -- Lone Star and Hyundai-Kia Automotive Group. The photo in the Times shows top executives bowing in an act of contrition. Apparently apologies like this are standard operating procedure in South Korea and are done in the hopes of reducing legal punishment. In addition to apologies, South Korean companies contribute funds to good causes. Hyundai's deep executive bows were accompanied by a $1 billion gift to social welfare programs (no small change). The entire act of donating money for wrongdoing in South Korea has its critics but certainly does not condone the misbehavior in the first place. Reputations cannot be bought.

The 80/20 Rule in CEO Coverage

2006-04-17T22:18:00.000-04:00

Today I spent some time reviewing saved articles in my files on CEO Celebrity. I turned back the clock to the late 1990s and early 2000s before Time Warner and AOL merged and the dot.com bust. The topics of CEO charisma and CEO as Brand were everywhere. Soon after the toppling of the CEO icon as Enron imploded, GE's then CEO Jack Welch was interviewed on the Jim Lehrer Online Newshour report (December 2002). He was asked about CEO celebrity and I couldn't help but applaud him as I sat alone in my office despite the four years that passed since these comments.

Welch said: “We resist 99.9 percent of all interviews. It happens when you’re in a big company and your company is successful because of a lot of people, you end up getting your mug shot all the time. You end up on television all the time and then you’re called a quote, charismatic CEO, out trying to do something. You’re not trying to be charismatic. You’re trying to motivate employees, you’re trying to work internally, you are trying to improve processes, you are not trying to get publicity because half the time it’s crappy. You’d like the mole to go away.”

Welch is so right. Most CEOs never start out wanting to be the center of media attention. In fact, even in the crazy heady celebrity CEO days, most CEOs just wanted to keep their heads down and take care of business. The few that did get the frenzied attention agreed with Welch that rallying the troops and communicating the message were good enough reasons to accept invitations to appear live.

As a research study pointed out, 20% of CEOs generated 80% of the media coverage leading up to the scandalous years. We were seeing the same CEOs in the spotlight over and over again -- John Chambers (Cisco), Jeff Bezos (Amazon), Jack Welch (GE), Jacques Nasser (Ford), Carly Fiorina (HP), Michael Eisner (Disney). Perception did not exactly match reality. The way the media reported on CEO celebrities made you think that all those Fortune 500 CEOs were grabbing mikes and throwing their shirts to the ground during employee pep rallies.

No way.

CEO-ing in India

2006-04-15T07:29:00.000-04:00

Google sent me an interesting article this morning about CEOs in India. According to the Economic Times, Indian CEOs are trying to fit in better with their employees and appear less imperial and hierarchial. Instead of staying at five-star hotels while traveling, Indian CEOs are now staying at company guest houses with employees and even using vending machines like the average guy or gal. As I have noted over the years in my work on CEO reputation, the link between the CEO's reputation and the bottom line is being felt in India. This is the reason given for CEOs turning into "cool dudes" as the article says.

One particular point caught my attention."Take the age-old tradition of attaching a Saheb, Babu and a Ji to everyone’s name. Though most Indian employees would still be acutely uncomfortable calling their bosses by their first names like the Americans do, Indian CEOs are now persuading them to call them by their initials as a first step. So Mukesh Dhirubhai Ambani is MDA, Kumar Mangalam Birla is KMB and Sunil Bharti Mittal is SBM to most and Sunil to quite a few."

Got me to thinking about CEOs we hear about often. Here is an unrepresentative list.

GE's Jeff Immelt = JI
BP's John Browne = JB
Microsoft's Bill Gates = WG (for William)
Microsoft's Steve Ballmer = SB
Ebay's Meg Whitman = MW
Starbuck's Howard Schultz = HS
Berkshire Hathaway's Warren Buffet = WB
Ford's Bill Ford = WF (for William)

Somehow these initials do not have a ring to them. Maybe because we need to use their middle initials if they have them. Hard to imagine calling Bill Gates WG or BG. Interesting idea, however.

Fighting Words from GM

2006-04-13T19:26:00.000-04:00

Interesting that Bob Lutz, GM's vice chairman, is fighting back. "We are removing the gloves at G.M and are going to be much more aggressive about telling our side of the story. It's time to strike back." (The New York Times, April 13, 2006). Those are fighting words.

Lutz mentions that GM has reached an inflection point. I think that he is not only speaking for his company but for companies in general. Over the past two years, it has become increasingly clear that companies are not rolling over when they think they are right and believe that their point of view is not being heard. Wal-Mart comes to mind after trying hard to keep a low profile and not ruffle any feathers. McDonald's is working on its game plan to counter the new movie "Fast Food Nation" which criticizes the food giant.

There is definitely change in the wind.

Support from GM's Troops

2006-04-09T07:17:00.000-04:00

Friday's The Wall Street Journal (April 7,2006) contained "An Open Letter to America From GM Dealers." The full page advertisement described its support for embattled GM CEO Rick Wagoner:

"Mistakes have been made and lessons have been learned. Today our CEO Rick Wagoner is leading the best management team since Alfred Sloan. It is a difficult job that requires balancing the needs of customers, employees, retirees, shareholders and dealership employees. Given the hand that exists, it appears that Rick Wagoner and GM are taking very bold steps and they are making a difference. We believe that Rich is a man of excellent integrity. His values are that of the best of America. He is an excellent leader, father, husband and human being. He needs and deserves support for the enormous job he is doing." The ad is signed by individual GM National Dealer Council and GM Dealer Advisory members.

Thought the advertisement was good and I welcomed hearing what they had to say. Due to the many rumors about Wagoner serving out his last days, I think that sticking with Wagoner during these tough times is the right direction. If you have not read Fortune's Alex Taylor on the subject, you should (He writes: "Why, after the UAW has been feasting on the largesse of GM chairmen for four decades, does Wagoner get accused of giving away the store?")

Back to the advertisement. I was struck by the references to Wagoner as spouse and parent in such a business-laden declaration. Those kinds of personal statements usually end up in obituaries or retirement speeches. I presume that the dealers were attempting to round out the full shadow of the man that goes beyond his nightmarish day job. Being that GM has those true middle American roots, the values being espoused seem to fit but definitely took me aback. We rarely get a glimpse of CEOs beyond the corner office unless they are being sued for divorce.

I do know one thing. If GM's CEO were a woman, an advertisement like this would never mention how good a job she did as a wife and mother.

Politicians and CEOs

2006-04-06T19:33:00.001-04:00

When I was in Vienna this week to launch my book, our affiliate Hochegger/Com honored the most admired Austrian CEO from their research at the event. The CEO of energy group OMV, Wolfgang Ruttenstorfer, was number one in the Austrian survey. He spoke about what CEOs need today to be successful. Since he spoke in German, I only heard what he said through someone else. Apparently he said that communications was critical to being a CEO in the 21st century. The oil major CEO remarked that he learned about the importance of communications from his government position which he held for three years. As a politician, Mr. Ruttenstorfer learned quickly about communicating daily with diverse and demanding constituents. Without that prior exposure, he said the CEO job would be very much harder.

I continually see the narrowing of the gap between politicians and CEOs. In many ways, people are voting for each every day. Politicians have to win daily support from constituents and CEOs have to win over customers to buy their products. Politicans have to get people to believe them enough to vote in their favor and CEOs must persuade stakeholders to support them by buying their stock, joining the company or giving them the benefit of the doubt in bad times. As things are going, I would not be surprised one day to see politicians with corporate governance advisory boards and CEOs running for election every four years. How crazy would that be?

To Separate or Not to Separate?

2006-04-05T09:39:00.000-04:00

We all know the story of how Enron had a separate chairman (Ken Lay) and CEO (Jeff Skilling). The un-perfect company actually followed good corporate governance procedures by disallowing executive power to remain with one person. We all know the unhappy ending to this story.

Over the past several years as more scandals unfolded, there has been increasing discussion in the media about separating the two positions in an effort to curb CEO power. Alas recent research noted in Harvard Business Review (April 2006) found that there is no statistically significant difference between companies that have two people or one person at the top. The authors used stock price and accounting income as their metrics (Yale professor Roberta Romano, Yale Journal of Regulation). Similarly, Institutional Shareholder Services (ISS) has been unable to find a correlation with market performance for separating the two roles.

On the other hand, when we asked this question in 2003 in our reputation research, we found a pattern leaning towards separating the chairman and CEO roles. Nearly two-thirds of U.S. business influentials reported a preference for splitting the two roles (63%) vs. less than one-fifth (17%) who thought they should be combined. A fairly large group -- 20% -- remained undecided. I have always wondered if respondents were offering what was an expected response in light of the abuses of CEO power at the time.

I think it is good that evidence is still unclear that splitting the roles makes a difference. Decisions such as this depend on the company’s culture and individual personalities. Citigroup’s chairman Sandy Weill is soon to depart (April 18) and there is no doubt that while he delivered on what he said he would do(no interference), Weill and current CEO Chuck Prince are probably looking forward to an amicable divorce and less close quarters.

Blogging from Vienna

2006-04-03T09:21:00.000-04:00

Tomorrow I will be speaking at the Vienna Stock Exchange on CEO Capital. My book on CEO reputation was just translated and launched by Linde International.

Although many Austrian CEOs are not well-known worldwide, I found out a few interesting facts. The energy drink Red Bull is Austrian and founded by CEO Dietrich Mateschitz, one of Forbes' wealthiest people. This brand is probably Austria's most global. Other fine companies with less global recognition include energy group OMV, Erste Bank and Wienerberger (the world's biggest brickmaker).

Back to the Wiener Borse Ag. The Vienna Stock Exchange was actually founded by a woman in 1771. Holy Roman Empress Maria Theresia's fine reputation was marked by major reforms which modernized the country's administration, reorganized the army, eased the life of the peasants, introduced compulsory school attendance and abolished torture. She set the standard for Austria today by exhibiting an outstanding sense of responsibility, credibility and diligence to the end of her days. Her impressive legacy carries on as noted in yesterday's The New York Times Business section (Off the Charts by Floyd Norris). When it comes to best performance for country stock market indexes around the world, the greatest change and number one leader comes from none other than Austria (+375%). Comparatively, the U.S. stock market index has increased only +59% since September 2002. Maria Theresia knew what she was doing. The Austrian stock market is as hyper-caffeinated as Red Bull.

In light of all this financial success, Austrian business is trying to now distance itself and its reputation from its biggest banking crisis in decades -- the Austrian Trade Union's ownership of Bawag bank and its risky business dealings with Refco. The good news is that the trade union, OGB, is trying to sell the bank. The Bawag bank is a blemish on Austria's reputation but quick action might be able to lessen the sting.

Without a doubt, I will be asked about how long it takes a company or organization to recover its reputation.

Blogging in Europe

2006-03-30T20:12:00.000-05:00

A UPS survey surveyed nearly 1500 business leaders from Europe's top 15,000 companies by revenue and found that 37% were not aware of blogs. An even larger 42% had heard of them but had not read them. Only 11% of top European execs read blogs and as expected only 2% write them. By country, here is how it shakes out:

Not aware of blogs
Germany -- 57%
Netherlands -- 56%
Belgium -- 48%
Spain -- 37%
Italy -- 32%
UK -- 31%
France -- 16%

Germany and the Netherlands were the least knowledgeable about blogs.

Although blogging has spread like wildfire in the US among business executives and businesses are rapidly monitoring the Internet to see what bloggers are saying about them, European business people have not caught the blogging fever. Maybe that is a good thing. Sometimes we have to stop ourselves in the U.S. from thinking that the entire world is staying up at night blogging or rssing or podcasting.

There is hope. The UPS Europe Business Monitor does hint that change is on the horizon. In 1999, 11% of business executives used online sources (including blogs)as their primary source of information on business issues. In 2005, online usage shot to 25%. Now that's progress.

Falling Asleep at the Wheel

2006-03-27T21:51:00.000-05:00

Crises start as ripples and eventually turn to tidal waves. It is the "near misses" that accumulate and nearly kill a company's reputation. Another good way of describing the incremental missteps that can do harm comes from a German shareholder talking about the quality problems at Mercedes: “You don’t break a car company over night. You really need to fall asleep at the wheel.” The statement appeared in the Financial Times (4 March 2005) article by James Mackintosh and Richard Milne, “The Ultimate Way of How Someone is Judged Is Not only By the Bottom Line."

Thought it was worth sharing.

CEO Calendar Vertigo

2006-03-26T20:04:00.000-05:00

Just finished reading a Financial Times interview with Merck's CEO Dick Clark. It is worth repeating below because this is not the first time I have heard a CEO talk about underestimating the demands on his or her schedule. Wal-Mart's CEO Lee Scott had similar thoughts:“The biggest mistake I made was not controlling my schedule. I was not prepared for the demands of my time -- internally and externally…I have to make sure I am in the stores and that I understand what is going on with the business.” My real sense is that CEOs get vertigo looking at their calendars.

"FT: Can you describe how your day has changed since you’ve become CEO?

