CEO SURVEY 2001: CEOs - Leadership through communication. The PRWeek and Burson-Marsteller CEO Survey 2001 finds US corporate leadersemulating the strong, open, communicative style of Rudy

Why, according to a Newsweek poll, do 94% of Americans think the

country would benefit from having Rudy Giuliani play a leading role in

the nation's economic recovery? How was Jack Welch able to take a

corporation with a market capitalization of less than $18 billion

and turn it into a $500 billion behemoth? The answer lies in two

qualities that both men have in bucketfuls, two inextricably linked

qualities - communication and leadership.



As the country reeled in the wake of the terrorist attacks of September

11, those CEOs who could exhibit these qualities - each in their own

way, of course - were the source of reassurance, strength, and

importantly, direction. And, though it was not necessarily their

intention to boost their own or their companies' reputations, they

certainly did them no harm.



Take, for example, Ken Chenault, the American Express CEO featured in a

recent BusinessWeek cover story. Chenault, who took on the role at the

beginning of the year, had to fill the huge shoes of his predecessor

Harvey Golub. What's more he was at the helm as AmEx, which had enjoyed

record profits in 2000, was forced to announce successive and

financially damaging write-offs to Wall Street following a bad junk

bonds deal in Minneapolis.



But, as BusinessWeek's John Byrne reported, come September 11, he

"showed the right leadership stuff."



What did that entail? "When the first plane crashed, Chenault was on the

phone to a colleague in New York," reported BusinessWeek. "He asked to

be transferred to security and instructed them to evacuate immediately."

As the day moved on, Chenault contacted all his senior executives to

check on their well-being and convene meetings. And while he rapidly

re-deployed AmEx's 3,000 employees from their building across the street

from the World Trade Center to a new office in Jersey City, NJ, two

concerns guided everything Chenault did - employee safety and customer

service.



AmEx helped 560,000 stranded cardholders get home, in some cases

charting airplanes and buses to ferry them across the country. It waived

millions of dollars in delinquent fees and increased credit limits to

cash-starved customers. But, most telling of all, Chenault organized a

meeting of 5,000 AmEx employees at New York's Paramount Theater on

September 20. There he told them he had been filled with despair,

sadness, and anger. Twice he rushed spontaneously to embrace

grief-stricken employees. "I represent the best company and best people

in the world," he said. "You are my strength and I love you." It was

poignant, it was unscripted, it made AmEx employees feel their company

was a caring and worthwhile American corporation, and it drew praise

from many quarters, prompting compliments on Chenault's exceptional

leadership and communication skills.



But, what of the rest of corporate America? Not all CEOs can be

Giuliani, Welch, or Chenault can they? Obviously not, but the results of

the PRWeek/Burson-Marsteller CEO survey would suggest that American CEOs

are learning to emulate these greats in leading from the front and being

open and aggressive in their communication.



They are realizing that the advice they have long been receiving from

their PR counselors is solid: that they are the walking embodiment of

their organizations and that they must, therefore, demonstrate the

consistency, ethics, and vision they wish their stakeholders to

associate with those corporations.



The difference a year makes



Maybe it is a result of recent events, or perhaps the ever-increasing

demand for information, that has changed the nature of the CEO role, but

the PRWeek CEO Survey paints a picture of a generation of CEOs who have

realized the need to stand up and be counted.



Just look at the answers to question 11. Last year, when we asked CEOs

how important it was for them to be the spokesperson in a crisis, 42%

said it was "very important," another 37% said it was "important," and

10% felt it was "not necessarily important." In comparison, this year

50% described it as "absolutely vital" for the CEO to be the

spokesperson, while another 46% said it was "very important" or

"important." Not a single CEO from our sample of 194 said it was "not

necessarily important."



These figures tallied well with the results of question 17, which asked

CEOs how important they believed their image to be to the reputation of

their corporations. A phenomenal 64% thought the two were "inextricably

linked," which compared to 49% who saw them as "inextricably linked"

last year. While last year 4% of CEOs thought there was "no

correlation," not a single CEO checked the "no correlation" box in this

year's survey.



