Editor’s note: we’re developing a new series on ReputationManagement.com entitled Reputation Management for CEOs. In this series, we’ll focus on reputation issues that specifically concern CEOs and other top executives. You’ll learn why your CEO reputation is so important, how to develop, maintain, and protect it, and see the value in a great reputation as a top executive. In this first post, we’ll focus on the why, essentially explaining just how important it is for CEOs to possess a strong reputation, not just for themselves, but for their companies.
Ask any CEO: they’re aware that their reputation matters. They’re reminded every time they speak to the press, meet with investors, or make major decisions — which is practically daily. But do you know just how much your reputation as CEO matters?
CEO reputation influences everything from corporate reputation and valuation to employee retention and media relations. And not just by a small amount: these factors are greatly influenced by CEO reputation. Enough that you simply can’t afford to ignore your reputation as a CEO today.
The Influence of a CEO’s Reputation
We live in a society that intensely scrutinizes leaders, and CEOs are certainly not immune. We see annual articles such as The Top 5 CEO blunders of 2014 and The Worst CEO Screw-Ups of 2013. Lead a company, and you can be sure they’ll be watching to see if you trip up and make a mistake. Everyone is aware of company wrongdoings, and often, those fall on CEOs, influencing not just company reputation, but individual CEO reputation as well.
CEOs no longer sit in a quiet corner office. They’re not expected to keep a low profile, but rather get out in front of the company long before any crisis or scandal in everyday business. They’re expected to engage, and in engaging, we find more opportunities to influence reputation, for better or for worse.
Overall, global executives attribute 45% of their company’s reputation to that of their CEO. That means a CEO’s reputation — whether for personal or business issues — makes up almost half of a company’s reputation. Further, global executives attribute 44% of their company’s market value to CEO reputation.
A strong CEO reputation has the power to protect companies from crisis, generate positive media attention, and maintain goodwill that attracts and retains employees — and can even attract investors. In short, most people want to work with and believe in a company that has a CEO with a great reputation at the helm.
This is a trend that isn’t going away. According to Weber Shandwick data, half of executives expect for CEO reputation to have even more of an impact on corporate reputation over the next few years.
CEO Reputation’s Impact on Company Reputation
In many industries, CEO reputation is among the top drivers of company reputation. The quality of products and services typically comes first, followed by financial performance. But CEO reputation is often just as important as marketing and communication, innovation, and media reports.
In the health care industry, for example, CEO reputation drives 44% of company reputation, just behind company industry and tied with media reports, CSR efforts, and senior leader reputation. In finance and engineering, we see that CEO reputation beats out marketing and communication efforts.
Increasingly, corporate branding, which is driven in large part by CEO reputation, is a leading factor in company success. Research indicates that 87% of executives believe a strong corporate brand is just as important as strong product brands.
Customers will consider a CEO’s reputation before engaging. A full 66% of consumers say that their perception of CEOs has an impact on their opinion of a company’s reputation. They take into consideration the support of controversial causes, personal opinions, and what you’ve said before they buy from or endorse a company. The same is true for investors. Before shareholders choose to invest — and when they decide how much to invest — they’ll consider the reputation of an individual CEO as well.
Further, a CEO’s reputation will set the tone for media relations for the entire company. The notion that all press is good press just isn’t the same anymore. Researchers have found that there is a relationship between the tone and visibility of CEO media coverage and that of the organization’s overall media coverage. CEOs who often receive bad press will typically lead companies that receive bad press.
The Benefits of a Strong CEO Reputation
According to Weber Shandwick, the value of a strong CEO reputation goes beyond company reputation and market value. It impacts a number of bottom line factors that really point to the heart of what makes companies strong and resilient:
- 87% believe a strong CEO reputation attracts investors
- 83% believe that a strong CEO reputation generates positive media attention
- 83% believe a strong CEO reputation affords crisis protection
- 77% believe that a strong CEO reputation attracts new employees
- 70% believe a strong CEO reputation retains current employees
CEO Reputation’s Influence on Retaining and Recruiting Employees
Want to catch the eye of millenials in the workforce? You’ll have to possess an excellent reputation as a CEO. Weber Shandwick’s research indicates that CEO reputation greatly influences how well a company can recruit and retain millennial employees.
In the study, Weber Shandwick revealed that 58% of milliennials are influenced by a CEO’s reputation when making career decisions, and 68% of milliennials are influenced by their CEO’s reputation when deciding whether to remain with their employer. They’re paying careful attention, with 54% of milliennials following senior leadership on social media — and 29% are following top executives from other companies as well.
Why the Stakes are Even Higher for Female CEOs
CEO reputation matters without regard to gender, and the reputation of a CEO will greatly influence that of a company. But there’s an added incentive for female CEOs to maintain a positive reputation: women who work for female CEOs with a strong reputation will be more motivated to become corporate leaders themselves.
According to Weber Shandwick research, not everyone wants to be CEO. But when there’s a female CEO at the helm, interest for female executives climbs higher. Typically, 23% of women want to be CEO one day, compared to 32% of men. But when female executives work for a company with a female CEO, their rate of interest jumps up to 29%. Clearly, positive role models play a major factor here.
Additionally, having a strong reputation for female (and male) CEOs could be key to retaining top female executives. Female executives are more likely than male executives to say that CEO reputation influences them to stay at their current companies (64% versus 54%). That number climbs even higher to 70% among female executives who have a female CEO.
The value of a strong CEO reputation — male or female — has never been greater than it is today. It’s essential that you’re focusing not just on corporate reputation, but individual CEO reputation to maintain a strong business and personal success. In future installments of this series, we will discuss what today’s expectations are for CEO reputation, and how you can deliver on them.