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CEO Reputation CEO Reputation and its inextricable link with company image Results of Burson-Marsteller CEO Reputation Survey 2005

A CEO’s reputation plays a vital factor in determining a company’s overall image, significantly affecting the behaviour of various stakeholder groups – be they customers, employees or investors. This has been underlined, more strongly than before by Burson-Marsteller’s second «CEO Reputation Survey» carried out in Switzerland. It also clearly showed that the Celebrity CEO is no longer in vogue and down-to-earth qualities are back in demand.


«The CEO’s good reputation is a valuable corporate asset.»

What is the relationship between a CEO’s repu-

It is another question whether one finds the close link

tation and the company’s image? Burson-Marstel-

between CEO and company good or bad. 42% of respon-

ler carried out its second survey on the subject in

dents, considerably more than three years ago, consider

2005, following the first one in 2002 (for details of

this dependence an advantage while 32% consider it a

the latest survey see box entitled «CEO Reputation

risk. Respondents increasingly believe this represents

Survey 2005»). In the course of the first half of the year,

opportunities instead of risks.

the GfS market research institute conducted a survey involving 500 opinion leaders (CEO’s, journalists, mem-

The three «C’s» crucial to a CEO’s reputation:

bers of executive management, financial analysts and

Credibility, Crisis Management, Communications

politicians) in the German and French-speaking parts

What criteria are used to evaluate a CEO? By far the

of Switzerland.

most important is credibility, followed by the ability to manage crises and the gift of clearly formulating objec-

The CEO plays a decisive role in determining

tives internally (cf. chart page 3). Interestingly enough,

the way a company is perceived

his awareness of the importance of shareholder value is

What significance does a CEO’s image have in

now only in eighth position (compared with sixth two

concrete terms? For the vast majority, namely seven out

years ago). High importance is attached to communica-

of ten respondents, a company’s overall image is more

tion skills (the ability to express objectives internally

than 50% dependent on the way its CEO is perceived

and externally, and powers of persuasion). There has

(cf. diagram). The way in which the person in charge is

been virtually no shift whatsoever in the factors central

perceived, then, is a crucial factor, and its significance

to a CEO’s reputation. The three «C’s» mentioned here

has increased by four percentage points compared with

came out on top in the first survey.

the 2002 survey.

Influence of the CEO on corporate image Question: «Put a percentage figure on the CEO’s influence on a company’s overall image.»

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«If you lose dollars for the firm because of a bad decisions, I will understand. If you lose the firm’s reputation, I will be ruthless.» (Warren Buffett)

Factors that influence a CEO’s reputation Question: «On a scale of 1 to 10 rate the importance of the factors which determine a CEO’s good reputation.»

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A CEO’s positive image bears fruit

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on top. There are probably several reasons for this

A CEO with a good reputation represents valuable

about-turn. First, with globalization making business

corporate capital for a number of different reasons (see

increasingly competitive, public discussion has

chart). When this is the case, people are more likely

increased. And, second, the controversy surrounding

to believe the company when it comes under pressure,

management salaries has led to CEOs being viewed in

recommend it as an employer and continue to trust it

a more critical light. At times of reduced growth and

even if its share price falls. Consequently, a CEO who is

uncertain future prospects there is an increasing call

perceived positively has a stabilizing effect, and when

for traditional, down-to-earth values such as reliability,

companies are going through critical phases, this can

caution and modesty.

be worth its weight in gold.

Nevertheless, the Top Ten includes different types of personalities, an indication that Switzerland has no

Back to down-to-earth values

strictly uniform expectations of a CEO. In other words,

In our last survey, in 2002, the listing of CEOs was still

the credibility of the individual is more important than

topped by various star players. Since then, there has been

the size, international stature or capitalization of the

a dramatic shift, compounded by the fact that some of the

company concerned. Among the top-ranking CEOs, we

protagonists who topped the poll last time no longer hold

find individuals from multinational corporations as well

the same exalted position. Overall, in the latest survey it

as from state organizations and wholesale retailers.

is the less pretentious, down-to-earth CEOs who emerge

Our study also looked into the reasons why a CEO was 3


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judged positively or negatively. An indication of the focus

Benedikt Weibel tops the

on personal qualities found in our evaluation is the fact

Swiss CEO ranking in 2005

that positive characteristics and capabilities (adjectives

Since publishing our first CEO study, we have adhe-

frequently used here included modest, trustworthy,

red to the principle of not publishing rankings, either of

forceful, charismatic, innovative and dynamic) are given

CEOs or of companies. We intend to retain this principle

more weight than corporate management’s strategic

in the interests of discretion. However, the unusual cir-

orientation (terms used often here included good, well

cumstances allow us to reveal the name of the top CEO

though-out, sustainable strategy, good management, clear

as Benedikt Weibel, CEO of SBB. He as an individual

direction, sound structures, transparency). The individual

as well as «his» company are a particularly notewor-

and his/her effectiveness are thus considered more

thy example of many of the qualities mentioned above.

important than the company’s activities and actions.

