A Matter of Reputation

Comm update_8 OctoberConsistency goes a long way to building a strong corporate reputation. If a CEO waxes lyrical about the pride the company takes in putting customers first, or eulogises about how it supports communities and tries to ‘give something back’, then the business cannot be found to be doing the exact opposite. That’s a sure-fire way to attract a swarm of negative publicity.

From environmental disasters, to rogue pricing and bad customer service, there are plenty of examples of companies which have seen their once gilded brands fall into the gutter. Nick Barton, CEO of CityWest Homes, a provider of housing management services, says: “The crucial thing to think about is how it might break down if things start going wrong. That’s when your reputation is so fundamental, because when things become uncertain people will cling to what they are most comfortable with. Trust is the fundamental part of your reputation.

“People will go with you, even if things are going wrong, because they believe you’ll do the right thing and will fix it. If there’s no reputation and no trust, you will lose your audience, market, investors, bankers, whoever, very quickly.”

Over the years, a company’s character will invariably be defined by the way it has operated. Ian Wright, former Corporate Relations Director at alcoholic beverages concern Diageo, says: “First thing, and absolutely critical to any corporate reputation, is sustained strong business performance; you can’t expect to be a well-regarded company without being good at business and without having a strong track record of success.”

Pam Powell, Non-executive Director at Premier Foods, notes that building trust is increasingly hard among well-informed, sceptical stakeholders. She says it’s necessary to devise clear policies around things like sustainability and to be able to demonstrate that actions are being taken to improve performance, as this is critical for maintaining corporate integrity.

It’s a case of devising a watertight communications strategy. Samantha Barber, Non-executive Director at electricity company Iberdrola, comments: “To have an engagement strategy with stakeholders who are onside and supportive is actually quite straightforward. It’s a completely different kettle of fish when you are interacting with those who are openly and vocally hostile to your company and brand. To make it work, it requires very active and constructive listening… and to have a respectful dialogue on all sides.

“With a really hostile stakeholder group, you may never be able to win them over completely to your side and they may never be openly supportive of your company, but what you might be able to do, through greater understanding between your corporation and that group, is neutralise the negativity and hence its impact on your corporate reputation.”

Tone from the top

Employees should be under no illusion about what’s expected of them. On the flipside, they in turn must be confident that the senior leadership team is going to follow the same rules and codes of conduct.

For Ian, “it won’t succeed unless the CEO is absolutely committed, otherwise people figure it out quickly”. If a CEO has a passion for excellence in customer service, it has to be bought into by his/her “executive colleagues… and then it needs to be transferred and made into a real feature across the organisation, including the board itself”.

Without that buy-in, things will go awry. Tim Kiy, MD of Operations for Marketing, Communications, Citizenship and Public Affairs at Barclays Africa Group, says: “Reputation is something that’s owned by every single person in the organisation but the tone is set from the top, primarily by the board and the executive committee.

“They have to understand exactly what it is they want in terms of both a culture for the organisation and the relationship with their customers, and that should be imbued in both the brand and the brand positioning.”

Tony Cocker, Chief Executive of energy company E.ON UK, comments: “It has got to start from the most senior levels then be nurtured and fostered at every level. To do that you’ve got to have the right behaviours; you need simple, clear strategies and people at the local level… need to feel empowered to do the right thing for the customers.”

Certainly, the external messaging has to be equally transparent and it pays to be on the front foot. Andrew McCallum, Director of Corporate Affairs and Business Support for oil and gas company Dana Petroleum, says: “Stakeholders, whether they’re customers or suppliers, governments, policymakers or campaigning groups, have become ever more powerful in influencing the reputation of companies and, in turn, their ability to deliver their strategies and goals.”

One of the main reasons for this, he continues, is that they are now able to communicate much more readily about issues. They’re able to do so pretty much in real time, through social media in particular, and “they can have quite a big bearing, these different audiences, on the level of trust that any company, brand, or government for that matter, enjoys”.

Earlier this year, E.ON UK was heavily penalised by the energy industry regulator, Ofgem, for mis-selling to customers. Tony explains that, when any organisation is under intense scrutiny, showing yourself to be accountable is crucial: “From a personal point of view, as the CEO, you have to represent the organisation and if you make mistakes, in my view you have to stand up and apologise for them personally, as we have done.