Chris Komisarjevsky, president and CEO of Burson-Marsteller, was not

surprised by these figures. "The CEOs' values and beliefs are absolutely

seen as the values and beliefs of their corporations," he says.

"Corporations are not perceived as impersonal by investors, customers,

or employees.



They are increasingly personal and their personalities are often cast in

the image of the CEO. Over the years we've seen a steady increase in

understanding of that fact from the CEOs. They know that stakeholders

look at a company's qualities, values and beliefs, and how they endure

over time. How those aspects stand up to crisis will greatly affect

people's interaction with a corporation. This is a good piece of

research which shows that CEOs see that link."



"Just five years ago most CEOs thought it was alright to put up a

spokesperson at these times," adds Dr. Leslie Gaines-Ross, chief

knowledge and research officer at Burson-Marsteller. "But they are

looking at Giuliani or President Bush in the last two months, or at Jac

Nasser in the front line throughout the Firestone crisis, and they are

realizing that they have to step up."



The survey also shows that, in the wake of September 11, most CEOs

understood the need not only to communicate, but also to focus that

communication on their own staffs.



Jerry Useem, the Fortune reporter who crafted the magazine's recent

cover story on leadership, comments: "Being a leader does not require

Churchillian eloquence. It's nice if, like British Prime Minister Tony

Blair, you happen to have that. But more important is to stick to a few

principles that apply in politics, business, or any other field: stand

up and be seen.



What did everyone say about Giuliani? 'He was everywhere - with the

firefighters, on TV, running for his life when the second tower

collapsed.' What did everyone ask about Bush as he zigzagged toward the

capital on September 11? 'Where is he?'"



PR agency CEOs certainly understood the need to be with their

troops.



As PRWeek phoned the agencies in the immediate aftermath of those

horrible events, each CEO said the same. Harris Diamond at Weber

Shandwick Worldwide was out walking the floors. Chris Komisarjevsky at

Burson-Marsteller spoke to the staff daily, and organized hourly

meetings to ensure security measures were in place and that the staff

were safe and well. Ray Kotcher at Ketchum was making sure that those

who were upset had someone to "go home with them, so that they could

look after each other." And so the story went on, not just at the

agencies we called in New York, but at agencies all over the

country.



But you'd expect that from the CEOs of PR agencies. What of their

counterparts in other industries? The survey would suggest that - either

through their training or, more likely, trusting their intuition - they

responded by getting out into the workplace. A total of 91% said it was

very important or important to talk to all employees, while 98% said it

was important to talk to their senior managers in the immediate

aftermath of the tragic events. Contrast those figures with the 24% who

thought it very important to talk to the media or the 26% who thought it

very important to talk to customers. Clearly CEOs made their employees,

and their internal communication, a priority on September 11 and in the

days that followed.



What's more they did not communicate from behind closed doors. Perhaps

they were taking a leaf out of Giuliani's book, or perhaps - again -

they were reacting instinctively, but they went out and saw their

people. An impressive 74% of the CEO respondents said that face-to-face

meetings were either "absolutely vital" or "very important," with

another 15% saying they were "important." Only 5% said face to face

meetings were "not important." Judging from this survey, American CEOs

were on hand when their staff needed them most.



"In such circumstances you have a three-part philosophy," says

Komisarjevsky.



"Your first outreach and primary concern is the safety and well-being of

your people. Secondly, you want to help people find ways of helping with

the broader relief effort. Then, thirdly, and partly because it is part

of the healing process, you have to start to turn people's thoughts back

towards their work." He adds, "The fact that this survey shows CEOs

focusing internally and speaking to people face to face is a credit to

the intelligence of the people in the CEO chairs. It also shows the

increasing recognition that the communications function is at the center

of everything CEOs do. And, finally, it is a credit to the

communications staffs of American corporations - in that they have

evidently helped their CEOs focus on the right areas."



Preparing for crisis



That said, the events of September 11 have clearly made CEOs think very

carefully about the adequacy of their corporations' crisis

communications plans. And, as you might have expected given the

magnitude of the tragedy, many CEOs have decided they were ill-equipped

to deal with the crisis.



