ceo reputation survey 2005_e

A CEO’s reputation plays a vital factor in determining a company’s overall image, significantly affecting the behaviour of various stakeholder groups – be they custo-mers, employees or investors. This has been underlined, more strongly than before by Burson-Marsteller’s second «CEO Reputation Survey» carried out in Switzerland. It also clearly showed that the Celebrity CEO is no longer in vogue and down-to-earth qualities are back in demand.

CEO Reputation

CEO Reputation and its inextricable link with company imageResults of Burson-Marsteller CEO Reputation Survey 2005

B-M Information_

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It is another question whether one finds the close link

between CEO and company good or bad. 42% of respon-

dents, considerably more than three years ago, consider

this dependence an advantage while 32% consider it a

risk. Respondents increasingly believe this represents

opportunities instead of risks.

The three «C’s» crucial to a CEO’s reputation:

What is the relationship between a CEO’s repu-

tation and the company’s image? Burson-Marstel-

ler carried out its second survey on the subject in

2005, following the first one in 2002 (for details of

the latest survey see box entitled «CEO Reputation

Survey 2005»). In the course of the first half of the year,

the GfS market research institute conducted a survey

involving 500 opinion leaders (CEO’s, journalists, mem-

bers of executive management, financial analysts and

politicians) in the German and French-speaking parts

of Switzerland.

The CEO plays a decisive role in determining

the way a company is perceived

What significance does a CEO’s image have in

concrete terms? For the vast majority, namely seven out

of ten respondents, a company’s overall image is more

than 50% dependent on the way its CEO is perceived

(cf. diagram). The way in which the person in charge is

perceived, then, is a crucial factor, and its significance

has increased by four percentage points compared with

the 2002 survey.

«The CEO’s good reputation is a valuable corporate asset.»

Credibility, Crisis Management, Communications

What criteria are used to evaluate a CEO? By far the

most important is credibility, followed by the ability to

manage crises and the gift of clearly formulating objec-

tives internally (cf. chart page 3). Interestingly enough,

his awareness of the importance of shareholder value is

now only in eighth position (compared with sixth two

years ago). High importance is attached to communica-

tion skills (the ability to express objectives internally

and externally, and powers of persuasion). There has

been virtually no shift whatsoever in the factors central

to a CEO’s reputation. The three «C’s» mentioned here

came out on top in the first survey.

Influence of the CEO on corporate image

Question: «Put a percentage figure on the CEO’s influence on a company’s overall image.»

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«If you lose dollars for the firm because of a bad decisions, I will understand. If you lose the firm’s reputation, I will be ruthless.» (Warren Buffett)

Factors that influence a CEO’s reputation

Question: «On a scale of 1 to 10 rate the importance of the factors which determine a CEO’s good reputation.»

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on top. There are probably several reasons for this

about-turn. First, with globalization making business

increasingly competitive, public discussion has

increased. And, second, the controversy surrounding

management salaries has led to CEOs being viewed in

a more critical light. At times of reduced growth and

uncertain future prospects there is an increasing call

for traditional, down-to-earth values such as reliability,

caution and modesty.

Nevertheless, the Top Ten includes different types

of personalities, an indication that Switzerland has no

strictly uniform expectations of a CEO. In other words,

the credibility of the individual is more important than

the size, international stature or capitalization of the

company concerned. Among the top-ranking CEOs, we

find individuals from multinational corporations as well

as from state organizations and wholesale retailers.

Our study also looked into the reasons why a CEO was

A CEO’s positive image bears fruit

A CEO with a good reputation represents valuable

corporate capital for a number of different reasons (see

chart). When this is the case, people are more likely

to believe the company when it comes under pressure,

recommend it as an employer and continue to trust it

even if its share price falls. Consequently, a CEO who is

perceived positively has a stabilizing effect, and when

companies are going through critical phases, this can

be worth its weight in gold.