Benedikt Weibel with his unidisputed communication skills as well as his proven track record as a credib-

Strong media presence Compared with the first study, it became quite clear that CEOs today tend to be far better known than they were three years ago. This is due to a general increase in reporting about the economy, the strong focus on CEOs in the media and the scandalous repercussions left by CEOs’ shortcomings at home and abroad. Whether he likes it or not, today’s CEO is a public figure exposed to 4

critical discussion of his actions in the media.

le, down-to-earth leader of a company which is not one of the market’s top-performers thus outstripped the CEOs of successful global companies.


«Today’s CEO is a public figure and is expected to maintain a lively dialogue with the media.»

The CEO’s role as communicator

diagram page 6). The average figure was 17.5 months,

The results outlined above clearly indicate that

which is slightly longer than in the 2002 survey. And how

communication, both internally and to the outside

long can a CEO afford to record a performance below the

world, is of significant importance. Therefore, our 2005

average for the market as a whole? About 30% of those

survey specifically evaluated respondents’ expectati-

interviewed grant a maximum of 12 months; another

ons as regards a CEO’s communication skills. The cru-

44% are prepared to lengthen the period of grace to

cial finding here was the balanced relationship between

18 months, but believe he should then resign. Finally,

the communication of customer services/products and

half of all those interviewed believed the CEO should be

strategic themes. On the one hand, respondents expect

recruited internally, with only 15% in favour of someone

a CEO to provide adequate information about longterm

from outside the company (the rest were undecided).

corporate strategy and the company’s objectives; on

In summary: today’s CEO is expected to satisfy both

the other hand, the third and fourth places are taken

market and communication demands quickly and in

by issues important to customers: information about

equal measure.

customer services, and new products and services. Low tolerance for double and multiple functions A CEO must prove himself in a short

Tolerance for double functions (i.e. individuals who

space of time

simultaneously hold the posts of CEO and Chairman of

A new CEO is expected to produce results fast.

the Board) continues to decline, with 85% against (up

Slightly over half of the respondents are prepared to

7% compared with 2002!). This view is most prevalent

grant a maximum of 12 months for this to happen (cf.

among analysts and journalists. Multiple functions,

Communication with the outside world Question: «What are the main topics a CEO should communicate to the outside world?»

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5


«It is more important for the CEO to be perceived as genuine than the company’s size, international scope or capitalization.»

Evaluating company reputation

The «first 100 days» Question: «From what point on do you think we can assess whether a new CEO is performing successfully?»

In order to establish the correlation between the CEO’s reputation and that of the company, the survey not only considered the standing of CEOs but also that of the companies. So what are the main factors that determine a company’s overall status? Factors considered by opinion leaders when evaluating company reputation: 1. Quality of its products and services 2. Attractiveness for the labour market

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3. Financial success 4. Balance and transparency of management structures 5. CEO reputation Taking these factors into account, the top-ranking companies are no suprise. Swatch, Migros and UBS lead the way. From a communication point of view, the follo-

whereby the CEO has activities with or interests in

wing points must be noted: in contrast to the often

other companies, are also rejected by almost 60% of

voiced opinion of top management, financial success

those interviewed and approved by only 30%.

alone does not determine a company’s reputation. On the contrary, financial considerations are seen

The CEO is in the driver’s seat:

together with softer ones such as attractiveness in

the Chairman of the Board plays a secondary role

the labour market and product quality. Here as in

In a prompted question («Who is in charge of

other areas of the survey, a company’s products are

company X?»), it is clear that the primary management

of paramount importance. This approach to assessing

role is attributed to the CEO. This even applies to

CEO reputation, asking questions about factors which

companies where there were recent management

determine good corporate image reveal important

changes or where the former CEO is now the Chairman

information about a CEO’s vital role in perception

of the Board.In communication management terms,

of the company by the outside world. In summary:

this means that the spotlight is on the CEO and his management team, while the Board of Directors operate in the background. 6


«The CEO’s good reputation – just like the company brand itself – needs to be cultivated, positioned and integrated within the communication mix.»

1. Soft factors, such as the company’s values, are as vital a part of the company’s communications as

CEO Reputation Survey 2005 Switzerland

communication for the financial markets.

