Archive for the ‘Reputation’ Category
Communicating Corporate Responsibility
Since public trust in the private sector has hit historic lows, demonstrating corporate responsibility has become even more important for today’s corporate leaders. Effective corporate responsibility - meeting (or exceeding) stakeholder expectations for financial, social and environmental performance -restores trust and credibility. Unfortunately, when companies attempt to talk about corporate responsibility, they often do more harm than good, causing even more damage to the company’s reputation. Common pitfalls are communicating instead of improving performance; ignoring reasonable critics; and reporting only what is required.
How can companies talk about corporate responsibility without shooting themselves in the foot? In my experience, companies that communicate corporate responsibility effectively follow seven rules.
1) Demonstrate, don’t assert.
Resist the temptation to demonstrate corporate responsibility via press release. Whenever a company talks about corporate responsibility, communication should follow action. Many skeptical audiences assume that corporate statements, if not misleading, will be self-serving and provide only a limited perspective. Assertions of corporate responsibility without the appropriate due diligence, policies, and actions backing them up will quickly prompt critics to highlight inconsistencies between word and deed. Just last week at the annual Business for Social Responsibility Conference, eBay CEO John Donahoe put it this way, “You can’t tackle your reputation until you tackle your actions.”
2) Get the facts.
Responsibility begins with accurate information. Without a clear understanding of conditions on the ground, companies cannot improve corporate responsibility performance. Accurate information, collected through due diligence tools like human rights impact assessments, not only informs smart business decisions, it minimizes the risks of communicating. Companies that provide policymakers with reliable information can reduce pressure for regulation. Companies that audit their operations can reduce the risk of legal liability. Accurate information is just as important for advocates who seek to improve corporate performance. A common set of facts provides a basis for engagement and collaboration among stakeholders.
3) Engage critics.
Most companies are exceedingly cautious and reluctant to engage critics. While a company may not agree with or ultimately adopt the recommendations of a critic, engaging critical external stakeholders in honest dialogue can earn credibility and demonstrate a corporate commitment to addressing the issues at stake. After Amnesty International released a 2003 report criticizing the human rights impact of a BP pipeline project, BP engaged Amnesty in dialogue, and sought to address the concerns by incorporating international human rights standards in the legal agreements governing the project. Engaging its main critic and taking stakeholder concerns seriously earned the company credibility. Engaging reasonable critics can also provide a company with valuable information and expertise, and set the stage for collaboration or partnership.
4) Be transparent.
Demands for greater corporate transparency are common in the wake of the financial crisis. Transparency has always been a hallmark of effective corporate responsibility. Communicating accurate information that is complete, relevant and measurable allows stakeholders to make their own assessments of corporate performance. As a rule of thumb, more information is better than less. High levels of transparency earn credibility with stakeholders and critics, create incentives for continuous improvement, and encourage the adoption of best practices. While companies that embrace full disclosure risk criticism, choosing to report as little as possible is a short-sighted strategy. For years, apparel companies resisted calls by advocates for full disclosure of factory locations. Despite its experience as a target of criticism, in 2005, Nike reversed the company’s longstanding position. By unilaterally disclosing all of its contract factory locations, Nike earned credibility while leveling the playing field among apparel brands and competitors. Nike’s principal rival, Adidas, ultimately disclosed its factory locations three years later. Companies must overcome cultural biases against public disclosure and seek levels of transparency sufficient to establish facts, demonstrate performance and earn credibility among stakeholders.
5) Define the company’s “sphere of influence.”
No company can, or should, assume responsibility for all the issues of concern to its stakeholders. Companies fall into the trap of accepting too much responsibility when other entities - governments, for example - must act to achieve lasting improvements. Conversely, companies that define their influence and responsibilities too narrowly risk a stakeholder backlash. A clear definition of a company’s sphere of influence, consistent with a company’s business, can go a long way toward meeting the expectations of stakeholders. The multi-stakeholder Global Network Initiative, for example, calls on its member companies to “prioritize circumstances where it has the greatest influence and/or where the risk to freedom of expression and privacy is at its greatest.” Leading companies evaluate and prioritize the corporate responsibility issues they face and allocate resources accordingly.
6) Earn credibility.
