CEOs Increasingly Take Responsibility for Reputation
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CEOs Increasingly Take Responsibility for Reputation

In response to high-profile cases of corporate wrongdoing and diminished corporate reputations over the last two years, 65 percent of CEOs surveyed worldwide now take personal responsibility for managing their company’s reputations.

Paul Holmes

In response to high-profile cases of corporate wrongdoing and diminished corporate reputations over the last two years, 65 percent of CEOs surveyed worldwide now take personal responsibility for managing their company’s reputations. Only 14 percent of corporate executives polled said their company’s board was responsible and just 12 percent considered corporate reputation a responsibility of their communications department, according to the Fifth Annual Corporate Reputation Watch survey of senior executives.

The survey, sponsored by global communications consultancy Hill & Knowlton, and executive recruitment firm Korn/Ferry International, examined C-suite perspectives on issues such as the importance of corporate reputation, influencers of corporate reputation, threats to reputation, governance issues, and corporate social responsibility initiatives.

The survey revealed that corporate boards are putting more pressure on CEOs to build corporate reputation. When choosing a CEO successor, the CEOs overwhelmingly agreed (97 percent) that boards place at least some weight on a candidate’s ability to protect and enhance the company’s reputation.

Among the global company CEOs, presidents, and chairmen who responded to the 2003 survey, 75 percent said their companies have improved internal controls in response to mounting revelations of corporate wrongdoing. In addition, 64 percent said that their companies have reviewed auditor and accounting relationships and 55 percent said they have revised codes of conduct.

“These findings reveal that most of today’s corporate leaders believe their own ethical behavior is critical to how their companies are perceived, and more and more are increasingly implementing measures to ensure that the mistakes of yesterday are not repeated,” says Paul Taaffe, chairman and CEO of Hill & Knowlton. “It is also significant that executives viewed customers as the biggest driver of reputation, which demonstrates their sensitivity to the link between corporate reputation and success in the marketplace.”

Reflecting a change in attitude from previous surveys, a vast majority of respondents agree that a company’s corporate reputation is more important today than it was five years ago, and more than half believe it is much more important today.

In the survey, which was conducted by ORC International, CEOs overwhelmingly (78 percent) point to customers as the external force with the greatest impact on reputation, with print media (48 percent) and financial analysts (44 percent) rounding out the top three.

“In today’s hypersensitive environment, including tougher public scrutiny, increased media coverage and multiple shareholder interests, a minor blemish can later have a major impact on a company,” said Paul Reilly, chairman and CEO of Korn/Ferry International. “Stewardship of corporate reputation can make a significant difference in share price, talent acquisition and retention, and ultimately on a company’s brand.”

CEOs agreed that corporate social responsibility (CSR) initiatives contribute to corporate reputation. Overall, eight out of 10 CEOs said that CSR initiatives contribute at least moderately to their companies’ reputation, but only three out of 10 said they contribute a “significant amount.” European CEOs place a higher weight on CSR initiatives. Ninety-four percent believe CSR initiatives contribute at least moderately to reputation.

CEOs overall cite the primary business objectives of CSR initiatives as recruiting and retaining employees (71 percent), favorable media coverage (51 percent) and promoting transactions and partnerships (40 percent). Surprisingly, increasing sales and enhancing stock price are mentioned more frequently by CEOs as objectives of corporate reputation, than corporate social responsibility.

The vast majority of CEOs believe the recent focus on more stringent corporate governance and board oversight is going to be a permanent fixture in the corporate landscape. While most CEOs believe boards of directors are doing a good or excellent job in performing an oversight role, a majority (68 percent) also believes that a higher proportion of independent directors will become a long-term outcome of increased corporate governance.

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