CorpComms Magazine

Having a chief executive who has a high profile outside the business world - the so-called celebrity chief executive - can prove a double-edged sword, according to the latest report of the Ipsos MORI Reputation Council.

Less than half (46 per cent) of the surveyed council's members, which comprises senior communicators from leading companies, found that the benefits of a high profile chief executive outweighed the cons.

But 37 per cent did not believe the benefits exceeded the negatives and 17 per cent did not know.

Council members agreed that a high profile chief executive can raise the profile and position of a company, prove effective in getting the company message across and provide a trusted voice on a range of media issues. But many felt that a celebrity chief executive appeared to work better in a consumer-facing company than in a business-to-business environment.

As one respondent said: 'It could help in the profile of your company. Your company could get a very human face. A wellknow chief executive, presumably he or she is outspoken, has a range of issues and will be very visible, and that could all help you in a cushion of goodwill.'

A celebrity chief executive, such as Sir Richard Branson at Virgin Group, can make life easier for communicators by generating coverage and making contacts, and by making a connection to customers and employees.

But communicators point out that difficulties arise when the interests of celebrity chief executives and the interests of the company come into conflict. There are also concerns that outside interests can prove to be a distraction.

One respondent said: 'Focus on what you are paid for, and that's developing the business. It's a question of whether you position yourself as an important person in society, or if you position the company as being an important part of society - that's a big difference.'

Another added: 'People change - you should invest in the brand. If that person moves on, all that investment in building the profile of the person is wasted.'

The issue of succession planning and management is heightened when a celebrity chief executive is involved. There have been several high profile departures of celebrity chief executives in recent years, which has focused attention on their successors and whether they are up to the job.

The challenging economic environment means that reputation management has moved up the board's agenda. 'I am on the board of the UK business, and for the first time I'm hearing a lot of members on the board saying How do we improve our reputation? How do we let people know? What can we do?,' said one respondent.

Indeed, eight out of ten respondents say that reputation is a formal part of their risk management processes.

But there is some debate about the correct terminology to use. Just over half of all respondents, 51 per cent, use the term 'reputation' when key strategic issues are being discussed with the board, while 34 per cent use the term 'trust' and 32 per cent say 'brand'.

Consistency breeds success

One of the biggest concerns for those involved in reputation management is how to demonstrate to external stakeholders and the general public that the company's beliefs and values are genuine. There was general agreement that consistency was a vital part of the success in such a strategy, both in terms of aligning actions and communications and also behaving consistently over time.

'It isn't something that is done easily or overnight,' said one respondent. 'It's a journey, a continual process of reinforcing your commitment to your values in your words and actions - so consistency is very important.'

Another added: 'Ultimately, the job of comms is made all the easier and more credible when you're not trying to communicate how you'd like your company to behave, you're communicating what your company is actually doing. If you're living the values, then that's by far and away the most powerful message that you can utilise.'

Building relationships

Robust internal communication is important in trying to articulate what the company's values mean in practice and ensure that all employees act with them in mind. But the respondents also pointed out the difficulty in demonstrating the success of their strategies, drawing on case studies and offering external verification of claims. 'We actually use evidence and case studies to prove it,' said one. 'We have made a concerted effort to discover stories across our organisation which support our desired corporate position and to then disseminate those both internally and externally.'

Many companies also build relationships with independent third parties, such as non-governmental organisations, not only to attract their endorsement but also to develop direct stakeholder engagement and partnerships.

But among the most important issues is how the company behaves when difficult issues or decisions arise and how it conducts important occasions or deals with mistakes. 'It is vitally important that companies appear to be fair and honest in dealing with difficult issues, whether they're customer issues or wider industrial issues. One has to apply common sense to these things, and I think people very easily smell a rat if there's a rat to be smelt.'

Ipsos MORI interviewed 41 Council members (senior communicators in leading European companies) between 22 March and 30 April 2010

To what extent do you agree or disagree with the following statements?

Given the current economic challenges...

Companies will continue to invest in reputation management

• Agree: 88 per cent
• Disagree: 7 per cent

The reputation of a company will be of increased importance

• Agree: 85 per cent
• Disagree: 2 per cent

Companies will continue to invest in corporate responsibility

• Agree: 78 per cent
• Disagree: 15 per cent

There will be less outsourcing of reputation management services

• Agree: 49 per cent
• Disagree: 34 per cent

Reputation management will take a back seat to more old-fashioned means of measuring a company's value (sales, share price)

• Agree: 27 per cent
• Disagree: 68 per cent

Environmental concerns will be of less importance

• Agree: 17 per cent
• Disagree: 76 per cent

The key to successful crisis management

By their very nature, crises are unexpected events that can catch companies unawares. While accepting that there is no one-size-fits-all solution to successful crisis management, the respondents identified the crucial ingredients as preparation, speed and honesty.

Their insights, which predate the BP crisis and do not relate to the oil company's problems, appear timely as BP fights to stem the flow of an oil spill at the Gulf of Mexico which has led to widespread environment and almost halved its market capitalisation.

Perhaps the most important of this trio of ingredients is preparation. The council respondents are unanimous that preparation is vital and that processes should be in situ that can be activated as soon as a crisis hits.

All key personnel should be aware of these processes and companies should have physical run-throughs, to ensure that everybody knows their role in the event of a crisis and also to check that these processes can perform their required roles.

As one respondent said: 'If you don't know the steps you are going to go through before a crisis hits, you're certainly not going to figure it out while you're in the middle of it, so you have to have the processes, structures, the contacts all in place beforehand.'

It is also vital to have an early warning system in place that can prevent issues escalating into a crisis. In some cases, an open culture whereby staff feel comfortable enough to raise concerns may be all that is required, but it is also important that there is not a knee jerk reaction to an issue that may transform it into an unnecessary crisis.

However, once a crisis hits then it is essential to act quickly. A speedy response, particularly in our current 24/7 culture when information is seamless, is necessary to regain the trust and confidence of customers, investors and other major stakeholders. Equally important, the information should be open and honest. 'I think, if you've created a mess, if you've created a problem, you must honestly give the facts,' said one respondent. 'And I think you have to do this very quickly.' Once a dialogue has opened, it is essential that progress is reported regularly.

With ongoing criticism that BP's chairman Carl-Henric Svanberg has been all but invisible during the oil spill crisis, the respondents recommend that senior people must be involved from the start with issuing public updates during a crisis to illustrate how seriously a company takes the issue.

One respondent said: 'It is vital to show that very senior people are personally involved in it and taking it seriously right from the start, again even if there's no initial solution. And then constant updating and very open communication with as wide an audience as possible, but certainly with the key media. This is where digital media becomes so important.'

The respondents also believe that stakeholders want to see an immediate resolution to a crisis, and that it is necessary to demonstrate from the outset that lessons are being learned and offering insights into how the company will adapt or change business practices going forward.

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