DC: That’s a great question. The variety of activities you do in any one given day are just incredible. They go from very strategic, to interface with investors, to meeting with employees. You have much more visibility inside and outside the company, so the variety is just incredible in the different types of experiences you have.

And the thing that’s probably the most difficult for me right now is to balance the demands on my schedule. Not internally as much as the demands that are being asked of me externally. I made a commitment when I took this position that I was going to spend a tremendous amount of my time, a majority of my time, internally running the company, getting the strategy in place, making sure we’re doing it right – before I decided to have this external exposure.

Whether they are different associations and boards or government officials, I underestimated ten-fold the external demand that is placed on a CEO

FT: By how much?

DC: 10-times, 10-fold. I had no idea the impact it would have. And there tough decisions, where the President of the United States, of the UN secretary general or this particular congressman or senator; you’ve got to attend these two board meetings and the council of competitiveness, and on and on and on. Which are important decision for the company as well, to represent the company and you help whoever’s asking you to provide input.

But at the same time you have to balance that. Your mission in life is to your stockholders, your employees and your patients. And getting that right is something I’m still working on."

CEO Blogging

2006-03-25T18:59:00.000-05:00

I listened to an interesting session this week. The teleconference call was set up by WOMMA (Word of Mouth Marketing Association) and had several interesting speakers talking about blogging -- Richard Edelman, President & CEO, Edelman Public Relations; Laurie Mayers, Senior Vice President, Deputy Managing Director, Hass MS&L;and Michael Wiley, Director, New Media, General Motors.

Richard Edelman identified several rules of the road that he abides by when writing his blog (e.g., make it ethical, yield control of the message, make sure it's not spin, engage your critics). Richard says that he checks Technorati to see if anyone is commenting on his blog and writes them a comment if his words have been misunderstood or taken out of context. I thought that was a smart idea. Will try it myself.

Hearing about General Motors' Fast Lane blog was also illuminating. Laurie Mayers works on the Fast Lane blog and noted that it received 8,000 comments in its first year. She mentioned that GM's return on investment with Fast Lane is many more times greater than what you would get if you had to pay for conducting focus groups to obtain the views of 8,000 car enthusiasts.

Michael Wiley made good points too. I was particulary interested in his comment that Fast Lane had become a feeder to various news media and that it was often picked up verbatim. Nice way to get the GM message out and speak directly to the public while bypassing a critical press.

All of the speakers agreed that the hardest part of CEO blogging was content creation. Tell me about it. For me, the pressure to come up with new and interesting content is hard enough. For CEOs, it has to be nearly excruciating. Yet, it is being done and clearly the ROI is bountiful.

Managing Your Reputation Online

2006-03-22T05:44:00.000-05:00

When companies undergo a crisis, they often forget that visitors go to their websites to check out or confirm what they may have heard. Unfortunately, many companies overlook how important their web sites are in managing their reputations during bad times. This topic was on my mind today as we presented our recent findings to a client on crisis-stricken companies online.

Some background. A few days after 9-11, we (Idil Cakim and I) examined Fortune 500 and most admired company websites to learn how their sites fared. We learned that companies quickly turned their business sites into information hubs to communicate to employees, customers, and families about the tragedy. Most companies were quick to provide a message to the public, update information on how to volunteer or donate funds, identify locations for giving blood, list counseling services or tell people where to go to donate products. In addition to monitoring web sites, we also surveyed the public and learned that they would have also wanted more updated news reports, being notified about the status of operations (what happened to my package?), emergency hotlines, email addresses for crisis updates and a message from top management. Many missed opportunities although we all learned alot about online communications during these unthinkable times.

9-11 got us seriously thinking about how companies manage their reputations online when they are in the spotlight or making headlines. Did companies take the lessons from 9-11 and apply them going forward? It is always surprising to us how little information companies make available during times of trouble. Undoubtedly, legal considerations get in the way and prevent companies from communicating fully with the public. Yet some companies manage to do a stellar job of managing their reputations online in bad times and good times. These companies provide special contact numbers (on the home page no less!), issue press releases or statements that answer questions on what might be troubling the company, feature a letter from the CEO (in a variety of languages!)and point visitors to other sites (such as government sites or non-profit sites) for further information. Some companies provide glossaries of terms, FAQs and positive and negative news accounts.

Just pick any simmering issue or crisis tomorrow, go to the company's web site and see what they are saying or not. If you have to dig beyond two page views, forget it.

Thumbs Up for Citigroup

2006-03-19T14:09:00.000-05:00

One of the markers of reputation recovery is making signs of progress visible. Of course if you have the choice, the best way is to get someone else to broadcast it for you. That's what happened yesterday to Citigroup. In Clint Riley's Wall Street Journal article, "Citigroup Gets Higher Grades for Its Corporate Governance," the writer underscores the positive progress being made by CEO Chuck Prince's journey to become "the most respected global financial-services company." Riley gathers votes of confidence from several corporate governance rating experts who give Citigroup a clean bill of health. One of the experts even called the financial services giant, "the new Citigroup."

+++Howard Sherman, COO, Governance Metrics International
+++Ric Marshall, chief analyst, Corporate Library
+++Robert A.G. Monks, founder, Institutional Shareholder Services and now Lens Governance Advisors

Prince's plan to overhaul the company after its Japanese trading scandal and European bond-trading misstep is bearing fruit. His "five point" plan includes intensive employee training ("Our Shared Responsibilities"), good corporate governance practices, better communications and board independence. The video on the company's long history that is part of the training appears on the web site and goes a long way towards educating Citigroupers as to their shared history and obligation to the revered franchise.

Although early positive endorsements can be reversed with the slightest misstep, these thumbs up for Citigroup go a long way in building momentum and energizing its 300,000 employees. The key is not to forget that recovery is a marathon, not a sprint. Repuation recovery is never finished.

Cures for the Company Blues

2006-03-17T20:34:00.000-05:00

Terrifically fun week. We launched our little 5X5 book, Cures for the Company Blues: 15 Early Warning Signs of a Company's Failing Reputation.

Burson-Marsteller published the pocket guide and launched it mid-week.

How did this book come to life? We were brainstorming last December about how to release the findings from our recent reputation survey. Just the thought of another press release was too much for me to bear. Alas, a light bulb went on in my head and I knew that a mini-book was our solution. Years ago when I was at Fortune, I had a similar brainstorm and published Fortune Cookies: Wit and Wisdom from Fortune. This little book included quotes from Fortune edit that were instructive and resonated with readers (like me) -- e.g., Innovate or Evaporate! was my favorite.

Cures for the Company Blues identifies the 15 early warning signs of organizational failure, describes the symptoms that leaders need to pay attention to and provides several sure-fast remedies. The basic idea is that CEOs can address the problems that destroy their corporate reputations by keeping a watchful eye out for what is happening inside their walls and right under their noses.

C-Suite Reputation Rises

2006-03-15T21:03:00.000-05:00

Hill & Knowlton just released their latest wave of research on reputation. Their global research among financial analysts found that perceptions of the C-suite are more important in investment decision-making than business unit heads, chairmen or board members. Of course, the CEO still remains critical to driving investment dollars but the top team is now increasing in importance. Burson-Marsteller's research has found similar results.

A great example of showcasing your company's senior team comes from Cisco. Take a look at how Cisco provides information to investors and other stakeholders about their leadership team. Not only can we read these top managers' bios but we can browse through their speeches, presentations, perspectives, videos, etc. The top team is smartly on display and practically in your living room. You can choose whether you want closed captions or translations. Cisco makes it easy to witness the talent of their top team and vote in favor of the company. Worth studying.

Getting the Point Across

2006-03-14T21:13:00.000-05:00

Business Week's article on the changes at Boeing contained a particularly chilling tale. At its first retreat with senior management, new CEO James McNerney (from 3M) introduced General Counsel Douglas G. Bain who criticized the company for its "culture of silence." For those of you who have not been following the Boeing saga, the ethics charges against the leading aerospace company have been quite numerous over the past several years (stolen proprietary Lockheed Martin documents, recruiting a Pentagon officer who had committed the Air Force to buy Boeing tankers at an inflated price, removal of CEO Harry Stonecipher for having an affair with a subordinate). Business Week writes that to get everyone's attention, General Counsel Bain rattled off the federal prison numbers of two jailed former employees. "These are not Zip Codes," railed Bain. Loud and clear.

Ironically, this week I found myself teaching graduate students about corporate reputation and the case study was Boeing board's decision to oust the amorous CEO. Most students understood that CEO Stonecipher had to be ousted because of poor judgement and unethical behavior in having an affair with another Boeing employee and sending racy email messages. Yet, one student remarked that affairs happen all the time in corporate America and this incident was not reason enough to oust the CEO. Another suggested that Boeing's board should have told Stonecipher to quit seeing this woman or else lose his job. It took some convincing from the class's professor to persuade these students that integrity is a company's most valued asset in the reputation wars and without it, reputation is worthless.

When I was writing my book, I had investigated the Boeing web site to examine how it managed its reputation. I recall finding an online ethics test that employees and site visitors could take to rate themselves. Not sure that the test is still there but I can assure you that Bain's remarks had a greater impact on the organization than any electronic quiz on moral values ever could.

CEO Communications On Tap

2006-03-12T14:08:00.000-05:00

When asked how much time he spends communicating, Dell's Kevin Rollins says, "Can you go above 100 percent?" If you think about it, most CEOs would probably say the same. The job which used to be overseeing operations and holding court from the corner office is now a pure communications play. CEOs are expected to communicate with just about every conceivable stakeholder, From one to many, CEOs are judged on their ability to communicate well and effectively. I would be rich for every dollar I could make listening to officers tell me that their CEO does not communicate clearly, crisply, strategically or at all. I think we are going to have to extend the day to above 24 hours to get all those messages distributed and heard. Should also add that CEOs are now worrying about writing blogs to communicate even deeper within the organization. Who has the time? I applaud the effort but wonder if CEOs need another responsibility on their plates. Time will tell.

Reputation in Istanbul

2006-03-06T15:42:00.000-05:00

Reputation has reached Istanbul in a big way. The conference that I spoke at on Mobilization of Capital & Corporate Reputation was held yesterday in Istanbul and well-attended. It was sponsored by the Swedish Trade Council, Embassy of Sweden and Capital magazine. TeliaSonera, a Swedish-Finnish telecom company, was the main sponsor. Capital has been covering reputational issues for some time now and Sweden strongly supports Turkey's journey to joining the EU.

Many Turkish companies are eager to learn the steps needed to build global reputations to succeed today in this new century. Since the vast majority of Turkish companies are family-owned companies, the challenges are different and sometimes difficult as they give up stakes in their businesses in return for financial capital. A major thread in the conference presentations was understanding how to apply good corporate governance in order to attract foreign investment and build credible companies. As well, there was a focus on business ethics which we all know has to underscore good governance and well-led companies.

A discussion on business' responsibility to provide a profit vs. social good surfaced. Since many Turkish companies are family-owned, good corporate citizenship is apparently built into the social fabric of Turkey and has a long history among the largest Turkish family-owned businesses such as the Koc and Sarbanci families. The Financial Times had an interesting sidebar(February 22, 2006) by Vincent Boland on the social deeds carried out by a Turkish carpet company, Merinos. Merinos is the world's third largest carpet producer and one of Turkey's first 500 industrial companies. Boland (who writes often on the Turkish economy and business and is always interesting and well-informed) describes how this family-owned carpet business sent 25% of its 3000 employees on vacation last year to a five-star resort in the Mediterranean. As if that was not impressive enough, the Erdemoğlu family who owns the company built apartments for its factory workers to replace the poorly constructed homes that existed. As Borland quotes the leader Erdemoglu, "We all come from similar conditions and we want to help our people." A worthy and noble thought.

Turkey is definitely an interesting country to watch as it builds its reputation on a world stage. A good case study and best practice for the future.

Reputation Everywhere

2006-03-04T13:46:00.000-05:00

I am off to Istanbul to speak about Reputation in the Capital Markets at a conference sponsored by Capital magazine and the Swedish Trade Council. After much reading about how companies in Istanbul are trying to attract investors, prepare for joining the EU and become a truly global player, I understand why building strong reputations matter so much. Individual countries are not all the same as I keep learning. In Turkey, many of the largest companies (and many of the smallest too) are family-owned. This represents a very different challenge than countries where the companies are mostly held by their shareholders and large institutional investors. However, Istanbul sounds like a very vibrant business climate that is open to business partnerships and reform as its economy has vastly improved from early 2000.

Turkey's reputation has improved. Its accession to the EU in October 2005 -- and a 10 year process ahead of it -- has dramatically signalled to other countries and companies that Turkey is serious about joining the EU way of conduct and freedoms.

The greatest issues facing Turkish companies seem to be corporate governance which I will emphasize in my speech. After reading about the turbulent relationship between Motorola and its relationship with the Turkish Uzan family over its cell phone partnership, I realize that corporate governance needs improvement and better oversight.