A mere 19% felt they had an adequate plan in place that worked well, 54%

had a plan but felt it was not totally adequate, while 7% conceded they

had a "clearly inadequate plan." But, perhaps most shocking, 21% had no

crisis plan at all. Without putting too fine a point on it, 21% were

caught with their pants down.



But they may not be stumbling around in their metaphorical underwear for

much longer, as 63% of the CEO respondents said they have re-addressed

their crisis communications plans since September 11.



Such statistics support the anecdotal evidence from the PR industry as a

whole. Many in-house PR staffs have reported to PRWeek that they are

working on new or refreshed crisis response plans, and agencies known

for their crisis expertise have reported that they have been inundated

with calls from clients - from both the public and private sector -

looking for advice on how to respond to recent events and on how to

prepare for problems in the future.



"We can't go into details about the clients in question for obvious

reasons," says Komisarjevsky. "But there is no doubt from the number of

calls we have received on the subject of crisis management that clients

are currently scratching their heads and wondering whether they have the

right systems or plan in place. We have been through an era when

concerns about events of this magnitude have not arisen and maybe people

became too relaxed."



His point is supported by Debra Koontz Traverso, author of the Small

Business Owner's Guide to a Good Night's Sleep: Preventing and Solving

Chronic and Costly Problems. Traverso, who tends to work with smaller

businesses than Burson-Marsteller does, comments: "Crisis planning seems

like a daunting task, often left at the bottom of the 'to do' list.

Small business owners often underestimate the potentially devastating

effect of an unexpected crisis."



Komisarjevsky points out that the problem is not just businesses that do

not have crisis plans, but also that some businesses are relying on

old-fashioned technologies to get their message out during a crisis. "We

had a call from one company that only discovered its intercom system

didn't work when the staff there tried to use it on September 11," he

says. "The fact is that there are a lot of opportunities to make use of

technology to develop the mechanics of a communications system, but some

people are still relying on an old handbook lying on a shelf

somewhere."



In coming up with a new plan, it seems that many companies will be

addressing not only what they do and say in times of crisis, but also

the mechanics of how they communicate and which media they use.



All of which looks to have resulted in a major boom in crisis

communications consulting for the PR industry. Jerry Murray of

Minneapolis-based LaBreche Murray Public Relations is just one

practitioner who has seen a growth in this kind of work. "The events of

September 11 have been the catalyst for clients to contact us, review

their crisis plans, and update them," he says.



One or two pros, in the immediate aftermath of the attacks,

characterized the promotion of crisis services as insensitive, but most

others argue that it would be foolish for an industry so well-versed in

crisis not to come to the aid of CEOs who are so clearly seeking their

counsel. "Nobody likes somebody trying to take advantage of misfortune,"

says Andrew Gilman of Washington DC-based Commcore Consulting Group. "On

the other hand, we have tools that can help and that's what we want to

do."



Changed business environment



Just how much the events of September 11 have contributed to the current

economic situation is a matter of conjecture. In fact, it is hard to say

how best to characterize the economy at the moment - although we are

clearly in some form of recession, there are still many journalists who

seem loathed to bandy the term around.



Buoyed by an interest rate cut, a reduction in energy costs, and an

injection of government spending, Wall Street stocks are again on the

rise. Some analysts have gone so far as to predict that the Fed may

actually be able to implement an interest rate rise some time next year.

Others, however, point out that consumer debt-to-income ratios are still

worryingly high and that, on a grander scale, the worst post-war

recessions have been characterized by global rather than regional

downturn.



Certainly there has been a global downturn in recent months, so perhaps

the case for optimism is still a little overstated.



Either way, CEOs are currently operating in as tough a climate as most

of them have experienced during their leadership tenures. It is a

climate in which layoffs have become the norm rather than the exception,

in which pay freezes are commonplace, in which revenues and profits are

under enormous pressure. But, despite - and because of - these

time-consuming challenges, the CEO still has to make both internal and

external communication an absolute priority. In fact, as recent research

from Burson-Marsteller showed, the twenty-first century CEO has to

communicate more than any of his predecessors.