“Clearly, in this day and age you have to go on the television… in our case you also go in front of select committees which, again, is televised. You’re in front of a stakeholder and you’re talking to customers, so you are very much representing the company and I think your values, therefore, will have to be very true to the values of the company.”

Clarity, conviction and consistency, as ever, make all the difference, and when things inevitably do go wrong, it certainly helps to be able to own up to mistakes. “The critical thing is to ‘be’ – to behave identically to your desired reputation, not simply to state it,” says Pam. “Trust must be earned through consistent behaviour across millions of touchpoints, large and small alike.”

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

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Keeping Cool in a Crisis

Wordpress 19.03.14The media wants answers. Self-proclaimed experts are casting judgements on social media. Meanwhile, inside the business, there’s blame, denial and recrimination. When a crisis breaks, the pressure from all sides will be immense unless you’ve taken the time to prepare for the worst and have a team that can calmly manage the various channels and relay the right message while the problem is fixed.

John White, UK Head of Resilience at KPMG, says: “Perspective, and the ability to appreciate how events and actions will be perceived by all stakeholder groups, plays an important role in the decision-making process. Good decisions are based on good information, and an effective crisis team will ensure they have a tried and tested means of gathering, monitoring, sorting and prioritising information from all sources.”

A similar point is made by Steve Cooper, Head of Personal and Business Banking for the UK Retail & Business Bank at Barclays: “At Barclays we have a dedicated person to lead our reputation and crisis committee. I’m not sure you necessarily need to have a board role for that but I do think you need clarity when a crisis occurs as to who is going to coordinate and pull that together.”

When it comes to communicating events to the media, an informed, joined-up response is essential. Professor Dominique Turpin, President of IMD and Criticaleye Thought Leader, says: “Different types of events call for different responses. Not every crisis requires the CEO to go and talk to reporters but, in all cases, the CEO should be kept informed and be kept close to the action, ready to intervene should the crisis deteriorate further.”

Furthermore, communication is only part of a company’s crisis management plan. Sandy Stash, Group Vice President of Safety, Sustainability and External Affairs at Tullow Oil, comments: “If you think back to The Exxon Valdez disaster [the oil tanker which ran aground on a reef off the Alaskan coast], one of the criticisms was that they didn’t get senior people out in front quickly enough. But, in recent times, I think companies need to be careful that the communications bit doesn’t become the tail wagging the dog.

“Rather than focusing exclusively on messaging, management needs to delve into details about the facts of the response and ask the hard questions … are we putting appropriate resources to this and making the right judgements?; are we doing the right things and being transparent?”

Need for Speed

Social media has undoubtedly made the process of managing a crisis more complex. Kevin Murray, Chairman at PR concern The Good Relations Group, comments: “The level of exposure because of social media and the nature of viral communications means that not only will [a potential crisis] be discovered quickly, but it can go global within seconds. How you respond to a crisis with that kind of speed attached to it has really stretched the capabilities of a lot of comms departments and many are no longer fit for purpose in the digital age.”

However, as John points out, the digital revolution has brought its advantages: “Organisations are now able to use social platforms to communicate with their customers and the media; close monitoring of social media activity can provide a good indication of public opinion and, in some cases, even provide an early warning to an organisation that a reputational crisis could be coming.”

Steve comments: “You’ve got to inform all your stakeholders: customers, colleagues, regulators, politicians, consumer groups; using social media to listen to the mood music… then obviously resolve as much as you can as quickly as possible. And if you can’t resolve it then put alternative solutions in place.”

No company is immune to reputational ruin, whether the cause is through flawed products, dishonest acts by staff, boardroom bust-ups, terrorist attacks or natural disasters. “Best practice in crisis management starts well before a crisis situation occurs,” says John. “Organisations must… maintain a chain of custody for known risk scenarios and ensure that an appropriate investment is made in planning to respond and recover.”

The risks are very real so the time and effort put into planning will make all the difference in the long run.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Making the Move to Group CEO

CE update 19.02.14Becoming Group CEO is the pinnacle of an executive career, but those with ambitions of taking the helm of a global business should be careful what they wish for. From managing the board and marshalling the views of divisional heads, to communicating with the media, analysts and shareholders, it’s a 24/7 responsibility which provides the ultimate test of a person’s ability to lead.

“The biggest impact for me was recognising the demands of the City and shareholders,” says Mike Turner, Non-executive Chairman at engineering concern GKN and formerly Group CEO of BAE Systems. “What surprised me at first was that at the half-yearly or yearly presentation the shareholders and analysts weren’t interested in the results, they really wanted to know about the future growth prospects of the company. That brought home to me the need to be able to articulate a clear, long-term growth strategy.”