More to come on reputation in Turkey.

Corporate Reputation Drivers

2006-03-02T07:36:00.000-05:00

"REPUTATION is a hot topic in executive suites, largely because the overall
reputation of business is so poor. Two weeks ago, the Business Council, a
group that includes chief executives of many of the largest companies in
the U.S., devoted a day to the topic at its retreat in Boca Raton, Fla.
Some executives expressed surprise that the negative effects of corporate
scandals have lingered for so long. Others felt victimized by a hostile
press. But all seemed to agree that reputation has become increasingly
important to their businesses." So wrote Alan Murray in yesterday's Wall Street Journal , "How Microsoft Rebooted Its Reputation." Our new CEO Mark Penn was mentioned in the article and also spoke at the Business Council that Murray refers to.

Reputation is indeed more important and not just because confidence in business is low. It is important because the intangible factors of business (talent, brand strength, patents, knowledge, technology, leadership, etc.) are rapidly replacing the tangible factors (real estate, machinery, inventory, etc.). Why does everyone forget that one of the reasons reputation is increasingly important is attracting and retaining the best talent?

Our latest research among global business influentials asked what drives company reputation. Below are the top five drivers. I am always fascinated by how these drivers change with the times.

Has high quality products and services (1)
Communicates effectively externally (2)
Has high quality management (3)
Focuses on serving customers (4)
Is honest with stakeholders (5)

Not entirely surprising to me, effective external communications rises to the number two slot. Transparency, honesty and accessibility are required for companies to build and maintain good reputations today. Communicating with the expanding universe of many stakeholders -- from bloggers to NGOs to alumni to regulators to online journalists to engineers to MBAs to academics to labor unions to hedge fund managers to institutional investors to boards (to name just a few)-- is not for the faint of heart.

America's Reputation

2006-02-28T20:27:00.000-05:00

There is an interesting poll among Economist.com readers in its special edition on what to expect in 2006. One of the findings is that 53% believe that America's reputation abroad will deteriorate this year. This is a sizeable change from October 2004 (pre-presidential election) when this question was asked and the figure stood at 44%. Clearly, America's brand health is on the decline.

Although I do not like to compare apples to oranges, I cannot avoid mentioning that President Bush's recent reputation ratings are equally low (around 33%). The link between President Bush's and America's reputation is not accidental. Just as CEO and company reputation is inextricably linked, the same goes for our president and America Inc.

I wonder how low these rankings will go over the next two years. I also wonder how these figures compare to other leaders and country reputations. Perhaps another new research idea.

Making Sense of the Most Admired

2006-02-25T20:18:00.000-05:00

For people who know me, I spend alot of time making sense of the Fortune Most Admired Companies survey which debuts every February. This year's list is out and on its way to subscribers' homes shortly.

After a brief departure when Fortune featured Most Admired Company brands on the cover instead of CEOs, we are back to the CEO standing in as the company. GE's Jeff Immelt graces the cover in the new issue (March 6, 2006). I am actually fine with their choice because afterall "quality of management" is consistently the prime driver of most admired reputations in nearly all the industries that Fortune surveys (actually the Hay Group does the survey work). And as Fortune notes, GE is America's Most Admired for the sixth time in the past decade. No small feat.

Interestingly, Fortune is only displaying the top five or six companies per industry grouping in the issue. The remaining companies in each industry are listed only on the web site and dubbed "contenders." Contenders is a better term than "least admired."I assume that Fortune was getting tired of companies ranking eight or nine and issuing press releases calling themselves "most admired" when they really are not by Fortune's definition. At least this way the top most admired companies are truly the 2006 most admired "class." Makes sense to me.

Although many of the most admired in the top 20 list are consumer-oriented (GE, FedEx, Southwest, P&G and Starbucks), it would be interesting to just look at which b-to-b companies would make it to the top 20 most admired. I am going to check that out since b-to-b companies could use the attention and distinction.

I will continue to write about some random thoughts about the most admired as I dig in deeper.

No Smoking Gun

2006-02-22T08:08:00.000-05:00

"There was no smoking gun, but there were innumerable brush fires," said well-known Harvard professor Howard Gardner about today's resignation of Dr. Summers and reported in The New York Times.

Gardner's statement is similar to a quote I often use about ripples turning into tidal waves that ultimately tarnish company and CEO reputations. The quote comes from former Morgan Stanley CEO Phil Purcell who said upon his resignation: "It was many, many little waves. It wasn't one storm."

Another good one was spoken by a German shareholder about quality problems at Mercedes and reported in the March 4, 2005 Financial Times: “You don’t break a car company over night. You really need to fall asleep at the wheel.”

Organizational or leadership failure is hard to ignore. The controversies surrounding Dr. Summers were easy to see -- leadership miscommunication, faculty departures, decline in fund-raising and diminishing benefit of the doubt. For Summers, there were too many brush fires to keep putting out. He ran out of time and water.

What is On Your CEO's Book Spine?

2006-02-20T17:44:00.000-05:00

A favorite question to ask CEOs or just about anyone in business goes like this.

Former IBM CEO Lou Gerstner's book is titled Who Says Elephants Can't Dance? If you had to pick a title for your book [or chapter], what would it be? This question gets CEOs to think about what they really have to say that is worth 250+ pages of someone's time and which ultimately goes down as their enduring legacy. Not an easy question to answer in five or six words (the maximum book spine length).

While reading about GE's Jeff Immelt last week, I found an article where he answered the question without even being asked. He was speaking before an audience at M.I.T. when he said: "If I were to give you a chapter of my business book, it would be called, 'Two Million Dollars From Greatness.' I can't tell you how many GE leaders give me the excuse that 'I could fund new innovations, but I can't afford it. I can't fit it into my budget.'" Immelt explains that these are the same leaders that have billion-dollar budgets. He must get this response often if he could fill an entire chapter on how two million dollars is not reason enough to excuse a shortage of breakthrough products and ideas.

Good question to ask your chief executive next time you bump into him/her in the elevator -- what will be on your book spine?

Bad Headlines Do Not Impact CEO Pay, Then What?

2006-02-20T16:43:00.000-05:00

David Larcker, Professor of Accounting at Stanford Graduate School of Business, joined with two other professors from The Wharton School to assess whether negative media coverage on CEO compensation resulted in reduced executive pay. Seems to me that the answer had to be a resounding "yes." I would never want to be embarrassed like that before the people I work with every day. Every time I pick up Sunday's New York Times Business section to find Gretchen Morgenson skewering another company for exorbitant CEO pay, I imagine some red-faced CEO skulking into work the next day.

Astonishingly, Larcker found that negative press attention about CEO salary had little or no effect on how much chief executives get paid. The authors examined 15,000 press articles on CEO compensation between 1994 to 2002 and found little change in how much companies paid their chieftains despite harsh criticism from journalists. Larcker found that negative press pay outings serves two different needs, unrelated to lowering CEO compensation. First, people want to be entertained and journalists are doing a good job making us laugh with those headlines on $6,000 shower curtains and free seats to Red Sox games. Second, Larcker and fellow researchers think that negative media coverage on executive compensation actually makes us look more closely at the board and wonder how well they are handling their fiduciary responsibility to shareholders. I guess that the attention on CEO pay fades in comparison to the pressure that gets placed on the board's behavior for awarding that much money to one person in the first place.

I know David from Wharton and am glad he is pursuing the media and CEO angle. More and better information on the intersection between corporate behavior and the media is a bonus and I look forward to further insights from the team. Although this is just a working paper, Larcker states "For example, we are also analyzing interviews and other communication in an effort to detect lying by corporate officers. Such research promises to provide new insights in predicting accounting restatements, fraud and stock price performance."

Are CEO lie detectors next?

Reputation That Never Dies

2006-02-17T21:46:00.000-05:00

Recently we asked how long it takes for people to forget a corporate crisis. For a long time, it seemed that this was a reasonable question. Clients in turmoil often ask us how long it takes before a crisis fades in people’s minds and no longer makes headlines. [I bet VP Dick Cheney was asking himself this very same question this week.] The results are not too favorable.

When global business influentials were asked about the shelf life of a crisis, they reported that it takes about two years before it loses saliency. I think now that they are wrong. Call me dense but I recently realized that crises, scandals and wrongdoing never make it to the reputation graveyard. With the Internet, a crisis now lives on forever. Martha Stewart has been out of prison for several months but the Inclone stock debacle always comes up highly “relevant” when her name is typed into google or yahoo. [Dick Cheney's reputation will always include some reference to his shooting error.]

Reputational brevity is a thing of the past.

CEO PR Men

2006-02-13T21:11:00.000-05:00

In a new survey among nearly 4,300 global business executives and recently released in the McKinsey Quarterly, only eight percent believe that large companies champion social or environmental causes out of "genuine concern." Fairly skeptical bunch. Equally disturbing was the finding that almost nine out of ten global executives agree that large companies are motivated by public relations or profitabilty. This is not a pretty picture.

One thing I have noticed over the past several years is how CEOs will qualify their thought leadership platforms by saying "this is not about public relations." Lord John Browne of BP says this a lot in his speeches. Mind you, he is one of the best pr people in the world. BP's "beyond petroleum" campaign has been a brilliant public relations effort to inform people about global warming, alternative fuels and social responsibility.

Citigroup's CEO Chuck Prince's seven second bow heard around the world is another display of whip-smart public relations. Prince wisely acknowledged the role that Citigroup played in Japanese trading scandals and publicly apologized for his company's behavior. His actions (which I applaud) highlighted his values in practice and his commonsense gesture saying he knew how to share the pain.

Public relations is about relating to your various publics. Since when was communicating with your portfolio of publics a bad thing.

Do Not Lose the Plot

2006-02-12T19:50:00.000-05:00

When I run out of new things to write about, I go to my quotes for inspiration. Lord John Browne of BP was interviewed on CNN and I found this quote (14 June 2004, cnn.com):

“My biggest mistake was to worry about things in too much detail and losing the picture once in a while. I always say to myself that the most important thing is never to lose the plot. No quarter passes with perfection. No year passes with perfection. The real question is: Are you sticking to the plot.”

Good advice to everyone in business today -- keep your eye on the plot.

How to Differentiate Your Company

2006-02-11T17:15:00.000-05:00

Someone provided a quote from Bill Gates in Fast Company's blog about how to distinguish a company: "The most meaningful way to differentiate your company from your competition, the best way to put distance between yourself and the crowd, is to do an outstanding job with information. How you gather, manage, and use information will determine whether you win or lose." Apparently the quote came from a recently released book from Fast Company titled The Rules of Business: 55 Essential Ideas to Help Smart People (and Organizations) Perform At Their Best.

As someone who deals with information alot, I totally agree with Microsoft's chairman. Information is the most valuable currency that an individual, company, CEO or other stakeholder can have. Without knowledge of trends, business shifts, global patterns, industry competition, reputational threats, external stakeholder perceptions, employee concerns (need I go on), companies will slowly die. Siloed management with no peripheral vision leads to organizational failure.

Leaders need to be informed. They must be information-addicts in order to understand how their decisions fit within the context of business and society.

I recall a story I heard GE's Jeff Immelt tell. He said that while he travels, he always reads articles, magazines, newspapers and trade publications ranging from the typical- to atypical- CEO reading matter. He rips out pages and sends them to different individuals at GE. Immelt said that he wants to keep people on their toes and to realize that their CEO is gathering information all the time to compete more effectively. Employees always gasp when they get these torn pages and live in fear that there is some piece of information that is mission-critical to their futures.[Reminds me of some research we did with Fortune several years ago among global CEOs. We found that 73% of CEOs say they often rip a page out of a newspaper or magazine for future reference or to pass on to someone else.] A common CEO tactic.

Information and knowing what to do with it makes all the difference in the world.

Non-Profit Leadership & Reputation

2006-02-08T19:56:00.000-05:00

Non-profit reputation is on my mind right now since I have to speak to several non-profits next week about building reputation. I started reading Jim Collins' Monograph Good to Great and the Social Sectors: Why Business Thinking Is Not the Answer to find some answers. Collins essentially says that the primary path to greatness in the social sector is NOT to become “more like a business.” After talking to people and trying to understand how non-profits operate when their outputs are not economically-oriented, he comes to the conclusion that the social sector needs to shift from being an economic engine to a resource and mission engine. As he says, "The critical question is not 'How much money do we make?' but 'How can we develop a sustainable resource engine to deliver superior performance relative to our mission?'" [I am not doing justice to the monograph so please get a copy.]

Collins' monograph is required reading for anyone who loved Good to Great and is interested in how organizations can be run without the hierarchy that supports and surrounds CEOs. Collins highlights how public companies keep everyone in place with concentrated executive power -- unlike the social sector where executive power is diffuse. He tells a wonderful example on page 10 that sums up the differences and made me think of Harvard's President Larry Summers newest no-confidence motion reported in today's Wall Street Journal. A corporate CEO went to work as an academic dean but eventually quit ("one of the most draining experiences in my life"). Collins says that another university officer he spoke to nailed the reason why the CEO-dean departed. Referring to tenured faculties, the officer said: "A thousand points of no."