Gaines-Ross explains: "When we first measured five different stakeholder

groups back in 1997 to try to understand the makeup of corporate

reputation, we discovered that about 40% was down to the reputation of

the CEO. In our most recent study the figure had risen to 50%. We have

also found that there's been a 61% increase in coverage of CEOs, and

just this year there's been a 22% increase in the rate of CEO

departures." In fact, Burson's most recent study suggested that CEOs

have just five quarters, or 15 months, to demonstrate their strategic

vision to the stakeholders and to show that they are executing that

strategy.



CEOs also have to answer to a larger number of stakeholder groups than

ever before. There is the growth in the number of private investors,

there's the growth in the internet driven rumor-mill, and there's been a

marked growth in pressure groups as well.



Witness the pressure placed on ExxonMobil CEO Lee Raymond by both the

environmental lobby and the gay lobby. Here was a man perceived as

responsible for overseeing the highest quarterly profit ever recorded by

a US company, but his unflinching attitude to global warming, to

ExxonMobil's businesses in regressive regimes, and his disdain for gay

rights sparked a boycott of Exxon's products in Britain, and even calls

for a boycott in the US.



Carly Fiorina, CEO of Hewlett-Packard, is another who has recently found

herself facing one dissenting voice too many, with Walther Hewlett, son

of founder William, and David Packard, son of fellow founder Dave

Packard, emerging as even bigger stumbling blocks than the disapproving

Wall Street analysts in her attempt to push through the merger of

Hewlett-Packard and Compaq.



"There is simply nowhere for these CEOs to hide," says Gaines-Ross, "By

the end of year one they need to have won over the employees and

developed a strategy, and by the end of 17 months they need to have

actually lifted the share price. CEOs need to invest in reputation from

the day they get in office."



In that context, it is interesting to look at CEOs responses to question

7 (What is your view of external relations and media relations in the

current climate?). Most CEOs, 62%, said they approach external

relationships the same way regardless of economic conditions, but 29%

said they give more interviews and see external relations as even more

important, as opposed to just 6% who said they give fewer interviews.

Komisarjevsky interprets these figures very positively: "They may well

be responding in part to the events of September 11, as well as to the

economic climate. The key thing is that they have understood the need to

be open and aggressive in their communication strategies.



In part this may be intuitive, and in part it is probably down to the

fact that they have been advised, and have understood that,

communication is a key function of their jobs."



CEOs views on PR



Many of the people who have been handing out that advice - the corporate

communications staffs and the PR agencies - are recognized in the CEOs'

responses to this survey as invaluable to their organizations. In their

answers to question 5 (How would you rate the job your communications

department has been doing for you since September 11?), they were

overwhelmingly positive, with 80% of CEOs saying they had done a good or

excellent job.



Additionally, in managing their companies' reputations (see question

17), more and more CEOs appear to be turning to PR professionals, and

particularly to their in-house communications staffs. Last year, 53% of

the respondents said they would turn to a public relations expert to

manage their corporation's reputation. This year, 59% specified that

they would turn to their "internal public relations counsel." Another

22% said they would turn to a marketing expert, that figure having been

13% last year, while only 15% would turn to a management consultant,

down from 17% last year.



CEOs also gave a ringing endorsement of the PR discipline in question

14, in which PRWeek asked: "In a soft economy which marketing

disciplines should be the first to be cut back and which should be the

last?" Only 25% cited PR/corporate communications as the first thing

they'd cut back, which compared extremely favorably to the 67% who said

direct mail would be among their first cuts, the 60% who said

advertising would be one of the first things to go, and the 49% who said

they would cut sales promotions.



Corroborating their answers to this question, 58% of CEOs also said that

public relations and corporate communications had become more important

to them over the last five years. Only 4% considered that public

relations had become less important. In contrast, 28% of CEOs said

advertising had become more important, whereas 20% of these corporate

leaders said advertising had become less important. CEOs have grown

their understanding of PR, and accordingly it has grown in importance to

them.



But Komisarjevsky is keen that these figures are not taken out of

context.



"These results might have been colored by the timing of the survey

(mailed at the end of October)," he says, referring to the fact that the

anthrax scare has had an impact on the direct-mail business, and that

the war on terrorism has made it tougher for ad agencies to get an

appropriate message across on behalf of their clients. In addition,

advertising has historically required bigger budgets than PR to achieve

its aims, a factor which might have led CEOs to see it as a more obvious

area for budget cuts than the leaner corporate communications

function.