Pim Vervaat, who became Group CEO of plastic manufacturing company RPC following five-and-a-half-years as CFO, comments: “Being good at governance, numbers, talking to banks; this alone is not enough to make the transition to CEO. You really need to have an interest in the people and the key strategic drivers of the business.”

A change of mindset will be needed by those who’ve stepped up from a divisional CEO or regional MD role. Leslie Van de Walle, Chairman at building material company SIG, who made the transition from Divisional CEO to Group CEO at United Biscuits, says: “Divisional heads often underestimate the difficulty of always getting the right compromise between the various stakeholder objectives. When you get to group level you have to balance decisions against the needs of the business, the shareholders, the wishes of the board… and the interests of suppliers and customers.”

Carl-Peter Forster, Non-executive Director at engineering company IMI and formerly Group CEO at Tata Motors, says: “You have to move on from being very operationally focused, which most divisional CEOs are, to becoming much more strategic. Leading a group calls for a more indirect way of influencing and motivating people.”

In focus

The pressure of being the public face of the business can come as a shock to the uninitiated. Judith Nicol, Director at executive and non-executive recruitment specialist Warren Partners, says: “Most people at the very top of organisations are absolutely gobsmacked by how much everyone scrutinises them on a daily basis.

“You become the cultural compass and people take in everything from how you’re walking around the building, how you look, your mood… It all becomes so much more important when you’re a chief executive.”

Mike comments: “The UK press is pretty demanding, and that was a challenge, but the biggest struggle I had was in dealing with the government… In the end I had to talk with then Prime Minister Tony Blair to try and get him to understand that this county’s defence equipment base would just disappear unless he adopted a defence industrial strategy.

“In business, you’ve got to look to the long term. I’m afraid a lot of politicians just look to the next election.”

To make it as a Group CEO, you need experience across a range of functions and situations to understand how a business operates. Pim comments: “As CFO you have got to deal with shareholders, the board, and all the stakeholders quite closely already…  Working closely alongside the chief executive in a public company for five years has helped me immensely.”

Likewise, taking on a NED role as an executive will certainly give you valuable insights. Carl-Peter says: “Dealing with the board was certainly something I found to be a bit of a challenge and it was the one area I wasn’t particularly well prepared for… An external NED role would have helped massively because it puts you in a position where you can observe things objectively.”

The real differentiator for the best CEOs is the ability to see the bigger picture, showing superb leadership skills and possessing the strength of character to handle the constant pressure of being in the spotlight. Leslie says: “You have to be clear not only about the attraction of the role and the power associated with it but also the downside, which is the fact that you are alone and that you are ultimately responsible and accountable for whatever your team and the group does.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

5 Ways to Cement a Leader’s Legacy

Comm update_4 Febr1

The decisions made by CEOs will ultimately define the legacy they leave behind. Richard Branson is the inspired entrepreneur. Steve Jobs the genius who changed our relationship with technology, while Jack Welch is famed for his no-nonsense management style. So what plans should a business leader be putting in place to ensure their long-term reputation is synonymous with a company’s success?

Firstly, it’s a case of accepting that the average CEO doesn’t have the time in charge afforded to the likes of Branson, Jobs and Welch. Kai Peters, CEO of Ashridge Business School and a Criticaleye Thought Leader, says: “A lot of CEOs aren’t in the job long enough to leave much of a legacy. Tenure is less than five years on average and declining… and research indicates that to make a significant change in an organisation it takes a little bit longer than that.”

So, from day one, you’ll be under pressure, balancing short-term priorities with long-term strategic goals. Criticaleye spoke to a range of business leaders to find out the five steps that need to be taken in order to make the right kind of impression as a CEO.

1)  Know Your Purpose

A leader who fails to articulate a compelling vision for a business will not last long. Andrew Heath, President of Energy at engine maker Rolls-Royce, says: “It’s about focusing on what really matters and finding that in the business that you’re running. You’ve got a responsibility to be the architect for the future of the business… [so] it’s a matter of focusing on that sense of higher purpose, the direction you’re trying to take it in and it’s about getting strategic coherence across the organisation.”