In corporate America, we often have too many points of "yes" but the above example summarizes how hard executive decision-making is when you leave America Inc.

A Living Annual Report

2006-02-06T20:52:00.000-05:00

I know I am getting carried away with my idea of turning an annual report into a blog to be written by employees (see my entry for February 1st, Out of the Mouth of CEOs). But now I have a name for it -- The Living Annual Report.

Here's a new twist. During a conversation I had this afternoon with a gentleman who heads sustainability for a foreign bank, we got to talking about turning sustainability reports into blogs that are always "open." Imagine a sustainability report that is a blog where community residents, employees, NGOs, corporate citizens of the world, receivers of a company's largesse, laborers, academics, students, alumni, social investors, etc. could comment and respond on the company's record. Both an exciting and frightening idea.

Reputation would be utterly transparent. Had to share it now that I found a name.

Fortune 500 Blogging

2006-02-05T17:55:00.000-05:00

In the executive summary from Richard Edelman's session on building trust in public and private institutions, a mention is made that there are only 20 blogs in the Fortune 500. In a wiki mentioned on Debbie Weil's CEO blogging site, a reference to a business blog wiki reports that there are 22 Fortune 500 blogs today. Close enough. Still very small. Here is the list:

Amazon.com Inc., Amazon Web Services Blog
Avaya Inc., 2006 FIFA World Cup Blog
Cisco Systems, Inc. Cisco High Tech Policy Blog
Cox Communications, Digital Straight Talk
Dell, Inc Linux Engineering
Electronic Data Systems, EDS' Next Big Thing Blog
Ford Motor Company, 2005 Mustang Blog
General Motors Corporation, FastLane Blog
Hewlett-Packard Company, HP Blogs
Honeywell International, HoneywellnbspBlogs
Intel Corporation, Intel Geek Blogger
International Business Machines, Guide to IBM Blogs
Microsoft Corporation, MSDN's Microsoft Blogs
Motorola Inc, Motoblog: 4 bloggers & a phone
Oracle Corporation, OraBlogs
Sprint, Things That Make You Go Wireless
Sun Microsystems, Inc Jonathan Schwartz
Texas Instruments, Video 360 Blog
Time Warner Inc, Jason Calacanis' Blog
The Boeing Company, Randy's Journal
Viacom International Inc, Real World/Road Rules Blog
Xerox Corporation, Palo Alto Research Center

Many of these big company blogs are in the technology field (Microsoft, Oracle, Sun Microsystems, Dell, HP) although some are considered non-tech such as Boeing, Ford, GM and Time Warner. Other non-Fortune 500 companies with blogs include Stonyfield Farms, Yahoo! and Google.

Several years back we counted how many Fortune 500 companies had internet addresses since that was fairly new at the time. I recall that Interstate Bakeries (remember Wonder Bread?) did not have a url and how bizarre we found that. Five years from now, I expect we will consider it strange that there are Fortune 500 companies without blogs.

My prediction is that employee blogs will be ubiquitous by 2010 and a welcome one at that. The big conversation will be nearly universal.

Google's Reputation Fault Line?

2006-02-04T20:51:00.000-05:00

In the Financial Times editorial today (4 February 2006), the talk was about Google's recent share price jitters (Google reported that its quarterly revenue last quarter was only 97 percent higher than one year ago!) and its decision to launch a censored Google in China. The editorial page seems to believe that Google's reputational fault line is beginning to fracture. The editors "fault" Google for allowing Chinese politics to impact Google's mission of providing unfiltered access to information and freedom of expression. The FT sees Google's China decision as giving competitors an unwarranted edge and some additional yuan: "Reputation matters when rival search engines are just a click away." They are right about that. For the 100 million Chinese users, they do have choices -- Baidu.com, Yahoo! and Microsoft's MSN. They are,however, less right about Google losing reputational equity. In the long run, Google might be approaching the problem the enduring way -- for the greater good.

The popular search engine follows a basic tenet of building sustainable reputation. They are reaching out to a critical stakeholder group and getting a meaningful dialogue going with Chinese regulators and law-makers. Google is also bringing in others by recommending an industry action coalition to provide guidelines on how to deal with countries like China that restrict information. Unlike some companies and countries, Google is saying it does not have all the answers today. It intends to listen hard versus "my way or the highway."

So what is Google doing in China to sustain its reputation as a transparent and open information provider? First, it is not shutting down the existing uncensored Google that takes forever to access because of its dependence on non-local servers. Second, Google will notify users on its local-server Chinese search engine (google.cn) whenever information is being withheld. Third, Google is staying away from email or blogging services for now in order to prevent future demands from the Chinese government to cough up user identities.

Another argument that carries reputational resonance is that an easily accessible google.cn ultimately provides more information to Chinese users than if Google was locked out of China altogether. As noted prominently on Google's About Us page, "We believe that our continued engagement with China is the best (and perhaps only) way for Google to help bring the tremendous benefits of universal information access to all our users there."

Reputations are built on incremental, consistent steps along the way. Although some see Google's self-censored Chinese offering as inconsistent with its mission and evidence of reputational fallibility, stakeholder engagement is a big small step in the right direction.

Out of the Mouths of CEOs

2006-02-01T17:11:00.000-05:00

I often review the quotes or smart sayings that come out of the mouth of CEOs. I save them because they can actually be profound in their simplicity.

Jack Welch's Straight From the Gut offers such an example. The former GE CEO posed this simple question to employees: “Is the company you read about in the annual report, the company you work for?” Perhaps all employee satisfaction surveys could ask this question (assuming that employees get a copy or read their annual report online). Or maybe a company will let employees actually write their own annual report just like high school students compose their year books.

My daughter worked one summer at a magazine where they had the readers (teenagers) put together an entire issue. They housed the teens from all across America in New York and paid them for their time. The magazine was awesome, cutting edge and less sanitized than most magazines for that age group. It was a hit.

Maybe the time has come for employees to look more deeply at their annual reports and mandatory "letter to shareholders" from CEOs or chairmen. In fact, why not turn the CEO's shareholder letter into a blog and ask readers, employees, investors, alumni, journalists and others to respond. Now that's a simple idea.

CEO Churn

2006-02-01T16:03:00.000-05:00

We released our findings yesterday on how many Fortune 500 CEOs exited their jobs in 2005. CEO Churn is on the increase (into the stratosphere):

1.CEO departures increased 126 percent since 2000 (129 CEO departures in 2005 versus 57 in 2000)
2.CEO departures increased 32 percent year over year (129 CEO departures in 2005 versus 98 in 2004)

One has to wonder why anyone would want the chief executive job in the first place. Boards are less patient and as worried about financial liability as CEOs. There is no room for failure or risk-taking. A top recruiter once said: "We are asking them to pitch no-hitters every day." I have always thought that all those departed CEOs should not take up golf but be more proactive about this sorry situation. An Advisory CEO Corps could be established to mentor CEOs as they begin new jobs or hit particularly rough patches in their tenures. Perhaps the Business Roundtable could provide a rotating selection of seasoned CEOs willing to provide counsel for these pressured captains of industry who do not know where to turn.

Although I would like to be able to say that better leadership training is needed, most CEOs report that nothing prepares you for the job.

Outsider CEOs -- The Nike News

2006-01-30T22:37:00.000-05:00

Surprising news out of Nike last week. Or perhaps I should say "not" so surprising. Few outsider CEOs are as lucky as IBM's Lou Gerstner, the ultimate outsider. The Nike succession plan probably soured due to several predictable factors:

1. Phil Knight, former Nike chairman, CEO and co-founder, was obviously not ready to give up his top dog role. He undoubtedly clashed with incoming CEO William Perez's decisions. Most founders do not enjoy sharing power.
2. New CEO Perez spent nearly 10 years at S.C. Johnson, a privately-held, family-controlled company. Nike is a publically-held company with a wide range of stakeholders that may have been difficult for Perez to get his arms around -- a board of directors vs. a family that does not want to shake the boat.
3. Nike makes sporting equipment and renown running shoes while S.C. Johnson produces brands such as Glade, Drano and Pledge. The emotional resonance of the Nike brand probably takes some getting used to.
4. Nike's culture is built on creativity and Knight is not known for his by-the-book leadership skills. Perez, on the other hand, is known for his masterful organizational skills. Creatives vs. process-driven are polar opposites.
5. Most outsider CEOs deliver less long-term shareholder value than insider CEOs. Apparently outsider CEOs begin their tenures with lots of action, decisiveness and new ideas. They are known for quickly losing interest when it comes to the mundane activities of running a business. Insider CEOs create less hoopla but know the culture well, have a cadre of loyal supporters and know the blind spots.

It needs no repeating but succession rarely works if the iconic CEO does not leave the premises shortly. Think about Jack Welch's smart exit. Knowing when and how to leave is a CEO's finest hour.

Great CEO Communications Lesson

2006-01-28T13:04:00.000-05:00

I hate to overlook an excellent CEO lesson even when it comes from my own company Burson-Marsteller. The lesson was so perfect (in its uniqueness) that it still sticks with me days later.

During my visit to our Tokyo office, our Asia-Pacific CEO Bill Rylance gathered the office together for a slide show on his trip to Africa with his 13 year-old-son Eliott. Bill spoke for nearly an hour taking us through their three-week journey climbing mountains and living with the Maasai tribe. [You should know that Bill rarely takes vacation but his son's birthday was a milestone he wished to mark. As he explained, a male 13-year-old Maasai turns from boy to man during this time and is sent to live on his own in the bush for 90 days after the ritual of circumcision. He wanted Eliott to experience this passage as special too (circumcision not included).] What was remarkable to me was this glimpse into our CEO's non-work life, his family values, the legacy he wishes to leave his son and those enduring "teachable moments" imparted to his young man.

You can learn alot from what pictures people take. Bill's photos were of faces -- the faces of natural beauty, magnificent animals, beautiful young and old Maasai, smiling guides, blinding sand storms and exhausted father and son. The cameradie among those making the journey with Bill and son was also striking.

The colorful slide show was more than another workday powerpoint presentation. Our AP CEO shared glimpses of his inner life and added a new dimension to who he was beyond a smart, hard-working, hard-charging committed CEO. He no longer stood there as chief executive but as a father, journeyman, guide, servant, pupil, friend and adventurer.

I tried to think about other CEOs who might have communicated to employees this way. Not many. But Bill reminded us all of our humanity, collectiveness and ability to touch one another in ways that are not "billable."

An impactful lesson worth repeating.

Tony Blair's Day in the Life

2006-01-27T09:30:00.000-05:00

On the 10 Downing Street web site, Prime Minister Tony Blair has his own version of A Day in the Life. The four minute video is worth listening to as an interesting form of communication for such an important and busy person. Blair tell us that there is no such thing as a typical day as prime minister, the job comes with an entirely "different order of stress" and requires being able to switch from one subject to another in a heartbeat. Kind of fun as leadership examples go.

More challenging than being filmed for a short snippet is PMQ. Blair participates in the Prime Minister's Question Time (PMQs) 30 minutes each week. MPs get to ask him questions on any subject. The questions usually focus on the key issues of the day. These sesssions are also available on the Downing Street web site. Hard to imagine President Bush being open to this type of unrehearsed format and challenging questions.

Worth thinking about for CEOs who want to be transparent.

Tokyo CEOs

2006-01-26T02:09:00.000-05:00

Tokyo business seems to be churning in many different ways. The Livedoor incident where the young entrepreneurial Internet CEO Horie-san was arrested and charged with financial irregularities has the public divided. On one hand, elder business people are glad that this young upstart who snubbed their ceremonial ways got his due. In contrast, many younger people are dismayed that this inspiring maverick has been proven to be as bad as the Enron bandits.

The entrepreneurial spirit that was kindled by Horie-san has been dampened for the time-being. Unfortunately there is no one to take his place. The Livedoor incident raises the problem of independent board members (not many in Japan), celebrity CEOs vs. credible CEOs (Horie-san was more the former than the latter) and building relationships with ALL stakeholders (the brash CEO seems to have ignored the regulators he needs now -- reminded me of Bill Gates and Microsoft a decade ago).

However, despite the recent bad news, business is indeed changing in Japan. More CEOs are accountable for losses and bad performance (NEC, Pioneer, Sanyo), CEOs are getting abit younger (from 60 years 10 years ago to 55 now), financial performance is trumping consenus management (Matsushita and Canon) and outsiders are starting to populate the CEO-set (Sony's Stringer and Nissan's Ghoan). I am confident that change is afoot.

Once my head clears from all the smoke in the airport waiting room, I will give you some more thoughts.

CEO Capital in Japan

2006-01-22T18:12:00.000-05:00

Japanese CEOs have alot to teach us. Since I am speaking at several events in Tokyo this week as my book was translated into Japanese, I have spent time reading about how CEOs build corporate reputations in Japan. Of course, we all know about the success of The Toyota Way and its enduring leadership example. However there are many other interesting lessons for the taking.

