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%