Colin Hatfield, Senior Partner and Founder of Visible Leaders, a consultancy that specialises in leadership communication, says: “I always get a little worried when I hear leaders saying that their ‘going in’ position is to build a legacy. I think they should start by saying: ‘I’ve got to do what I think is the right thing for this organisation’… Leadership generally is about making change happen and the CEO is the epitome of that.”

2) Be Realistic

Only so much can be achieved by a CEO at any given moment in time, particularly in the early days. Matthew Wright, Chief Executive of Southern Water, comments: “Whether it’s a cultural legacy; a [track record] of under-spending on asset maintenance or whatever, there is often a period where you’re trying to dig yourself out from under a legacy that isn’t entirely positive.”

Howard Kerr, Chief Executive at standards and training provider BSI, says: “As an incoming CEO, you’re always very conscious of what your predecessor leaves you. When I leave there will be something that my successor will have to work on that I haven’t necessarily addressed effectively. You’ve got to be very honest about what… you are leaving behind and recognise that no CEO or organisation is perfect.”

3) Get the Team Behind You

Teams will perform to a much higher level if they believe in what they’re doing. Peter Horrocks, Director of BBC Global News and World Service, comments: “The key is to convince people that the changes you want to make during your period in charge are not contrary to the central values of the organisation, but that they will help to sustain it and to make it more successful in the future… You can get into a situation where people see that someone is changing things in such a way or to such an extent that they react against it.”

Matthew comments: “We go on the road, meet all our employees and talk about how they can start to influence the direction of the company… [we’re] very clear about why we’re here, what our vision and mission are and what roles people have within that so that they can connect with the organisation and its objectives.”

4) Cast a Shadow

“If they don’t notice when you arrive, they’re unlikely to notice when you leave,” says Lucy Dimes, Non-executive Director at textile services company Berendsen and former UK & Ireland CEO of telecoms concern Alcatel-Lucent.

Andrew comments: “I try and put my personal mark on things, so I do a weekly blog in which I talk about the key strategic themes and priorities, such as health and safety, and the values we have around ethics and compliance. I talk about what I see is going well and where I see things not going so well, reinforcing positive behaviour and recognising individuals who portray the right values and who are being highly supportive of executing the strategy.”

For Lucy, a leader must be capable of engaging. “Did people remember it as a good era, a time when things changed and when the leader touched their lives rather than just operating aloofly over the organisation?’

“The leader sets a tone and casts a long shadow on the organisation, so you’ve got to make a personal impact. At the same time you want to create things that everybody agrees are right for the organisation and not just the way that [you] do things, so that when you leave they are seen as changes that everybody has played a part in creating.”

5) Build Long-Term Value

Sam Ferguson, Group CEO and President of EDM, an information management provider, says: “There is a short-termism in business… which means, instead of investing to create the right business for the future, many people end up maximising profits now so that the chief exec can get his bonus… I think there’s a bit of that in the UK that needs to be rectified, so that [CEOs] are more focused on building businesses with the long-term future in mind.”

When it comes to creating value, a CEO will make a lasting impression by getting good financial results and by leaving behind a capable team. Kai comments: “You should be investing for the long term. You bring talent in and you make sure you facilitate the capacity for people to talk to each other without you having to be the omniscient one in the middle. Between bringing in some new faces and getting people to talk to each other, hopefully you generate some intellectual property.”

***

In the final analysis, a CEO should realise that their role requires them to be a steward, serving the company to the best of their ability before moving on. “No one individual is bigger than any organisation, whether they’re the chief executive or in any other position,” says Howard. “The company’s interests always trump those of the CEO.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

 

Lean, Green and Built to Last

The brand benefits of a sustainable approach to running a business have long been clear. Over time, this has evolved beyond feel-good marketing initiatives so that sustainability has also become a tool for operational and strategic change, where the focus is on improved performance, efficiency and growth.

Martyn Fisher, Executive Vice-President, Industrial Europe, Veolia Water Solutions & Technologies, says: “Implementing a sustainability programme is a way of not only attracting new customers, it can add to a company’s overall business credibility and reduce costs. All of which will lead to financial gain.”

Cost reduction is key when embracing sustainability. Richard Pamenter, Head of Environmental Sustainability at GlaxoSmithKline, comments: “I simply don’t see any disconnect between being more sustainable and delivering benefits into the bottom line. It’s simply a matter of leadership conviction and an ability to step out of the day-to-day whirlwind and see the bigger picture by thinking laterally.”