Third parties are the most powerful corporate responsibility communicators. The opinions of credible experts and independent stakeholders almost always carry greater weight than corporate assertions, especially in an atmosphere of mistrust of corporate motives. Independent monitoring was one of the first expectations of stakeholders when companies began to adopt voluntary codes of conduct. A single statement of support from a respected former critic can do more for a company’s reputation than years of corporate communication. But you have to earn that credibility. Ways companies have earned credibility include adopting widely accepted external standards, partnering with stakeholders, and acknowledging problems. The best corporate responsibility reports, for example, are notable for the candor with which they acknowledge failures and address performance obstacles.
7) Connect corporate responsibility to business strategy.
Stakeholders who value information on social and environmental performance look for evidence that a company’s corporate responsibility initiatives reflect an ongoing organizational commitment rather than an ad hoc response to an isolated issue. Are corporate responsibility efforts integrated, well-understood and rewarded at all levels of an organization, from the boardroom to the factory floor? Is every corporate function able to make the business case for corporate responsibility? The most effective communications demonstrate how a company’s corporate responsibility efforts advance key business objectives.
By adopting these best practices for communicating corporate responsibility, corporate leaders can avoid common pitfalls and focus on improving financial, social and environmental performance.
Worth reading: Booz & Company CEO Succession Survey, “Stability in the Storm” by Per-Ola Karlsson and Gary L. Neilson
A Leadership Test
Leaders are judged on how they deal with their most significant challenges.
As American Express CEO Ken Chenault said on the cover of the November, 2007 Fortune, “We have to remember that reputations are won or lost in a crisis.”
Each year the consulting firm Booz & Company studies CEO turnover among the 2,500 largest public companies in the world. Their report, published in Booz’ online magazine Strategy+Business, is worth reading, and provides not merely statistical data and trends, but also insights into the particular leadership challenges facing CEOs today.
The 2008 CEO Succession Survey, published this month, concludes that the financial and economic meltdown that began in the last third of last year is still causing CEO turmoil. Forced CEO turnover remained high in 2008, but those CEOs who kept their jobs aren’t out of the woods yet: (more…)
Rebuilding Trust
Worth Reading: Harvard Business Review, June, 2009, special section: Rebuilding Trust
I’ve been teaching ethics in graduate business and communication programs at New York University for more than 20 years, and every semester we lament the decline of trust.
But this year seems to be worse than most. Trust in US corporations is at an all-time low, 38 percent, according to the 2009 Edelman Trust Barometer. And most other measures of trust in institutions also point to continuing declines.
The June issue of Harvard Business Review takes on the issue of trust with a 25-page special report, Rebuilding Trust. It’s worth reading. The package includes a forceful critique of business school curricula, a 100-year timeline of highlights and lowlights in the public’s trust of business, and a counter-intuitive piece on how despite recent events people may still be trusting too much.
But the real payoff is the first piece in the package, by James O’Toole and Warren Bennis. O’Toole is the Daniels Distinguished Professor of Business Ethics at the University of Denver’s Daniels College of Business, and Bennis is University Professor at the University of Southern California. The two are co-authors (with Daniel Goleman and Patricia Ward Biederman) of Transparency: How Leaders Create a Culture of Candor (Jossey-Bass, 2008).
The special report opens with O’Toole’s and Bennis’ conclusion:
“We won’t be able to rebuild trust in institutions until leaders learn how to communicate honestly — and create organizations where that’s the norm.”
Apology Update: Compare and Contrast
A public apology is a good way to express remorse and offer reconciliation to an affected party. But the very act of apologizing can be daunting.
If delivered effectively, an apology can mend relationships and restore trust between two or more parties.
If delivered effectively, an apology can help maintain company’s competitive advantage, reduce litigation costs and minimize business disruptions.
If delivered effectively, an apology can create a perception of genuine regret on behalf of the offender and mend his or her reputation.
But here is a question:
Can an effective delivery distract the audience from an insufficient apology?
And,
Can a weak delivery diminish a powerful message of a genuine apology?
I invite you to look at three recent apologies and share your opinion about the effectiveness of each apology is in terms of its message and its presentation.
Humility Update: President Obama on the World Stage
Humility is strength.