Back to down-to-earth values

In our last survey, in 2002, the listing of CEOs was still

topped by various star players. Since then, there has been

a dramatic shift, compounded by the fact that some of the

protagonists who topped the poll last time no longer hold

the same exalted position. Overall, in the latest survey it

is the less pretentious, down-to-earth CEOs who emerge

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Influence of a CEO’s good reputation on company image:

Question: «How does a CEO’s good reputation affect your personal attitude towards the company?»

Benedikt Weibel tops the

Swiss CEO ranking in 2005

Since publishing our first CEO study, we have adhe-

red to the principle of not publishing rankings, either of

CEOs or of companies. We intend to retain this principle

in the interests of discretion. However, the unusual cir-

cumstances allow us to reveal the name of the top CEO

as Benedikt Weibel, CEO of SBB. He as an individual

as well as «his» company are a particularly notewor-

thy example of many of the qualities mentioned above.

Benedikt Weibel with his unidisputed communication

skills as well as his proven track record as a credib-

le, down-to-earth leader of a company which is not one

of the market’s top-performers thus outstripped the

CEOs of successful global companies.

judged positively or negatively. An indication of the focus

on personal qualities found in our evaluation is the fact

that positive characteristics and capabilities (adjectives

frequently used here included modest, trustworthy,

forceful, charismatic, innovative and dynamic) are given

more weight than corporate management’s strategic

orientation (terms used often here included good, well

though-out, sustainable strategy, good management, clear

direction, sound structures, transparency). The individual

and his/her effectiveness are thus considered more

important than the company’s activities and actions.

Strong media presence

Compared with the first study, it became quite clear

that CEOs today tend to be far better known than they

were three years ago. This is due to a general increase in

reporting about the economy, the strong focus on CEOs

in the media and the scandalous repercussions left by

CEOs’ shortcomings at home and abroad. Whether he

likes it or not, today’s CEO is a public figure exposed to

critical discussion of his actions in the media.

Communication with the outside world

Question: «What are the main topics a CEO should communicate to the outside world?»

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«Today’s CEO is a public figure and is expected to maintain a lively dialogue with the media.»

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The CEO’s role as communicator

The results outlined above clearly indicate that

communication, both internally and to the outside

world, is of significant importance. Therefore, our 2005

survey specifically evaluated respondents’ expectati-

ons as regards a CEO’s communication skills. The cru-

cial finding here was the balanced relationship between

the communication of customer services/products and

strategic themes. On the one hand, respondents expect

a CEO to provide adequate information about longterm

corporate strategy and the company’s objectives; on

the other hand, the third and fourth places are taken

by issues important to customers: information about

customer services, and new products and services.

A CEO must prove himself in a short

space of time

A new CEO is expected to produce results fast.

Slightly over half of the respondents are prepared to

grant a maximum of 12 months for this to happen (cf.

diagram page 6). The average figure was 17.5 months,

which is slightly longer than in the 2002 survey. And how

long can a CEO afford to record a performance below the

average for the market as a whole? About 30% of those

interviewed grant a maximum of 12 months; another

44% are prepared to lengthen the period of grace to

18 months, but believe he should then resign. Finally,

half of all those interviewed believed the CEO should be

recruited internally, with only 15% in favour of someone

from outside the company (the rest were undecided).

In summary: today’s CEO is expected to satisfy both

market and communication demands quickly and in

equal measure.

Low tolerance for double and multiple functions

Tolerance for double functions (i.e. individuals who

simultaneously hold the posts of CEO and Chairman of

the Board) continues to decline, with 85% against (up

7% compared with 2002!). This view is most prevalent

among analysts and journalists. Multiple functions,

The «first 100 days»

Question: «From what point on do you think we can

assess whether a new CEO is performing successfully?»