In practice, this can range from introducing energy efficient IT solutions to sharpening up supply chains and logistics. “The drivers for corporations to respond to the green agenda are intensifying, from rising costs of resources and externalities through to rapidly changing regulatory and consumer expectations,” says Peter Lacy, Managing Director of Sustainability Services, Europe, Africa and Latin America for Accenture.

Aside from the operational trimming, the ‘green economy’ continues to provide a significant strategic opportunity. “Leading companies are examining their core business capabilities in the context of a rapidly growing market,” says Peter, noting that recent estimates suggest that the global market for low carbon and environmentally friendly goods and services is already worth over £3.2 trillion.

In the forecast 

There is still plenty of brand kudos that comes with being green. Mohan Sodhi, Professor of Operations Management at Cass Business School and a Criticaleye Thought Leader, comments: “If you want sustainability as a PR exercise, which is true for most companies, then it does mean extra costs, including the fees for consulting, ‘carbon off-setting’ by tree planting, then campaigns and advertisements that could bring a tear to every eye.”

But it can also mean a whole lot more. “Sustainability, at the very least, means using fewer resources and that means lower costs,” adds Mohan. “If you are truly worried about costs in these constrained financial times, work to reduce them by improving processes and share resources with other companies.”

The retailer, Marks & Spencer, has been widely lauded for its Plan A programme.Richard Gillies, Director of Plan A, CSR and Sustainable Business at M&S, comments: “Can a more sustainable business also be a profitable business? We firmly believe so. Last year, Plan A… delivered a net benefit of over £70 million to M&S by making our operations more efficient and opening up new revenue streams.”

It goes to the heart of a business. Ian Wright, Corporate Relations Director at Diageo, comments: “We have set ourselves challenging targets to reduce our absolute impact on the environment while increasing our production. We undertake a multiplicity of initiatives to reduce our impact, increase efficiencies and reduce operational costs.”

Naomi Wells
, Programme Lead, Property Services Leadership for Waitrose, says: “Businesses need to make sustainability choices as part of everyday decision making and not see it as an add on… It’s about placing value on commodities and materials, brand value and reputation, and how through using a wider range of evaluation tools decision making can ensure that a business delivers improved sustainability while still being financially sound.”

In a sense, it’s about embedding best practice into a business. “Organisations don’t need to choose between financial stability or sustainability; they go together and the more successful businesses will be the ones that capitalise on this,” adds Naomi.

The driver at board level is that, if executed properly, this will make a company perform better. Richard Pamenter says: “Personally, I see the actions to improve sustainability and deliver business value as entirely complementary – the leadership challenge is to hold this conviction.”

Indeed, there is no real argument for rejecting a sustainable approach to running a business. Niall Trafford, Chief Operating Officer & Director of Sustainable Development at environmental consultancy BRE, says: “In challenging economic times, sustainability is a key strategic asset which is critical to future growth. Brand value, innovation and access to new markets and knowledge all depend upon it – this is how businesses remain competitive.”

Paul Polman, the CEO of Unilever, is unequivocal on the matter: “You can wait for technology and use that as an excuse, but there are many things that businesses can do now and it does make good business sense. There might be a slight cost in some cases, but they are the exception. The cost of not acting and the cost of failure is going to be far higher. So, my simple message [to those businesses] is just get on with it and start today.”

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

How to Handle a Crisis

As everyone knows, not owning up to a mistake only makes matters worse in the long run. When big businesses try to deflect blame or don’t recognise the gravity of a situation, the damage and fallout can be catastrophic. There are plenty of examples where businesses still don’t get this basic truth, opting instead to insult people’s intelligence with delusory PR and buck passing.

Mary Jo Jacobi is a Criticaleye Associate who has worked on reputation management issues for some of the world’s biggest companies, including BP after the Gulf of Mexico oil spill, Royal Dutch Shell during the reserves miscategorisation and HSBC during the Asian financial crisis. She says: “It is absolutely true that it takes 20 years to build a reputation and 20 minutes to destroy it. You have to be prepared and if a crisis comes, take it seriously and have the available resources to manage it.”

Denial and delay only compound issues, especially when the media sniffs blood and anarchic hearsay is loosed upon the web. Andrew Griffin, Chief Executive of reputation management specialist Regester Larkin, says: “The important thing is to acknowledge failings and mistakes, visibly demonstrating the steps that are being taken to fix them.”

