Kathy Bloomgarden is the CEO of Ruder Finn and author of Trust: The Secret Weapon of Effective Business Leaders. Trust has been on the shelves at all major booksellers and available online since February 20.
PRWeek: What made you decide to write this book?
Kathy Bloomgarden: I think all of us who have been reading the newspapers over the past year or two [have noticed] that there's an increasing amount of negative coverage about top leadership. Some of it is quite striking in terms of the images that are used, even having people being led away in handcuffs. I began to realize two things.
First, it struck me that the CEOs I was working with and many people I knew in that position were really doing extraordinary things and had changed the way they were considering their role. I didn't think that was being reflected or discussed broadly enough. I began to see that PR was becoming much more important to them. What people had called "soft management skills" were coming front and center. If you step back and look at the data, you can see why that was happening. The polls show that only about 20% of the American public rate business executives highly.
Secondly, in the course of my research I found that the tenure of CEOs was becoming shorter and shorter. If you look at the data, CEOs worldwide can now only expect to spend about three years in their position and 40% of all new CEOs will lose their job within 18 months. At the start of 2006, eight of the 30 companies on the Dow Jones Industrial Average began the year with a different CEO than the one they'd had 12 months earlier. When you come to the statistics for this year (January), close to 1,500 CEOs lost their job in ‘06 compared to only 600 in '04.
So something has really changed, and I thought what had changed was the role of the CEO and the kind of leadership that was expected of someone in that position.
PRWeek: Can you talk specifically about some of those changes?
Bloomgarden: I think in years past, many people in top positions would consider the most important thing (and probably the only thing) they needed to do was deliver strong performance. If they kept their head down and just stuck to delivering good financial results, the reputation of the company would be strong and their leadership would be appreciated. But I would argue that what you need to do is go beyond the numbers.
The importance of gaining trust among all stakeholders has gotten much more salient than it was in the past. And it's not just reputation management, it's really trusted leadership, which means you need to think about all the stakeholders you're going to come in contact with, whether it's NGOs, employees, investors, [or] your board. Keeping all of these stakeholders in mind is critically important.
In an era [with] the Internet and [where] everyone can express their point of view no matter where they are in the world, [criticism] can spread rapidly and impact the reputation of the company and the ability of corporate management to move forward with their plan.
PRWeek: The thing that first struck me is the subtitle: The Secret Weapon of Effective Business Leaders. Why is it a secret weapon? Why isn't it a given that trust is included in the position of CEO?
Bloomgarden: The traditional job definition is to lead a company to strong performance. But I think you saw in the recent JetBlue [crisis that] what was most effective in dealing with an extraordinarily difficult series of delays for the company was that the CEO stepped forward and took personal responsibility very quickly and made some very significant changes. It's very difficult to do that. Even if you look at the words that were used in that case - "I was humiliated" "I was mortified" - it's difficult to step forward and to admit that things went wrong. I think that [David] Neeleman and JetBlue did an outstanding job.
But I think the ability to be natural, to be transparent, to [give] the facts quickly, to take personal responsibility, to make real, genuine changes - these are things that outsiders looking in passing might think are easy, but [are] often very difficult to carry forward.
PRWeek: How can technology provide further opportunities for CEOs to prove their transparency and trustworthiness? How can they learn to be more trustworthy overall?
Bloomgarden: Remind yourself that you have to think about all of the various stakeholders and be certain that you're communicating with them. Technology makes it easier for someone to get engaged and to appear to be accessible, to express their point of view, [and] to have their voice heard. You have a lot more channels and a lot more real-time opportunities with the technology that we have today.
But it works for you and against you. People can take things out of context and anyone can express a point of view. I would argue that you have to use the new technologies and the channels that have always been available to us - in-person meetings, print media, and TV - so people get a sense of the individual. Technology is a helpful compliment to [a] variety of communications channels.
PRWeek: Can you talk about the importance of internal communications and building trust? Is it just something to do internally or does it reflect externally?
Bloomgarden: I think it does reflect externally, but the most important thing is to be very fact-based with your employees. If you're in a tough situation, make sure people hear about the status of what's going on first rather than reading it in a newspaper somewhere.
Some people feel [that] if they follow all the rules, you're going to avoid any crisis or problem. In this book, [I say] that everyone is going to [find themselves] in a crisis at some point. Being able to manage that and get beyond it depends on how you handle it.
Take the example of Fred Hassan, who took over at Schering-Plough and found that the company had quite a lot of difficulties [on an] employee basis. Town hall meetings, being completely accessible, closing down the corporate lunchroom, [and] making sure everybody spent time with everyone up and down the line completely changed the esprit de corps.
Values within a company [are] critically important. It reflects how you're interfacing and how you're perceived by your stakeholders. All of your associates are representatives of the company.
PRWeek: In chapter two you write "Successful leaders can no longer ignore the fact that a new generation of employees is coming on board, many of whom expect their employers to live up to a certain standard of behavior and make a positive contribution to the global community." Can you talk about the importance of CSR both internally and externally?
Bloomgarden: First, I want to confirm what you said; that's what I found about young people coming into the business community. I recently gave a talk to a graduating MBA class and I did a survey to see what they're interested in.
I found that the most important factor in terms of choosing a job would be to find a place where they felt they could make a genuine contribution or [with] a company that was contributing to society. I think those going into the workforce have prioritized contributions and CSR activities far more than their predecessors.
When I was working on a Novartis program, there was a drug in development [Gleevac], which required a rapid ramp up. We had to ask people in the production facilities for volunteers and we found almost immediately that the amount of people that [we] required were filled. Even years later when I went back to that factory, people were still talking about how much it meant to them to work over Christmas to feel that they were contributing to help patients.
People coming to work, thinking about what they do, [and] being motivated is much more driven by making a contribution to society. That's important for leadership to recognize. The more that they can recognize those principles and make them part of the company's culture [and] part of their leadership values, the more they're going to be able to align the company in a way that's motivated, engaged, and energetic.
PRWeek: How did you use your experience as both a PR professional and a CEO in writing and researching this book? And what did you take away from this experience?
Bloomgarden: I have had the privilege of having worked with a great number of CEOs and outstanding leaders and through these programs have come to experience the things they hold in common that constitute strong leadership in today's world. My background in the PR business helped me formulate what is strong leadership today and how it has changed since years past.
Going forward for Ruder Finn and for those of us who are involved in programs that touch on leadership, there is a new set of rules for leading companies. There are shared principles that set great leaders aside and really help to them build the kind of trust that's going to help them stay in office, deliver great performance, and help them be recognized as great leaders.