One example comes from Canon. Canon's president Mr. Fujio Mitari understands the meaning of building mutual trust among his senior team. Every morning at 8am he convenes an unofficial meeting of senior managers to just talk. There is no agenda or theme to the conversation. He does not take roll call or minutes. The meeting is meant to build cameradie and exchange information, be it sports, work or the weather. "When you meet people face to face and engage in casual conversation with them every morning, you come to better understand their personalities and the way they think. It helps to build trust." Additionally Mr. Mitari believes that meetings such as these helps to spread Canon values and traditions down through the organization.

What a fine way to begin the day.

Do CEOs Count Sheep?

2006-01-21T16:09:00.000-05:00

I laughed out loud while reading an interview in SmartMoney with Ramani Ayer, CEO of The Harford, the 10th largest insurer. A typical CEO interview question is if the chief executive has trouble sleeping at night in light of all the challenges and pressures of running companies today. Most CEOs say they sleep like babies giving the impression that they are confident about their decisions and do not second-guess themselves. I can confidently say that nearly 95 percent of CEOs who have been asked this question by journalists respond by saying they do not stay awake counting sheep. Of course, many of us non-CEOs lay awake at night worrying about what we did that day, said or did not say.

Therefore I have to hand it to Mr. Ayer. When asked by writer Evelyn Twitchell about how his nights go,the CEO said, "I sleep like a baby -- I get up every two hours and I cry." I know that his comment was meant to be tongue-in-cheek but my immediate reaction was here's a CEO with a true human side (and a nice touch of humor). It was heartening to read and quite commendable.

Communications as Reason for Departure? Huh?

2006-01-18T07:57:00.000-05:00

Today's Wall Street Journal (1/18/06) reports that Hyundai Motor America replaced its CEO with a new CEO. One of the reasons quoted in a statement that the Journal was obviously privy to was to "enhance communications." The Journal went on to say that Hyundai wanted "better communication at the CEO level with the U.S. office." Mr. Bob Cosmai steps down and Mr. Ok Suk Koh steps up. The change in leadership was apparently a surprise.

I have two reactions. First, it is not often that executive communication becomes a reason for a CEO exit. We usually hear about poor earnings, slowed growth, misstatements, poor handling of a crisis, financial irregularities, etc. Trust me, if they had asked me about what CEOs need to be good at today, I would have told them that effective CEO communications is an absolute must. Our research has repeatedly shown that internal communications from the top is a prime driver of favorable CEO and corporate reputation. CEOs do not have to be charismatic communicators but they do need to be open and motivate the employee workforce.

Second, I went to the Hyundai Motor America Web site to learn more about the unexpected switch and found no mention. Tried the Hyundai international Web site as well and found no clues. Seems that for a company using executive communication as a reason for a sudden changing of the guard, Hyundai's communication with its stakeholders would be forthcoming. The last news release on the U.S. site was January 10th,"Hyundai Azera Named Best New Luxury Family Sedan."

I guess I should be happy just knowing that enhanced CEO communication is getting its due.

CEO Direct

2006-01-16T17:38:00.000-05:00

My London colleague sent me some information she found online about how to best reach CEOs. The insights came from a blog called the consumerist. Basically there is a 4-step approach to get the CEO's ear with your complaint or criticism. A CEO-proof strategy is also provided. Here they are:

Step 1: Go to Google, find out where your problem company’s headquarters is located. Sometimes you can find this on the corporate part of the company website as well. Good search terms include: Company X headquarters and Company X corporate offices.

Step 2: Find the phone number for that location. Use switchboard.com, Google, superpages, or yp.yahoo.com.

Step 3: Use Google or the company site to determine the president’s name or the name of the executive you are looking for.

Step 4: Call the number after the main offices have closed. Generally one of the first choices available is the option of using the directory. Start by dialing the CEO’s last name and you will get to the CEO’s voicemail box or one monitored by his assistant which is generally good enough.

Making your case:
--Praise the company’s past service or products
--Focus on one problem while maintaining a positive tone and pleasant demeanor
--Always being professional and concise

I recall that Robert Crandall, legendary CEO of American Airlines, used to list his telephone number in the phone book for customers to call (hoping that they had some restraint on calls at 2am). This old-time CEO assumed that was his job -- hearing from customers who were dissatisfied!

Good luck to anyone who reaches a CEO voice mail or actual person. Let me know if it works.

PR Industry Gets Reputation Boost

2006-01-15T18:18:00.000-05:00

A recent article (14 January 2006) in the Financial Times reported that Prime Minister Blair's son Euan Blair would be working at pr firm Finsbury Group for two weeks. The reporters note that young Blair will now see how pr truly influences the decision-making and strategic choices of the high and mighty. Reporters' Saigol and Croft write: "As Euan Blair's interest shows, it has also become a desirable profession for graduates. A quick glance around London's PR community reveals that it is the profession of choice for many figures of the establishment, particularly those with political links." It is nice to see something positive about the industry. The pr industry is not all about celebrity endorsements and spinmaking as the pundits make it out to be. Most pr professionals provide sound, thoughtful advice. After all, good public relations counsel can make or break a company's reputation.

I am glad that Euan Blair is giving pr a chance. The industry deserves more respect. Next I hope to see Princes' William and Harry learning the craft.

CEOs and Work/Life Balance

2006-01-14T16:23:00.000-05:00

One of the prime reasons that upcoming executives do not want to be CEO is the lack of work/life balance. When you look at the coverage of work/life balance in major global news and business publications, there has been an increase of 262% from 2001 to 2005. No surprise then that rising execs have this on their minds. For the younger generation, having a life in addition to work does not escape them either. For the first time, a Universum study among university students cited "balancing work with personal life" as the most important career goal. A large 54 percent put this goal as their top ambition.

The focus on a balanced life has not escaped marketers. In Fast Company, two campaigns are cited that focus on having a life. Ikea's campaign -- www.lifeoutsidework.co.uk -- features a Work-Life-Balance'O'Meter and Beringer's -- Living5to9.com -- has a time-to-go-home alarm. Blackberry would do us all a favor by locking down at a reasonable hour. However, I guess that would defeat its purpose.

I was thinking about work/life balance today (as I was working) when I received an e-mail from Aaron Kwitten who led the North American region and largest unit of Euro RSCG PR Worldwide. He left to start Kwitten & Company, an "intelligent" (their positioning) pr firm (www.kwitco.com or www.kwittkenandcompany.com).

In his e-mail announcing the new firm, Kwittken remarked that his "firm is rooted in seven non-negotiable principles," one of which is "Family/life balance obligations always come first, always." Interesting commitment for a pr firm and one that is probably on the cusp of something very important.

Ghosn & Japanese Management

2006-01-12T21:21:00.000-05:00

Lately I have been reading about Japanese CEOs because I will be paying Tokyo a visit. Although I read Carlos Ghosn's book, Shift, I did not realize the deep impact he had on Japanese business thinking. As you know, Brazilian-born Ghosn was sent to Japan on behalf of Renault to turn around failing Nissan. To many people's utter surprise, he revived the car company and changed the insular culture of Nissan's management. He was hailed a company hero. A comic book was written about him as pictured above. I recall reading two years ago that Japanese women were offering themselves up to Mr. Ghosn to have his babies! Ghosn-mania.

Ghosn's success conveyed the message in Japan that good management can make a difference. The impact of the leader or CEO is now believed to have a profound impact on the company's reputation, bottom line and market value. Japan will always have CEOs who are humble, modest and consensual. But Ghosn's aggressive and American-Euro management style undoubtedly changed the world order in Japanese business for good. My trip should be interesting.

Sago Mine Communications

2006-01-10T20:53:00.000-05:00

Do you agree that the communications fiasco at Sago Mine was shocking?

Several facts are hard to understand. The Sago Mine web site had no information on its home page until they hired pr firm Dix & Eaton. We have been auditing Web sites of companies in crisis for years now and Lesson #1 is acknowledging that something has happened and quickly informing your publics online. We began auditing Web sites of companies in crisis after 9-11 and many of those lessons should be second-nature today.

Second, there was obviously no one advising the company's leaders on how to communicate during this trying time. Neither was there any press source to turn to. Instead the president Ben Hatfield was fielding questions and the miners' families and pastor were all talking to the press and breaking news. Yet another Lesson -- identify one person to speak on behalf of the company and no more. All news starts and ends with that person.

Not sure if you have heard of the Hot Shots. They are the elite team of professional wildland firefighters. The rule is that the first person who lands on the ground in the vicinity of the fire is the boss. He/she is in charge. Sago Mine needed one person in charge, not a village.

The reputation of the mining industry has to be reeling. Hopefully with good wishes and wise counsel they will get back on their feet.

Corporate CPR

2006-01-08T17:41:00.000-05:00

Carl-Henric Svanberg, CEO of Ericsson, has been credited with the turnaround of the Swedish mobile telecom company. In an interview with the Financial Times on 20 March 2005, he said: “We had only one bullet, only one shot to make it right.”

It is not unusual for CEOs to think that corporate resusitation requires just one deep breath or single bullet to make things right. However most of the turnarounds we have witnessed require more than one hit. Most turnarounds consist of many small steps that collectively add up to success. It is these consistent incremental actions that make the difference between success and failure, not one big lunge forward.

To Mr. Svanberg, he probably felt that he had only one bullet to transform the company and keep it out of imminent danger. Obviously Svanberg hit his target between the eyes. I think that if he looked backwards over the past three years at the make or break decisions along the way, he would see that there was a pattern of many small breathes that revived the patient.

Reputation & Communications

2006-01-06T18:30:00.000-05:00

Good communications and reputation go hand in hand. Research consistently shows that the most admired companies have effective top-down communications. Information flows from the top to bottom and back up.

I always like reading Watson Wyatt's research on the ROI of effective communications. The newest study (2005/2006) found evidence that communication effectiveness is a leading indicator of financial performance and that companies that communicate effectively also have...

**19.4 percent higher market premium than companies that do not
**higher levels of employee engagement
**lower turnover rates than peers.

These findings are staggering if you are concerned about talent and growth. It makes you wonder why companies do not treat communications as seriously as financial and legal matters. Amazon CEO Jeff Bezos says: "It is not our job to convince people of our strategy. It is our job to articulate it clearly." How often can you say that you worked in a company where the CEO thinks this way about communications? Maybe once in a lifetime.

CEOs and leaders have to plan their communications, coordinate communications internally and externally, and measure the impact. I know one well-respected company that surveys its employees monthly to see if communications are cascading downward and being understood. When the information is not reaching the right people or is too complicated, supervisors are asked to repeat the messages and clarify any ambiguity.

Reputation is many things. Good communications only helps.

Reputational Failure

2006-01-04T17:07:00.000-05:00

I would be remiss if I did not mention that an article I wrote (with my colleagues' help) about the early warning signs of organizational failure ran in The Wall Street Journal Manager's Journal on December 27th. It is below.

As the new year begins and leaders return to their offices, it is important for chieftains to recognize internal signs of wear and tear that could halt their progress in 2006. Some of the telltale signs are mentioned in the article and eight more will be released later in the month.

Equally important, employees who see these early warning signs should speak up now and get their message to the right people. Every organization has people who are receptive to hearing about trouble and who will effectively deliver the message. No sense in sending out your resume unless you have tried to get the message upstairs or have tried to do something about it. Some companies provide anonymous hot lines and confidential e-mail addresses. Put them to use!

As the new year moves forward, get your house in order so that your company's reputation is safe from harm.

*************************************
Manager's Journal
On Business Storm-Proofing
By Leslie Gaines-Ross
895 words
27 December 2005
The Wall Street Journal
A14

AFTER PHIL PURCELL resigned from Morgan Stanley, he spoke not of opportunities lost but of warnings missed. "It was many, many little waves," he said. "It wasn't one storm."

He might as well have been speaking of the ebb and flow of the reputations of companies and the people who lead them. In the end, a good reputation is the most competitive and valuable asset of any individual or institution, but it can be easily eroded. In our ongoing survey of 685 global business leaders in 65 countries, some 81% report that there are more company reputation threats today than there were two years ago.

Great reputations are not accidents; they are not the result of good luck or built overnight. They are carefully planned, nurtured and managed as the vital asset they are. Likewise, reputations are not always destroyed outright, but are often gradually eroded by a ripple effect.

However, there are clear warning signs -- or little waves -- that signal a company or leader is in trouble. The good news is that in corporate life, as elsewhere, early detection is critical in damming against the oncoming surges. If leaders can identify the signs of oncoming reputation failure, they can take immediate steps to halt its progress.