Ian Ryder, Deputy CEO of BCS [British Computer Society], the Chartered Institute for IT, confirms that speed is the name of the game. “Failures occur when organisations aren’t quick enough or open enough. They have ill-prepared or poorly equipped spokespeople, which ignores reality and the level of potential damage,” he says, noting that some businesses will be beyond salvation (think Enron, WorldCom, Ratners et al).

During the oil reserves crisis at Shell, Mary says that the critical factor was the board’s willingness to accept changes were needed and fast: “Shell realised that wholesale reorganisation was essential,” she says. “It restructured by completing the merger of Royal Dutch Petroleum and Shell Transport and Trading, creating Royal Dutch Shell with its single head office in the Hague.”

If alacrity is a must, so is demonstrating that the root problems are rectified. Furthermore, the overall situation should be seen as an opportunity to, as Royal Dutch Shell did, make improvements. Andrew says: “It’s a case of tying reputation to a long-term business strategy: what do you want to achieve and how can you build a reputation that will help achieve it?”

It will take time. News Corporation’s decision to end the News of the World may have been swift and dramatic, but it did very little to regain public trust in terms of the ethics and trustworthiness of the group and the UK sub-division of the organisation. Andrew continues: “Evidently, this is an organisation which needs to rebuild [its reputation]. In order to do this, it needs to understand how it was seen before the crisis. Was it seen as responsible or ruthless? Respected or tolerated? Which stakeholders were supportive and likely to remain so through thick and thin?”

A good impression

Lord Browne of Madingley, the former Chief Executive Officer of BP, observes that it is vital to appreciate the link between the image and standing of an organisation and its ability to deliver impressive financial results: “There is a growing realisation that reputation is a long-term asset that requires strategic thinking in order to drive real value for shareholders.

“They now see that reputations are built on trust created over time and this comes from the performance, behaviour and values of a business. Having a good reputation can see an organisation through the bad times, when others with more fragile reputations may flounder.”

There is no foolproof contingency plan. The best governance won’t be able to stop determined fraudsters or rogue directors and, for global organisations, it’s inevitable that something will go wrong. In the public sector too, there are failings and mistakes which attract the worst kind of attention. Genie Turton, a Criticaleye Associate and former senior civil servant, says that the “front line of government and of some large companies is enormously long and complex and it is impossible to prevent things and events happening that may blow up into a crisis”.

That’s not to suggest various scenarios and contingency plans shouldn’t be drawn up so an organisation isn’t the proverbial rabbit in the headlights. Mary comments: “It has to be seen as an opportunity rather than treating it as a nuisance that must be endured. Intelligent companies think the unthinkable. They prepare for the worst while expecting the best. They listen to their people and use social media. Crucially, they are willing to hear bad news and act upon it before a crisis can occur.”

For Genie, this has to be the right approach: “Just as, in the safety area, we now try to spot and report ‘near misses’, analysing the most frequent causes of accidents, so it is worth investing in some analysis of what did not happen and what type of issue has the potential to grow into a crisis. The response to a complaint can be more important than the thing that went wrong. It is worth analysing how a response is handled too.”

Mary reveals that a disaster can be guaranteed when companies take shortcuts to wriggle out of a crisis. “They don’t tackle the root causes or honestly assess the wider implications of what went wrong. Some try to move on too quickly, creating the perception that it is in denial about the importance and impact of the crisis for the stakeholders.

“Reputation and brand exist in the perceptions of the stakeholders and smart companies recognise the importance of those perceptions. The crisis is over when the stakeholders say it is, not when the company decides it’s over.”

If communication is sloppy and an organisation is seen to be reluctant to accept responsibility, then it can soon be seen as dishonest. Then it really does have problems. Boards and CEOs now need to realise that the expectations of stakeholders and the public are higher than in days gone by, so they have to be smarter and switched on when the worst comes to pass.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk

The Language of Leaders

An ill-judged remark has always been potentially devastating for a business, as the jewellery entrepreneur Gerald Ratner famously discovered when a joke about the quality of his products nearly led to the collapse of the company. But what has changed dramatically for business leaders in recent times is the ease with which they can slip on a reputational banana skin.

The rise of social media and round-the-clock reporting mean there is an ever-present, braying audience for bad news and PR gaffs. Paul Drechsler, Chairman and CEO of the building and construction company, Wates Group, says: “It isn’t that trust and reputation are more important today than they were before – it is that [business leaders] are more vulnerable in today’s world. I say to my colleagues in Wates that my number one concern is that, through their actions and behaviours, a brand and reputation that took 140 years to build up, could be destroyed in an instant.”