Such factors certainly provide a backdrop that should temper any

feelings of over-confidence arising from these results. Advertising

still takes the lion's share of the average marketing budget and ad

execs are the key players in many of the giant marcoms holding companies

that now dominate the communications landscape. But, as the cautious

Komisarjevsky puts it, "these figures are nevertheless a heartening and

strong endorsement of what we do from a strategic point of view, as well

as the way in which we actually get the messages out there. It sounds to

me as if CEOs are seeing communication as a major part of their

responsibility."



Gaines-Ross adds: "It's such a shame we don't have comparative data, but

I feel sure that just five years ago CEOs would have seen PR as the

first discipline to be cut, and this survey shows it as the last - that

has to be great news whichever way you look at it."



This increasing enthusiasm for the discipline has not, however, stayed

the executioner when it comes to cutting staff. PRWeek has reported on

lots of major corporations making cuts in their internal staff: American

Airlines, GM, McDonald's, and Ziff-Davis have all cut back their

communications departments, and they are just the ones whose

redundancies made a blip on the radar. Responses to the PRWeek CEO

survey (question 8) suggested that many more made cuts, in fact 24% of

CEOs said they had reduced the size of their communications staff in the

past 12 months.



While it is clearly saddening that so many communications pros have

already lost their jobs, the survey did suggest that there are better

times ahead.



When the CEOs were asked, in question 9, whether they expected to have

to make further cuts in their communications staff in the next 12

months, only 5% said they would. Of course these CEOs are only human,

and, as we know, the best-laid plans do not always translate into

reality. But many of these CEOs have already gone through the budgeting

process for 2002, so they are better equipped than most to predict cuts

within their organizations. Perhaps the worst really is over.



Whether it is or not, CEOs will remain under incredible public

scrutiny.



They cannot - and, according to this survey, are not attempting to -

escape the fact that their impact on stakeholders, from startled and

saddened employees to investors, pressure groups and customers, is

incredibly telling. Increasingly the CEO is the living, breathing

embodiment of the corporation.



But, rather than running from those intimidating facts, most CEOs - even

those who would rather tackle a spreadsheet than a microphone - are

taking advice from their PR experts, grappling with the key elements of

their reputations, and re-addressing their plans for potential crises.

And, most importantly, CEOs are now leading with communication.



The CEO Survey was conducted in October by Impulse Research, an

independent firm based in LA. Written questionnaires were sent to CEOs

at all Fortune 1000 companies and their subsidiaries. CEOs at smaller

companies were sampled through an Internet poll conducted by Impulse

Research. The full spreadsheet of results of the 2001

PRWeek/Burson-Marsteller CEO Survey is available in Excel Spreadsheet

format at a small administrative cost.



If you want a copy, please e-mail sara.calabro@prweek.com, entitling

your e-mail "CEO Survey." The sample of 194 CEOs has an accuracy of

+/-6% at a 95% level of confidence.



PROMOTING PRODUCTS AND SERVICES, MANAGING REPUTATIONS

19 Please choose five of the following media in terms of which you think

would have the greatest impact:

2001 SURVEY RESPONSE

Publication % of CEOs selecting title*

The Wall Street Journal 89%

Business Week 61%

Forbes 52%

The New York Times 51%

Fortune 47%

USA Today 36%

CNBC 35%

Barrons 22%

The Washington Post 21%

Time 19%

Newsweek 19%

NBC's Today 17%

CNNfn 11%

US News & World Report 7%

Fast Company 6%

The Los Angeles Times 4%

People Magazine 3%

2000 SURVEY RESPONSE

Publication % of CEOs selecting title*

The Wall Street Journal 38%

Newsweek 38%

Business Week 35%

USA Today 29%

Time 28%

Fortune 23%

The Industry Standard 19%

The New York Times 17%

Forbes 17%

Fast Company 12%

US News & World Report 10%

Other 9%

Investor's Business Daily 8%

Financial Times 8%

The Economist 7%

The Washington Post 4%

Business 2.0 1%



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