This is not as difficult as it might sound. In Burson-Marsteller's research, we were struck by the near universal agreement of the order and magnitude of the early warning signs. Remarkably, business leaders across all regions -- North America, Europe, Asia-Pacific and Latin America -- listed virtually the same seven conditions in virtually the same order: (1) Employee morale is low. (2) Internal politics are more important than doing the job well. (3) Top executives are departing. (4) CEO celebrity is displacing CEO credibility. (5) Employees speak of customers as nuisances. (6) Employees stop telling positive stories about the company. (7) Management spends more time inside than outside headquarters.

If any of these signs sound familiar, then it's time to take an objective look at your company and begin the challenging process of protecting your company's reputation while there's still time.

According to published reports, these signs should have been evident to Mr. Purcell toward the end of his tenure at Morgan Stanley. Top executives were bailing out; others were politicking internally by anonymously bad-mouthing Mr. Purcell to reporters. And, customers complained of feeling unappreciated.

Yet every one of these issues can be resolved if management heeds the warning signs. Take the issue of low employee morale. Companies need to keep a closer eye on employee satisfaction and make better use of internal communications. It also doesn't hurt to have an approachable boss who regularly walks the halls. Internal politics can be minimized when leaders set -- and adhere to -- a policy that is based on a meritocracy and incentivizes employees in different departments to think of themselves as teammates. Motorola CEO Ed Zander had this type of silo-busting in mind when he had the company's marketing and public relations employees spend a day in the company's lab.

Talented executives are always in demand, so some high-level departures are inevitable. However, companies can stem the turnover tide by frequently updating their succession plans, developing one-on-one relationships with their rising stars and, when high-level people depart, seriously considering and acting on exit interview comments. Companies should also avoid the temptation to turn the CEO into a celebrity. Instead, they should choose select exposure -- rather than over-exposure -- and promote the c-suite as a team so that continuity is protected in the event of a CEO departure.

Know any positive customer stories? Then begin every internal communication with one to remind all employees that customers are not annoyances. Having senior executives staff the customer service lines now and then, and listen in on disgruntled customer calls, are other good ways to keep the focus on the customer. As Wharton Professor Robert Mittelstaedt reminds us, for every one lost customer you hear about, there are 10 more you don't.

Spreading the word on upbeat employee stories is another way to help keep a reputation afloat. They should be woven into the company folklore and play a key role in employee orientation and the Intranet. People also speak more positively about their company when accomplishments large and small are acknowledged and celebrated. Finally, keep in mind that a successful reputation can never be built within the four walls of the executive office. Former GE Chairman and CEO Jack Welch always reminded himself that "headquarters doesn't make anything or sell anything."
Being accessible to customers, the media and other audiences, and delegating to qualified management team members, can put a company on course for a long and successful journey.

When a company's reputation suffers, so do the company's culture and bottom-line. By keeping these warning signals in their line of sight, leaders can avoid being pulled under by the intensifying waves of reputation failure and successfully navigate their way through 2006 and beyond.

Crushing Misery & Reputation Damage in South Korea

2006-01-01T19:48:00.000-05:00

Two words stayed in my mind over the year-end holiday weekend -- "crushing misery." They were articulated by the South Korean government who vigorously promoted cloning scientist Dr. Hwang as the symbol of its biotech and entrepreneurial ascendency (The New York Times). Dr. Hwang is the man who reportedly created the first cloned human embryo and extracted stem cells from it only to be found as having faked parts, if not all. The "crushing misery" applies not only to the South Korean government who financially supported this research but to the 48 million Koreans who took pride in its nation's scientific brilliance.

The reputation of South Korea has certainly taken a hit. It is amazing how quickly the reputation of this one individual, Dr. Hwang, rubbed off on South Korea as a whole. Dr. Hwang, not entirely in agreement with findings that he fabricated results, did acknowledge one clear fact -- he deeply disappointed his own people: "I apologize to the South Korean people for creating an unspeakable shock and disappointment."

South Korea now needs to disclose all facts quickly and honestly. The government should initiate an investigation (beyond the university panel) into how this happened and set up stringent controls so that their scientific accomplishments are never questionned again. Those in charge should also work hard to reassure those still working at Seoul National University that there is confidence in their work and they should carry on.

The South Korean government and Seoul University should also look at the work of Wake Forest University professors' Charles Iacovou, Ron Thompson and H. Jeff Smith. They have researched why some team members misrepresent progress reports. Their goal was to learn whether respondents had ever intentionally withheld or manipulated information when filing their progress reports and if so, why. They hypothesized that personal interest -- career advancement or survival in a competitive workplace, for example --was a primary motivating factor. Instead they found that the project's size and complexity and one's relationship with his/her superior turned out to be the two determining factors most often cited. It would appear that Dr. Hwang did not feel that he could trust his superiors in admitting failure or lack of progress. Learning to fail should probably be at the top of lesson plans in South Korean universities.

The South Korean government would be wise to seriously explore how to repair its image over the many months ahead as this story remains top-of-mind in the media and South Koreans struggle with the challenges of lost pride.

2006

2005-12-30T14:57:00.000-05:00

As we look foward to 2006, a few thoughts.

No more Trust Me...instead Show Me
No more CEO Celebrity...instead CEO Credibility
No more CEO First....instead Company First
No more Enron behavior...instead Ethical Behavior
No more CEO Charisma...instead CEO Character
No more Crony Governance...instead Corporate Governance
No more Outsider CEOs...instead Insider CEOs
No more Executive Privilege...instead Full Disclosure

Happy New Year! lgr

Measurement Does Not Replace Management

2005-12-29T19:38:00.000-05:00

I found this statement in a PriceWaterhouseCoopers journal on risk management -- measurement does not replace management. I am the first to agree that it is not the most profound but it sure rings a bell. There is always a demand to measure public relations, advertising, direct mail, etc. and not surprisingly, no one has found the holy grail.

When it comes down to it, it's all about quality management. Measurement is important and my favorite CEOs all recite that you manage what you measure. But without good leadership, all the measurement in the world can't cut it. Numbers can fail. I can't help recall the terrific quantification and forecasting by Cisco that held us all spellbound until the numbers did not do their job. Thankfully Cisco is back on its feet with the deft leadership of John Chambers.

We were recently asked about measurement, in particular marketing mix modeling (MMM). This is the new craze ever since P&G's new research found that public relations can have a significant effect on sales. Bravo to P&G for these results which help to validate public relations and other "below the line" marketing.

Key to conducting marketing mix modeling, however, is the availability of extensive, detailed data that can be fed into the model. The process requires entering large amounts of data (usually broken down by week) covering a considerable time span -- several years in many cases -- for each type of channel involved. The model also incorporates broader economic and competitive data to take external factors into account. Needless to say, not every company has reams of detailed data that can be thrown into the MMM hopper.

While the model may be able to determine public relations’ contribution to sales, increased sales may not be the prime objective of public relations such as building reputation, building equity with key communities and forging relationships with allies.

I leave you with my thought for the day: Good management trumps measurement. Maybe not profound but certain.

Reputation Erosion

2005-12-27T11:59:00.000-05:00

Burson-Marsteller's global reputation research made it into today's The Wall Street Journal. My by-lined Managers Journal piece ("On Business Storm-Proofing," 27 December 2005) described some of the early warning signs of reputation failure and what leaders can do about them. We identified 15 early warning signs (only 7 were identified in the article) and remarkably, business opinion leaders around the world agreed with the rank order and magnitude of these telltale signs.

I was encouraged to see that the first early warning sign was low employee morale. Companies should regularly monitor employee satisfaction and ask employees what is on their minds. With several years of tracking data behind them (start now!), leaders can see how their actions, communications and events impact employee morale and loyalty. With a benchmark to compare against, leaders can recalibrate what is working and not working. Former president Teddy Roosevelt said: "Far and away the best prize that life offers is the chance to work hard at work worth doing." If leaders can provide meaningful work worth doing, they are doing their job.

Hopefully as the new year begins and business leaders prepare new slates, we can all watch for these troublesome warning signs and get our houses in order.

The Reputation Files

2005-12-23T13:01:00.000-05:00

I just spent the entire morning filing articles and information from the past several months. Since we have a few days off for the holidays, I thought I would spend time getting ready for 2006. I usually try to file when the stack gets too high, meaning over 12 inches. I have about two inches left which I will try to complete shortly.

My reputation files are all at home which means that my home office is chock full of make-shift file holders and lots of piles. Here are my other reputation-piles that surround me (and haunt me) day and night:

**14 books (two feet high)that I hope to read (e.g., Tough Calls, Will Your Next Mistake Be Fatal?)
**unread but to-be-read magazines, journals and articles (8 inches high)
**maybe-will-read magazines, journals and articles (6 inches high)
**articles that I want to reread again since I liked them the first time (4 inches high)
**many file holders containing information that grew out of my first book, CEO Capital (e.g., first 100 days, CEO legacies, CEO thought leadership, reputation crises, European CEOs, Asia-Pacific CEOs, Wall Street and CEOs, CEO succession)
**many file holders containing information on emerging trends in the reputation- and CEO-space (e.g., industry reputation, private company CEOs, CEO blogs, the happiness of being number 2)

I intend to write less frequently in my blog and enjoy the holidays. That sounds to me like a fair trade-off for completing my dreaded filing on all things reputation.

Flag Bearing CEOs

2005-12-21T16:29:00.000-05:00

GM's CEO Rick Wagoner was interviewed by Bill Holstein (editor of Chief Executive) magazine in The New York Times last Sunday about how the big auto giant was faring. Wagoner provided his advice for leaders who find themselves in a similar position -- righting the ship. His advice was 1) focus on the key factors that will drive the turnaround; 2) always do what is right for the business; and 3) communicate effectively.

"People are always hungrier for information when times are challenging," remarked Wagoner. He could not be more right. During difficult periods, CEOs have to be the flag bearer. Wagoner has done a yeoman's job of keeping a dialogue going with all of GM's diverse stakeholders. In fact the automotive industry on the whole -- from Ford's Bill Ford to DaimlerChrysler's Dieter Zetsche -- have all been carrying the flag these days. They have all spoken of sacrifice in light of difficult financial conditions and reputation challenges.

Reminds me of an episode I read in Nissan CEO Carlos Ghosn's book titled Shift. Ghosn arrived in Japan in 1999 to turn around the suffering global automotive manufacturer and quickly learned that the company had not been profitable since 1991. After three months, Ghosn called a press conference and laid out his revival plan which was meant to communicate the changes necessary to revive the company. Ghosn took his job of chief communicator very seriously. He wrote in his book: "As the CEO, my responsibility is to be certain that everyone who works for Nissan is clear about his role as a necessary part of the company...we must communicate with all of them [employees], we must make them part of the company's advance, we have to keep them informed of its progress, and we have to share its fruits in the most honest possible way."

Ghosn's idea of employees as the company's advance team makes sense. With CEO flag bearers and employee advance teams, the auto industry is possibly marching in the right direction.

Being Number Two

2005-12-20T07:57:00.000-05:00

Safe to say these days that being number one is risky business. Wal-Mart certainly faces this problem while number two Target appears to enjoy media praise, robust earnings and customer support. A Pew Research survey that was released yesterday found that 85 percent of the general public is favorable towards Target while only 69 percent feels the same about Wal-Mart. Or to read it another way, a slim 15 percent is unfavorable towards Target versus 31 percent who express unfavorability towards mega-Wal-Mart.

We may have another target on our hands. Now that Pepsico's market value surpassed Coca-Cola's for the first time in 112 years, Pepsico might face some of the tough challenges that numero uno companies confront daily.

Darling Google (#1 in the search engine space) is doing fine just now. Over 90 percent of the general public have favorable views of the search engine firm in the just mentioned Pew study. But as a fierce reputation watcher, I expect Google to misstep along the way. AOL, Amazon, ebay and Microsoft have all had their comeuppances along the way to stardom. Some have weathered the storm better than others. I guess we will see whether Google's investment in AOL will turn out to be the midas touch or the emperor's new clothes.

The Business of Green

2005-12-18T21:22:00.000-05:00

As always, The Economist from December 10th has an insightful article about the greening of GE. Several fascinating points about how GE is going green.

First, CEO Immelt is announcing at the start of 2006 that all global managers will be evaluated not just on their financial performance but also on their green bottom lines. All units will have ambitious targets for reducing carbon dioxide by 2012.

Second, I found it particularly interesting how GE got started with its focus on clean technologies. GE began with its customers. Eighteen months before the new green strategy was launched, CEO Immelt invited top exec customers to two- day "dreaming sessions" to talk about what products they might need in the future and where the world might be in 2015. Immelt's thinking was that if my customers want clean energy, GE better be ready. Whereas former CEO Jack Welch began strategy with supreme execution (Six Sigma), Immelt begins with the customer.

Third, the article not surprisingly compares GE with BP's "Beyond Petroleum" environmental thought leadership. The comparison is meant as a warning to GE to not overpromise with its new Ecoimagination manifesto. The writer seems to believe that BP might be back-pedaling from its lofty talk of alternative fuels and climate control. The point being made is that change comes slowly to the energy business and GE should be careful because going green could backfire. BP CEO Lord John Browne is quoted as warning companies: "Be very careful to separate aspirations from actual promised action. Business is about doing business, it's not a surrogate for goverment or public service." GE has stirred the global business pot with its message about green technologies but it needs to keep a lid on overreaching in case GE has to pull back from its ambitious targets. However, my bet is on GE making its targets.