More than a year ago I began a series on this blog about humility as a leadership attribute. I noted that
A dollop of humility tempers other attributes, and makes a leader even stronger. Humility helps a leader to recognize that maybe - just maybe - he or she might be wrong; that there may be other valid perspectives; that he or she doesn’t have to be the smartest person in every room, at every meeting.
Humility also helps leaders to connect with others up, down, and across the chain of command; to build organizations and cultures that more likely thrive; to understand the perspectives of other stakeholders.
Yesterday at the close of the G-20 Summit in London, President Obama put his leadership in full focus as he demonstrated both confidence and humility on the world stage. It worked.
He gained the confidence of world leaders, including those who had previously been America’s adversaries or who had predicted that the Summit would fail. He even got a rousing ovation from an otherwise skeptical world press corps.
In a press conference closing the Summit, President Obama demonstrated a tone that was a stark contrast to that of his predecessor, and that rallied other world leaders to seek to cooperate with the United States rather than to resist us.
President Obama set the tone before a single question was asked: (more…)
On Apology
Photo by KiraKalina
“Forgiveness does not change the past, but it does enlarge the future. ” Paul Boese
A significant increase in public apologies over the past months could be seen as a positive trend.
We saw the most senior leader of this country apologizing to the American public: “I screwed up.” We watched two prominent athletes A-Rod and Michael Phelps issue painful apologies to their fans.
We saw four bosses of British banks saying sorry to the Treasury Select Committee, and watched Japan’s Finance Minister announce his resignation along with a formal mea culpa.
And finally, in the last couple of weeks we heard the words of regret from Rupert Murdoch and Bishop Richard Williamson.
And yet many of these highly visible apologies failed to earn public forgiveness. Some were criticized for being too shallow and insincere, others could be hardly recognized as apologies at all.
So, what does it take to make an effective apology that comes across as true and genuine? And what are some examples of ineffective apologies that failed to resolve conflicts or earn forgiveness?
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Crisis Management Spotlight: US Airways’ Hudson River Landing
Leadership in a Crisis
A hearty salute to Captain Chesley B. Sullenberger, III, the US Airways pilot whose cool and decisive handling of a breaking crisis prevented a plane crash from becoming a tragedy.
Captain Sullenberger, a former US Air Force fighter pilot, a pilot union safety official, and a sometime plane crash investigator with the National Transportation Safety Board (NTSB), exhibited exceptional leadership skills when his Airbus 320 aircraft hit a flock of geese when taking off from LaGuardia airport yesterday afternoon.
The geese took out both of his plane’s engines at approximately 3,200 feet as the plane was making a left turn over the Bronx. With no power in his engines, Captain Sullenberger had a choice to make, and very little time to make it. (more…)
That Was The Week That Was
What a week for crises!
Forget about the financial melt-down, the transition to the new president, or any of the really old news.
Last week was one for the record books.
The curtain rose Monday, December 8, on the usual tired old economic meltdown crises, particularly the prospect of an auto bailout (that still hasn’t happened).
Then things got curiouser and curiouser…
Not Available on E-Bay
Tuesday Illinois governor Rod R. Blagojevich was arrested for trying to sell his appointment of President Elect Barack Obama’s vacant senate seat to a high bidder. He’s still governor (as of 3:30 PM Monday, December 15).
Update: Humility, Humiliation, and Self-Inflicted Harm: Illinois Governor Rod R. Blagojevich
‘Nuff said….
Fred
When a Tweet From Mumbai Reaches Around the World
Mumbai by karmadude, under a Creative Commons license
Like many people in the U.S., I was out of town for Thanksgiving when I heard about the Mumbai attacks last week. After a Wednesday afternoon spent grocery shopping in Denver, CO, my family and I returned to my relatives’ house, turned on the news, and saw our first reports about the horrific attacks on CNN. Trying to learn more, I pulled up Twitter on a laptop, and searched for reports about what was happening. A flood of information started coming in.
Apparently, I wasn’t alone in using Twitter to follow the crisis. Twitter is a social networking tool that allows users (“Twitterers”) to post 140-character updates (or “tweets”) to their followers (or the public – over 80% of the 6 million users have public pages), either online, via text message or through other tools. This New York Times article notes that, “At the peak of the violence, more than one message per second with the word ‘Mumbai’ in it was being posted to Twitter.” Approximately 80 tweets were sent via SMS (text message) every five seconds (CNN).
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