Burson-Marsteller is a globally active communi-

2. Companies tend to respond to pressure from the

cations consulting company and, since 1997, has

financial markets and thus put their communication

been conducting regular international and national

emphasis on financial reporting. In this there is

surveys that examine the relationship between the

a real danger of other important factors being

reputation of CEOs and corporate image. In 2005,

neglected, such as product quality and innovation,

the survey was carried out in Switzerland for the

corporate social responsibility, human resources

second time, following the first in 2002. In the

and CEO reputation management.

course of March and April, 532 opinion leaders

3. The CEO’s good reputation is vital to the company’s

(CEOs, journalists, members of executive mana-

image and – just like the brand itself – needs to be

gement, financial analysts and politicians) in the

cultivated, positioned and integrated within the

German and French-speaking parts of Switzer-

communication mix.

land were interviewed. We thus consciously opted not to take a representative cross section of the population. The company-related questions were

Many roads lead to good reputation The following table summarizes the various possible

based on around 30 – mostly listed – Swiss com-

approaches to building a CEO’s reputation. It shows

panies and their CEOs (mainly SMI plus specific

clearly that, depending on the company’s situation and

non-listed companies). The survey was commis-

reputation as well as the image of its CEO, any of several

sioned by Burson-Marsteller and carried out by the

strategies may be correct.

GfS market research institute.

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7


king an overall assessment of the company. When assessing a CEO’s strategic competence, special attention should also be paid to the skill with which he is able to communicate strategic and product-related information and on events of importance to the company. However, the results of the survey also suggest that a company would be exposing itself to risk by relying entirely on the CEO for its image and that it would be prudent to use other means of building its reputation. Roman Geiser roman_geiser@ch.bm.com

Who wants to be CEO? Additionally

a

number

of

external

factors

are making a CEO’s career increasingly difficult. No success formula for CEO Reputation –

CEOs need to assert themselves in an increasingly

Commentary

demanding environment. This is reflected in the

The results for the CEO Survey in Switzerland, as

high level of top executive turnover. The economic

well as numerous identical surveys in other countries,

constraints of globalization, growing public criticism,

confirm the top executive’s importance when it co-

increasingly strict regulation and burgeoning pressure

mes to the perception of the company as a whole. In

from investors inevitably lead us to ask what could

addition, the fact that stakeholders wish to see more

possibly motivate anyone to be CEO. An international

rapid performance tracking demands active communi-

study carried out in 2005 by Burson-Marsteller in

cation on the part of the CEO. It is clear from the

conjunction with the Economist Intelligence Unit

results obtained that there is a distinct connection bet-

came to some sobering conclusions. To the question

ween a company’s reputation and that of its CEO. How-

whether they themselves would wish to be CEO,

ever there is no perfect success formula for building a

only 46% answered Yes, with 54% giving a negative

CEO’s reputation. The company’s status and the perso-

answer! In other words, a majority of global business

nality of the CEO must be taken into account when ma-

influentials has no interest in becoming CEO.

ABOUT BURSON-MARSTELLER SWITZERLAND: Burson-Marsteller is one of Switzerland’s leading

BURSON-MARSTELLER AG Zurich: Grubenstrasse 40, 8045 Zurich

public relations and communications companies with

Phone +41 (0)44 455 84 00, Fax +41 (0)44 455 84 01

branches in Zurich, Bern and Geneva. With approxi-

Berne: Konsumstrasse 20, 3000 Berne 14

mately 40 employees, B-M offers services in corpo-

Phone +41 (0)31 356 73 00, Fax +41 (0)31 356 73 01

rate communications, financial communications, public

Geneva: c/o Rochat & Partners SA

affairs, health care and scientific communications,

Rue du Roveray 12, 1211 Genève

media relations and specific areas in advertising. The

Phone +41 (0)22 700 42 56, Fax +41 (0)22 786 54 66

company is headed by Roman Geiser.

www.b-m.ch, info_bm@ch.bm.com

Burson-Marsteller was founded in 1953 in the USA and for years now has been a leading player in the creation and management of communication strategies and plannings. The company has 53 branches and 46 affiliated offices operating in 58 countries on all continents. Burson-Marsteller is part of the Young & Rubicam agency network.

B-M Information_ is a series published by Burson-Marsteller on topics related to the world of communications. Further copies and previous publications can be ordered at info_bm@ch.bm.com Previous publications: – Overweight and obesity – Nanotechnology needs successful communication – Business leaves its stamp on Switzerland’s image – Litigation communications – Media focus: companies and managers as the heroes and villains of the media – Investor Relations – professional expectations management – CEO Reputation – CEO Reputation Survey 2005

CEO Reputation  

CEO Reputation and its inextricable link with company image.

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