Persons of the Year

2005-12-18T15:44:00.000-05:00

The choice of Bill and Melinda Gates as TIME's persons of the year along with Bono confirms our recent release that Bill Gates was chosen as the world's most admired leader in our global business survey. They even beat out Mother Nature.

Most Admired Leader: Reputation Rebound

2005-12-15T20:00:00.000-05:00

We issued a press release this week on the world's most admired CEOs/Chairmen from our global business influential survey. Bill Gates won the top prize. I was not surprised due to the attention paid to his philantrophic contributions in the areas of education and health.

What I found compelling was how Microsoft's founder recovered his reputation. Gates' reputation rapidly spiraled downward during the anti-trust investigation. As one onlooker said, "it was like they went through the valley of death." There was a series of well-publicized reputational issues from negative customer satisfaction to weaknesses in perceived trust, ethics and honesty. However, Gates(and new CEO Ballmer, of course) used the crisis an an opportunity to streamline management, renew its culture and reset its reputation and strategy. Over time, Gates has proven that reputations can rebound.

In case you are interested, here is the list of the 15 world's most admired CEOs and Chairmen:

2005 World’s Most Admired Chief Executives

Rank CEO/Chairman Company
1 Bill Gates/Microsoft
2 Steve Jobs/Apple
3 Warren Buffett/Berkshire Hathaway
4 Michael Dell/Dell
5 Richard Branson/Virgin Group
6 John Browne/BP
7 Carlos Ghosn/Nissan Motor & Renault
8 N. R. Narayana
Murthy/Infosys Technologies
9 Jeffrey Immelt/General Electric
10 Rupert Murdoch/News Corporation
11 John Bond/HSBC Holdings
12 John Chambers/Cisco Systems
13 Jorma Ollila/Nokia
14 Terry Leahy/Tesco
15 Lakshmi Mittal/Mittal Steel

Source: Understanding CEO Capital™, 2005, Burson-Marsteller

100 Days +/- Til Davos

2005-12-14T10:44:00.000-05:00

The countdown to the World Economic Forum is upon us. Always comforting to know that our world leaders, academics, policy makers and opinion shapers are discussing our greatest collective challenges. On the WEF website, the agenda lists some of the speakers and their given topics -- China, India, European reform, world resources, terrorism, globalization. Of note, the CEO of Accenture, William Green, talks about people. "My top priority as chief executive is to ensure that our people have the right capabilities, as well as the energy and motivation to achieve extraordinary results for our clients and for us as a company." Refreshing to hear a CEO talk about his workforce as his most pressing challenge.

24/7 Modesty

2005-12-13T08:30:00.000-05:00

Modesty is the new driver of executive celebrity. Everywhere you turn, someone is writing or talking about CEOs who are no-name heroes, giving away bonuses, speaking infrequently, focusing on operations and just plain shy. One after another. I do think we are going slightly overboard. You know, there is nothing wrong with CEOs speaking up. Business is not all spread sheets. There has to be some excitement, drama and pomp and circumstance....a little, that's all.

Stakeholders and shareholders want to hear what leaders are thinking about our collective futures. They want to hear how companies are driving growth, managing change and delivering service. They want to know how to infuse an organization with entrepreneurism and innovation. It is okay to agree to an interview.

I am waiting for the Most Modest CEO list in 2006.

When Messengers Are As Important As the Message

2005-12-12T11:06:00.000-05:00

I read this quote in Harvard Management Update that rings true.

Professor Robert Mittelstaedt of University of Pennsylvania's Wharton School of Business was quoted as saying: “…you need to multiply every lost customer you do hear about by 10 more that you haven’t.” Customer problems that finally reach the CEO's office are usually so diluted and filtered that it is hard to have an accurate handle on reality. Multiplying by 10 every customer defection that gets to the CEO's office is an easy back-of-the envelope formula for leaders who want to hear before it is too late.

We all know of company examples where CEOs are the last to know of an internal or customer service problem. We also know that warning signs exist for some time before the final wake-up call. News accounts of the Enron scandal often describe whistle blower Sherron Watkins' prior attempts to inform Ken Lay of accounting shenanigans. Similarly, evidence of terrorist activity prior to 9-11 did not surface soon enough or with enough urgency.

CEOs have to want to hear the good news with the bad. Sounds easier than it is. Procter & Gamble's CEO Alan Lafley is described as living proof that the messenger is just as important as the message. Presumably Lafley hears what is really happening at P&G (where "customer is king") because he does not shoot the messenger but probably multiplies the message by 10.

Reputations can be destroyed with fleeting speed if customers defect or express dissatisfaction. If bad news reaches the corner office, you can bet that it is not the first time. Pay respect to your messengers.

Making Sense

2005-12-11T15:51:00.000-05:00

I keep an ongoing list of leadership and reputation quotes. Occasionally I review them to jump start my thinking. My collection of quotes contrast with what I see as today's intense and crushing focus on growth, the bottom line and quarterly earnings. All good things for sure but this monetary focus begs the question: Where does Xerox Parc guru John Seely Brown's comment fit in today's world? Brown was quoted in Fast Company as saying: "The job of leadership today is not just to make money. It’s to make meaning.”

When I first saw this quote, it resonated with me. To build lasting and enduring reputations and keep the right talent people, CEOs need to make work meaningful and purposeful. When one looks at companies such as Microsoft who is trying to eradicate disease or Intel who is recognizing science achievement, you know that meaning is being made.

Reputations cannot be built on financial performance alone. Our reputation research consistently finds financial performance as "necessary but not sufficient." Other attributes are equally if not more important today -- credibility, honesty, transparent communications, good places to work, motivation and inspiration. I guess that is where meaning comes in....leaders who can be straightforward about the organization's true purpose, treat and rewards employees well, motivate and inspire us to reach new heights. I wish we heard more about meaning and less about money from our leaders. When they do speak about meaning, we hear them loud and clear.

Women@Work

2005-12-08T22:04:00.000-05:00

I read this absolutely wonderful speech from Time Inc chairman and CEO Ann Moore that was featured in Wharton's Knowledge Works. Ann was the keynote speaker at the 7th Annual Wharton Women in Business Conference. She provided nine business insights (nine not 10, the rounder number) that to think about when you are a CEO and woman these days. Here they are:

Never turn down the chance to vote. (Voting is a privilege)
The only difficult assignment in business is finding good people and putting them in the right job.
You will never have more control over your professional life than you do when you start out.
Forget the clock. Get a compass instead.
Power accrues to those who produce results. Profits matter.
Power isn't everything. Power means incredible sacrifices and constant trade-off between work, spouse and family.
Recognize that there are fundamental differences between men and women.
All behavior emanates from the top and reverberates down the organization to the lowest level.
Making money is easy. Making a difference is hard.

I can't decide which insight I like best. They all resonant with responsibility. Number 4 and number 9 are fairly profound. Regarding number 4, Ann says to forget about managing your time to the minute and worry about the direction your life and career are taking. Always have a North star to guide you. Time passes so quickly that you lose sight of where you want to end up.

The CEO's last insight speaks to doing something with one's life that helps others whether it is mentoring, volunteering, taking care of your aging parents, helping someone in need. When we look back over our lives, what will we see as having made a difference. I have never forgot a statement from Levis' Robert Haas who said that when he died, he did not want his tombstone to say that here lies a man who shipped XXX millions of jeans. As we know, Levis Strauss & Company was one of the original corporate social responsibility givers.

Good thoughts on work and life as the year closes and a new one opens.

The Ticking Clock

2005-12-07T08:21:00.000-05:00

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.

The Ranking Season

2005-12-06T07:45:00.000-05:00

Today starts the ranking season. The Wall Street Journal (December 6, 2005) issued its Harris Interactive survey of corporate reputations. Soon to follow in late February is the Fortune Most Admired Companies Survey. Ron Alsop, the writer, made an interesting point about it taking Google seven years to build a great reputation. Revered Jim Collins, author of Good to Great and management guru, has said that it takes seven years for a company to go from good to great, not from zero to great. As Collins reminds us in Built to Last, "good" is not so easy to get to at all. Google has definitely set a record but as we see time and time again, reputations rise and fall like the temperature.

Today is also the day that I get inquiries about the "WSJ" survey. Companies do not understand that the WSJ survey is among consumers whereas the Fortune survey is among the corporate elite and financial analysts. If you recall, a few years back, Ben and Jerry's Ice Cream was among the most admired in the WSJ survey -- an obvious hint that CEOs were not voting! The other hint that the WSJ survey of reputation is among consumers is that the top 10 are all consumer-based companies. J&J, Coca-Cola, Google and UPS are all companies that average consumers touch nearly every day. In the Fortune survey, we find that some of the top votes go to companies such as Berkshire Hathaway and Procter & Gamble which consumers might not immediately recognize despite knowing their products (Geico and Tide, respectively).

Alas, the Harris survey results are discouraging. Alsop points out that consumers are down on corporate America -- 71 percent rated American businesses' reputation as not good. This is despite the outpouring of support for recent hurricanes, tsunamis and earthquakes. Sounds like we all have our work cut out for us if we want to build back that trust.

Keep the faith that we can turn this around.

FAMA, My Girl

2005-12-04T17:03:00.000-05:00

At a conference on the market value of reputation held in Zurich this fall, I caught my first glance of her. A presentation by Fritz Gutbrodt of SwissRe about Fama left me wanting more. This asbstract goddess of reputation was enthralling. As Fritz pointed out, if you look closely, you will see Fama's many tongues a-wagging and her countless eyes upon you. Fama was the original generator of word-of-mouth. She sprinkled rumors and news about people from the heavens onto unsuspecting villages and towns below. With her trumpet in hand (bellowing out compositions of good and bad deeds) and inked quill on her side (all the better to write with), Fama is our poeta laureata. Of course, her words could build up someone's good name instantly or shatter their reputation forever. Her job was to take what she heard and spread it like wildfire. For us reputation watchers, Fama was doing her job way before we arrived. What a conversation we could have today!

Public Backlash Against Wal-Mart

2005-12-03T19:04:00.000-05:00

Zogby International just released a national poll among Americans about their opinions and attitudes towards Wal-Mart. The findings are not pretty. The American public has an increasingly poor view of Wal-Mart. The poll found nearly four in 10 Americans holding an unfavorable opinion of Wal-Mart and more than five in 10 Americans believing Wal-Mart’s image is worse than it was one year ago. The poll reports that 56 percent of American adults agreed with the statement, "Wal-Mart was bad for America. It may provide low prices, but these prices come with a high moral and economic cost." In contrast, only 39 percent of American adults agreed with the opposing statement, "I believe Wal-Mart is good for America. It provides low prices and saves consumers money every day."

The Wal-Mart woes are a 21st century example of the high cost of reputation damage. This mighty retailer is losing the public relations war . Its foes, to name a few --walmartwatch.com, wakeupwalmart.com -- are having a powerful effect on public opinion. It seems that there isn't a day that passes without a knock against the giant discounter.

Two summers ago I worked on an amazingly satisfying project about how companies rebuild reputation. The analysis consumed us for months. The day before we presented the findings, I was catching up on the Financial Times and came across a sentence that struck me. As I am often asked about how to manage reputation, the sentence summed up my thoughts with some minor tweaking. For me, it sums it all up.

Everything in reputation management is very simple,
but nothing in reputation management is very easy.

Norway's Burnished Reputation

2005-12-02T09:00:00.000-05:00

Norway's ears must be burning.

First, the World Bank and International Finance Corporation found that of 155 countries, Norway was the best country in Europe for business. It takes a mere two weeks (13 days) to establish a company in Norway compared to nearly half a year (198 days) in Laos. (http://worldbank.org)

Second, the WSJ reported yesterday on its front page (December 1, www.wsj.com) that the Norwegian government Petroleum Fund choose a philosopher, Henrik Syse, to be their in-house ethicist. What does a country need with such a high brow thinker? Well, finding the right mix between wealth and responsibility. Norway, as most of us know, is the world's third largest oil exporter and its coffers are teaming over from escalating oil prices. The Fund wants to insure that Norway matches profit with purpose. The Journal author Andrew Higgins writes that "this nation of just 4.6 million has long used its reputation for moral rectitude to wield influence around the globe out of proportion to its size."

Norway's recognition as the home of the Nobel Peace Prize further enhances the country's perception as the land of social justice, human rights and peace. Now Norway can add on selling points such as business-friendly and moral diviner. It is nice to know that some countries actually ponder how to behave for present and future generations.

Country reputation can be easily spoiled. Althought it has had its own hiccups along the way, Norway is one country that has been steady as she goes.