It’s all too easy to send the wrong message. The experience of Tony Hayward at BP following the Gulf oil crisis demonstrates how a  mighty corporation can be brought to its knees by an accident and subsequent mishandled communications. Graham Mackay, Chief Executive of drinks company SABMiller, says, “Businesses are much more like open democracies. People expect to be communicated to … and see themselves as part of a democracy where they consent to being led. As well as the need to communicate more with employees, there is increased regulatory scrutiny, the rise of global NGOs and 24/7 media. You have to represent yourself and explain your company and your actions all the time.”

In the spotlight 

There’s no ‘off switch’ or downtime for the leaders of the UK’s business community. Kevin Murray, Chairman of PR firm Bell Pottinger, says, “Good leaders steer organisations to success by inspiring and motivating followers, by providing a moral compass for employees to set direction and by communicating a compelling vision the future.”

In other words, communication is a key weapon in a modern CEO’s armoury. Sir Stuart Rose, former Executive Chairman of retailer Marks & Spencer and current Non-executive Director of Land Securities Group plc, says that “for a business leader, building reputation and trust IS the day job, which makes communication the day job too”. It’s a point taken up by Jeremy Darroch, Chief Executive of media giant BSkyB: “Organisations that aspire to long-term success have got to have trust as an important part of their agenda. You never trust somebody you don’t know, whose motives you don’t understand. So, as a leader, you have to give people inside and outside the company a sense of who you are, and what you stand for. That’s what will help people decide whether they are willing to trust you.”

High stakes

Companies are expected to communicate well and properly engage with consumers and clients like never before. John Connolly, Former Senior Partner & UK CEO of Big Four firm Deloitte, says, “I believe that we have come to a stage where we have now to imagine a new definition of the purpose of business. What is it for? How does it make a positive contribution? There has to be more of a focus on long-term sustainable success rather than just short-term gain. It is only if you think long-term that you build more value in your business. You cannot sustain your business in an environment, either social or physical, that does not have a future.”

Jeremy adds, “You’ve got to make sure that your mission and values are relevant to a broad range of audiences, and that they understand your endeavours are making a contribution beyond the narrow profit of your business. What is good for you as a business is generally good for others too, whether you are a partner, an employee, or a customer. So you have to be prepared to stand up and explain why your success is good for all of those people.”

If managed correctly, this transparency and openness presents a fantastic opportunity for businesses to get closer to their core markets. Dame Amelia Fawcett, Chair of the Guardian Media Group, says, “Most communications are just not fit for purpose in the Facebook, Twitter, blog and 24/7 news world. News is now being produced by professionals and non-professionals working together – in what we call the mutualisation of news. One correspondent on the Guardian has a following on her blog of 750,000 people; The Guardian has a circulation of 365,000. If you know how to engage with that sort of network it can be very powerful.”

For Sir Stuart, CEOs and non-executive directors should be proactive in explaining how trade and commerce are positive forces for society. “I think it is beholden on business leaders to spend time in educational establishments, especially schools, and explain to children that work is not a bad place and that, unless they are unusual, they are going to spend 30 years or more in work. One of the downsides of the financial crisis is that there is now a feeling in schools that the creation of wealth is a bad thing.

“We’ve got an obligation to explain to the community at large that business growth is good, otherwise we wouldn’t have roads, universities, trains, planes, and all the other infrastructure we need. People need to understand that the Government  is spending the money that business makes. This is hugely important and I’ve been quite vociferous about it.”

Jeremy agrees. “There is no use in doing a lot of good and then not communicating it. Business has got to get itself on the front foot. Leaders have got to start laying out the positive case for business and private enterprise in a much more compelling way.”

Silence and a hands-off approach won’t be tolerated any longer. But every communication needs to be carefully weighed-up and balanced as nobody wants to suffer the merciless consequences of ‘doing a Ratner’ in the digital age.

This Update has been inspired by the content of a new book on leadership by Kevin Murray. The book, which is due to be published in November, is entitled ‘The Language of Leaders.’ You can find out more by clicking here (enter ‘Language of Leaders’ into the search facility). A supporting article is alsoavailable here.

Please get in touch if you have any comments about the issues raised here.

I hope to see you soon

Matthew

www.twitter.com/criticaleyeuk