The CEO is the Keeper of the Vision/Reputation
(article from chiefexecutive.net)
Guess Who's the Chief Reputation Officer?
Difficult to earn, but easy to lose, a company's reputation is a fragile thing, and judging from the results of Chief Executive's third annual study of corporate reputation, the burden of caring for it falls squarely on the CEO. By J.P. DONLON
REPUTION WAS ONCE considered an intangible benefit. Not anymore. Increasingly business leaders see it as a bankable asset.
"A good reputation creates demand, and demand can command premium pricing," says Jim Copeland, CEO of Deloitte Touche Tohmatsu. 'It also defines the markets' expectations of everything you offer.'
'The value of a good reputation is never more evident than in times of crisis,' says Ford's Jacques Nasser, who ought to know given the events of last summer. 'A company with a reputation for doing the right thing, for caring for customers, will be given more leeway to fix mistakes than a company with a little known reputation or, worse yet, a negative reputation.'
Virtually all CEOs (94 percent, unchanged from last year) see the enhancement of their company's reputation as an important strategic business objective, but the key influencers are customers, employees, and, not far behind, the personal reputation of the CEO. This is one of several key findings in the third annual Chief Executive/Hill & Knowlton corporate Reputation Watch survey. Conducted in late 2000 by Yankelovich Partners, the study examined CEO attitudes and actions in relation to reputation and drew responses from 611 CEOs and presidents from 10 industry groups.
'It's easy to see how the image of the CEO gets entangled with the company's reputation for products and services,' says Jeffrey Sonnenfeld, chairman and president of the Atlanta-based Chief Executive Institute.' It's part of the branding process we use to simplify complex relationships. CEOs tend to personify the values one associates with the reputation.' CEOs are divided on the share of corporate reputation they believe is based on the CEO's personal reputation, but nearly all (96 percent) feel it has at least some impact.
David Wright, president and CEO of Mountain View, CA, storage management software maker Legato Systems agrees. 'In the end it's about trust, and the people at the top must deliver on their promises or lose competitively,' he says. Other than improving financial performance, the most significant thing a CEO can do to improve his or her company's reputation is to take initiatives to improve customer satisfaction and communication (20 percent), closely followed by maintaining corporate culture (18 percent). This is consistent with respondents' views that customers and employees are key influencers.
'Shareholders, employees, and customers are three legs of the reputation stool,' says Al Lauer, CEO of Palo Alto-based Varian, a technology and measurement systems company. 'The CEO must build trust with each group.' Two out of five companies (42 percent) currently have a formal system in place to measure reputation. This is a 5 percent increase over 1999 and a 23 percent increase over 1998. Informal feedback and custom research are the two leading measurements used. Interestingly, published rankings and media coverage figure less prominently. The ability to protect and enhance a company's reputation is also influencing CEO succession. Nearly two-thirds of CEOs (64 percent) place a great deal of weight on this ability (compared with 43 percent in 1999).
'The alarmingly high rate of CEO failures over the past year has to be at least partially responsible for the dramatic increase in the respondents' assessment of reputation management as a 'must do' function for those who aspire to succeed them,' says Harlan Teller, executive VP and director of Worldwide Corporate practice for Hill & Knowlton. Clearly reputation is seen as the CEO's job. Three-fourths (77 percent) say the CEO is primarily responsible for this. By contrast, only 5 percent see this falling mainly to the chief marketing officer, and a mere 3 percent feel it rests with the chief communications officer. In addition, company reputation is managed on a global basis by just over half (54 percent) of the firms responding.
Concerns are rising among CEOs regarding negative information about their company on the Internet. Nearly three-fourths (73 percent) are very or somewhat concerned, a jump from 60 percent who had such concerns in 1999. Among the choices given, the most prominent worry of CEOs (48 percent) is unhappy customers criticizing the company on the Internet. This is followed by concerns that current employees may be criticizing the company on the organization's internal e-mail system (28 percent). By contrast only 22 percent are concerned about investors slamming the stock in chat rooms.
Oddly, the number of firms who monitor what is being said about their company on the Internet increased only slightly from 11 percent last year to 15 percent today. One would think that the increased concern revealed elsewhere in the study would translate into an appropriate increase in vigilance.
'In the end reputation is about authentic leadership,' argues Sonnenfeld. 'Why is John Chambers synonymous with Cisco? His company's products are so complex I'm sure half the analysts don't really understand them. But he doesn't talk down to anyone. He's straightforward especially when he deals with bad news. He's an authentic leader.'
'It's clear CEOs see themselves as chief reputation officers as well as chief customer satisfaction officers,' adds Teller. 'This implies that a company's marketing and communication efforts aimed at building corporate reputation should be more closely linked than has historically been the case.'