Tug of War

2005-12-01T08:16:00.000-05:00

I was reading an article yesterday about a CEO who is under siege to improve the bottom line, please investors and rally employees. The article said that the CEO who is quiet and modest needed to be more visible. On one hand, this makes sense. If your company is in the spotlight, the CEO must speak up on behalf of the organization. The CEO is the human and public face of the organization. Yet...we continuously find that CEOs are criticized for speaking too much or too little. Finding the right balance is the holy grail. The first focus for CEOs must be internally communicating the strategy, direction and next steps to revive the company's fortunes and reputation. Without employee buy-in and clarity, CEOs cannot stem the tide of external criticism and sniping.

I often advise CEOs and their communications officers to break their recovery plan into "five easy pieces." In other words, reduce the "go forward" strategy to 90-day cycles. This is easier to manage and measure progress than your typical three-year manifesto for the future.

Either way you cut it, CEO visibility has to be about select exposure and not overexposure. Plain and simple.

Blogging CEOs

2005-11-29T08:12:00.000-05:00

Our research on CEOs and blogs received alot of attention. It seems to have struck a chord. The survey -- the2005 PRWeek/Burson-Marsteller CEO Survey (www.prweek.com) -- revealed that while blogs are increasingly making headlines, only seven percent of CEOs are blogging and many are skeptical about starting a blog themselves. Despite the low numbers, 59 percent of CEOs said blogs are useful for internal communications, and 47 percent said blogs are effective for external audiences.

The Good about Blogs
CEOs recognize the benefits of blogs, including the ability to quickly communicate new ideas and news (41 percent), providing a more informal venue for communication with constituents (40 percent), and obtaining immediate feedback (36 percent). Despite these benefits, only 18 percent of CEOs plan to host a company blog over the next two years.

The Bad about Blogs
Even more interesting to me was why CEOs might not favor blogs. Half (50 percent) said that they would not have the time and somewhat more than one-third indicated that CEO blogs might not be appropriate enterprise-wide (37 percent) or there may be too many legal restrictions (35 percent).

All of the reasons for and against CEO blogging are quite legitimate. The interesting news was that CEOs seemed aware of this means of communication. Only eight percent knew nothing at all about blogs.

A Good Idea for New CEOs
For new CEOs, internal blogs make sense. New CEO blogs can quickly capture what is on employees' minds in the early months. Since many new CEOs can not visit every site or facility, an internal blog opens up the channels to the top. An internal CEO blog would positively give the impression of the new CEO's desire to listen and engage. Nothing wrong with that.

I hope to continue exploring the CEO blogging phenomenon.

lgr

Dangerous Precedence

2005-11-28T12:44:00.000-05:00

I see it coming. After reading about new auto CEO Dieter Zetsche in today's Wall Street Journal ("New DaimlerChrysler CEO Targets' Infighting, Intrigues,"http://wsj.com) , I began worrying about the man. There is the standard comparison to the old top dog (outgoing CEO Jurgen Schrempp), the new CEO-to-employee communication style ("hands on") and the bold declaration ("what counts is performance"). Dieter is also described as a pain-sharer (he personally delivered bad news to employees about layoffs).

Noticeably, the writers mention that Dieter has given scant details about how he plans to right the DaimlerChrysler ship. Despite the lack of an articulated agenda, the legend is building fast. Before Dieter takes over on January 1st, expectations surrounding this newly minted CEO will be so high that it will be hard for him not to stumble.

I wish him good luck.

lgr

Leadership Is An Art

2005-11-26T18:57:00.000-05:00

I pulled out former CEO Max De Pree's Leadership Is An Art this weekend. The former CEO was a thoughtful leader and his book rings as true now as it did in 1989 when he wrote it. De Pree writes :

"Leaders owe a covenant to the corporation or institution, which is, after all, a group of people. Leaders owe the organization a new reference point for what caring, purposeful, committed people can be in the institutional setting....Covenants bind people together and enable them to meet their corporate needs by meeting the needs of one another. We must do this in a way that is consonant with the world around us."

His call for a sense of community and responsibility to the organization would be great if it only were more common. With so many CEOs departing, downsizings and serial mergers and acquisitions, leaders are finding it hard to infuse the organization with the commitment De Pree talks about. It can be done however. If leaders communicate that a covenant exists and walk the talk as De Pree did, commitment will flourish and productivity will soar. Leadership does not have to be a lost art.

CEOs or Cogs

2005-11-23T09:29:00.000-05:00

When I was editing my post yesterday, I spellchecked the entry. Interestingly, the word "cog" came up as a replacement for "CEO." Got me thinking that perhaps employees do view CEOs as cogs in the wheel. I looked up the definition of "cogs" and found : A subordinate member of an organization who performs necessary but usually minor or routine functions.

In all the organizations I have worked, no one ever seems to know what the CEO does all day. People often remark, "Well, what is he/she doing about it?" "He's never here." "She nevers talks to customers. We do all the work." "What does he know about what is really going on? Who does he talk to besides the CFO?" Due to this lack of information on most CEO whereabouts, employees do think that CEOs are cogs in the wheel that perform necessary but minor routines. Perhaps CEOs need to do a better job of filling in employees about their calendars.

Years ago, Cisco CEO John Chambers had a calendar on the Cisco web site indicating when he was visiting employees and customers. I thought it was a good attempt at trying to inform the organization about his schedule. Fortune sometimes shadows CEOs. The recent article on Jeff Immelt in their 75th anniversary issue has a day in the life profile of Immelt's travels and meetings. I thought that this was helpful in better understanding what it really takes to run a Fortune 500 company. The title was, "If It's Tuesday, This Must Be Oslo." (www.fortune.com/fortune/fortune75/articles)

All those Day in the Life books might have considered shadowing CEOs but when it comes down to it, I tend to think no one would be interested. Although I follow CEOs regularly, most people are less enamored of the CEO class. Yet, a Day in a CEO's Life would be a good exercise for training the next generation of CEOs who might be wondering what a typical CEO day is like. Then these rising stars would get to vote yea or nay.

lgr

Business Magazine CEO Covers Go Dark

2005-11-21T08:48:00.000-05:00

Looking back to June 2005 (approximately six months), it is clear that the major business magazines are rightsizing CEOs right off their covers. Whereas CEOs were once regular cover fodder for Fortune, Forbes and BusinessWeek, they are now MIA. See the figures below:

From June 1 - Nov 30
2002
Fortune 5
Forbes 4
BusinessWeek 5
Total = 14
2003
Fortune 6
Forbes 1
BusinessWeek 9
Total = 16
2005
Fortune 1
Forbes 3
BusinessWeek 0
Total = 4

This change in CEO iconography could be due to several reasons. The most obvious reason for non-CEO covers is that business editors no longer want to celebritize CEOs only to have them revealed months later as law-breaking scoundrels. Many business editors still remember Enron cover boys Ken Lay and Jeff Skilling. Another reason for the lack of CEOs on recent business covers could have to do with CEOs themselves. Few CEOs today would want to be tagged as an "imperial CEO." Employees, investors, shareholders and board members might look askance at CEO-posing when they businesses have to be run and customers met. Another factor that might be keeping CEOs off business magazine covers is the Sports Illustrated jinx -- the superstitious belief that athletes appearing on SI covers is tantamount to the kiss of death (see 2002 SI story re the jinx.)

We will keep track of what the next six months of business magazine covers bring and let you know what we find.

lgr

CEO Work-Life Balance

2005-11-20T19:36:00.000-05:00

We released a portion of our new research on CEO and corporate reputation this week. The results are thought-provoking when you realize that 51 of the 100 largest global economic entities today are corporations.

The CEO has traditionally had a legendary place in most cultures, a stature that often far exceeds their role as a mere business executive. Part rock star, part Type A workaholic, many have earned headline-friendly nicknames like “Chainsaw Al” or “Neutron Jack.” That’s why the results of our new global survey are nothing short of surprising. (www.burson-marsteller.com/pages/news/releases/2005/press-11-15-2005) It seems a lot of our Type A’s have decided to focus some of their considerable skill and talent on the home front, displaying a newfound sensitivity worthy of Mr. Mom.

A survey of 685 senior executives from around the world found that 54 percent of these so-called business influentials would turn down the job of CEO if it were offered. And the number one reason for bypassing the corner office? It’s a desire to achieve a better balance between work and family life. The heck with the next rung on the corporate ladder, what time is soccer practice?

But beyond the unusual nature of these findings are some serious implications for both business and society. Given the post-Enron focus on corporate ethics and a rising rate of CEO departures, businesses have an urgent need to replace outgoing chief executives with a new generation of talented, ethical and credible leaders. But as more CEOs depart, the reluctance of many senior executives to accept the top slot will continue to hinder efforts to restore overall trust in companies around the world.

So why are so many people willing to say “No thank you” to what has long been considered the ultimate corporate job. Sixty-four percent cited the so-called family factor – the search for work/life balance -- as the leading reason they’re willing to pass up the top job. Clearly there’s a desire by many to avoid a schedule like the one recently described by Jeff Immelt, chief executive officer of GE, who told a national publication he routinely works 100-hour weeks and spends 60 percent of his time on the road. (www.fortune.com/fortune/fortune75/articles/
0,15114,1101116,00.html)

But work/life balance is only one of the reasons some people would rather not be CEO. Forty-two percent cite the pressure – or as Novartis CEO Daniel Vasella called it the “tyranny” - of quarterly earnings, 37 percent noted the high stress level and 27 percent cited intense scrutiny by the press, shareholders and public.

To be sure, our survey also unearthed plenty of reasons why some still find the corner office worth pursuing, but they’re not the reasons you might suspect. Although the 3 P’s – pay, perks and prestige – usually dominate the headlines, those are fairly far down the list. There are more compelling reasons why many men and women still want to be your company’s next CEO.

For example, more than half – 56 percent – want the chance to solve complex problems, followed by significant percentages who want to have a personal impact on the business, the satisfaction of seeing their ideas implemented, and the chance to take a company from “good to great.”

So, armed with this information, what should companies do? And more fundamentally, why should they care? After all, despite evidence of growing reluctance to accept a company’s top job there are still plenty of people willing to take the plunge. The key is finding the right person. Corporations are under immense pressure to build a good reputation, and our research has repeatedly found that a company’s reputation is tied directly to that of the man or woman at the top. In fact, we’ve consistently found the reputation of the CEO is directly related to the company’s prosperity, standing and destiny.

The good news is that the findings of the survey provide some insight into how companies can manage the challenge of building the next generation of global leaders. We think it’s critical, for example, that companies provide their future leaders with real-life training and realistic strategies for balancing life and work, managing stress and dealing with public scrutiny. Corporate boards should mentor rising stars to make sure they’re comfortable on the fast track. Upcoming leaders should have the resources to build the strongest senior management team. And, if possible, companies should give incoming CEOs time to get their sea legs and perfect their leadership skills out of the public spotlight.

As we see a rapid rise in the rate of CEO departures and greater focus on corporate conduct and performance, the need has never been greater to build the next generation of global leaders. CEOs are increasingly challenged by time zones, fluctuating global markets, unpredictable crises and an expanding roster of stakeholders demanding their attention. All of which makes it harder to maintain the balance between work and home that a growing number of executives indicate is important. The extent to which companies help upcoming qualified CEOs find that balance will go a long way toward determining their success in the marketplace.

Those are my thoughts for our next leadership generation. lgr

Reputation Galore

2005-11-18T15:57:00.000-05:00

Reputation is increasingly becoming research-worthy. Just this week I encountered two interesting surveys -- one on reputation risk ("Risk of Risks") and another on board reputation management.

The first survey provides excellent information from the Economist Intelligence Unit (http://eiu.com) although I cannnot seem to find a link to the report on their web site. The survey was sponsored by ACE, Cisco, Deutsche Bank, IBM and KPMG.

The other is from Financial Dynamics and Directorship and appears in the November issue of their newsletter (www.directorship.com/newsletter/index.html). As a reputation expert, here are some of the findings that captured my attention:

59 percent of senior risk managers say that reputation is becoming a key source of competitive advantage.
CEOs are primarily responsible for managing reputational risk, followed by the board of directors (media agencies rank lowest but I tend to think that risk managers rarely talk to agencies unless they are in trouble).
Companies do not gather external perceptions often enough. The most often surveyed segment are customers, the least surveyed are pressure groups, NGOs. Of course, the latter groups can be the most noisy.
Board members say that the CEO is the source they rely on most to stay informed about the company (92 percent choose the CEO). Sounds abit risky to me.

The findings are of particular interest because the CEO continues to be the principal reputation guardian despite all the regulations, board involvement, financial liability, lead directors, non-executive chairman, and other restrictions we have placed on them. In fact, it appears that although CEOs are reported to be losing authority, they are gaining accountability when things go wrong.

Management guru Peter Drucker was quoted in the Wall Street Journal on November 14th (http://www.wsj.com) as saying: "In every single business failure of a large company in the last few decades, the board was the last to realize that things were going wrong."

Reputation should be everyone's responsibility. Leaving it to the top dogs can be risky.

lgr