Factors considered by opinion leaders when

evaluating company reputation:

1. Quality of its products and services

2. Attractiveness for the labour market

3. Financial success

4. Balance and transparency of

management structures

5. CEO reputation

Evaluating company reputation

In order to establish the correlation between the

CEO’s reputation and that of the company, the survey

not only considered the standing of CEOs but also that

of the companies. So what are the main factors that

determine a company’s overall status?

Taking these factors into account, the top-ranking

companies are no suprise. Swatch, Migros and UBS

lead the way.

From a communication point of view, the follo-

wing points must be noted: in contrast to the often

voiced opinion of top management, financial success

alone does not determine a company’s reputation.

On the contrary, financial considerations are seen

together with softer ones such as attractiveness in

the labour market and product quality. Here as in

other areas of the survey, a company’s products are

of paramount importance. This approach to assessing

CEO reputation, asking questions about factors which

determine good corporate image reveal important

information about a CEO’s vital role in perception

of the company by the outside world. In summary:

«It is more important for the CEO to be perceived as genuine than the company’s size, international scope or capitalization.»

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whereby the CEO has activities with or interests in

other companies, are also rejected by almost 60% of

those interviewed and approved by only 30%.

The CEO is in the driver’s seat:

the Chairman of the Board plays a secondary role

In a prompted question («Who is in charge of

company X?»), it is clear that the primary management

role is attributed to the CEO. This even applies to

companies where there were recent management

changes or where the former CEO is now the Chairman

of the Board.In communication management terms,

this means that the spotlight is on the CEO and his

management team, while the Board of Directors operate

in the background.

CEO Reputation Survey 2005 Switzerland

Burson-Marsteller is a globally active communi-

cations consulting company and, since 1997, has

been conducting regular international and national

surveys that examine the relationship between the

reputation of CEOs and corporate image. In 2005,

the survey was carried out in Switzerland for the

second time, following the first in 2002. In the

course of March and April, 532 opinion leaders

(CEOs, journalists, members of executive mana-

gement, financial analysts and politicians) in the

German and French-speaking parts of Switzer-

land were interviewed. We thus consciously opted

not to take a representative cross section of the

population. The company-related questions were

based on around 30 – mostly listed – Swiss com-

panies and their CEOs (mainly SMI plus specific

non-listed companies). The survey was commis-

sioned by Burson-Marsteller and carried out by the

GfS market research institute.

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«The CEO’s good reputation – just like the company brand itself – needs to be cultivated, positioned and integrated within the communication mix.»

1. Soft factors, such as the company’s values, are as

vital a part of the company’s communications as

communication for the financial markets.

2. Companies tend to respond to pressure from the

financial markets and thus put their communication

emphasis on financial reporting. In this there is

a real danger of other important factors being

neglected, such as product quality and innovation,

corporate social responsibility, human resources

and CEO reputation management.

3. The CEO’s good reputation is vital to the company’s

image and – just like the brand itself – needs to be

cultivated, positioned and integrated within the

communication mix.

Many roads lead to good reputation

The following table summarizes the various possible

approaches to building a CEO’s reputation. It shows

clearly that, depending on the company’s situation and

reputation as well as the image of its CEO, any of several

strategies may be correct.

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B-M Information_ is a series published by Burson-Marsteller on topics related to the world of communications. Further copies and previous publications can be ordered at [email protected]

Previous publications: – Overweight and obesity– Nanotechnology needs successful communication – Business leaves its stamp on Switzerland’s image– Litigation communications– Media focus: companies and managers as the heroes and villains of the media – Investor Relations – professional expectations management – CEO Reputation – CEO Reputation Survey 2005

Roman [email protected]

No success formula for CEO Reputation –

Commentary

The results for the CEO Survey in Switzerland, as

well as numerous identical surveys in other countries,

confirm the top executive’s importance when it co-

mes to the perception of the company as a whole. In

addition, the fact that stakeholders wish to see more

rapid performance tracking demands active communi-

cation on the part of the CEO. It is clear from the

results obtained that there is a distinct connection bet-

ween a company’s reputation and that of its CEO. How-

ever there is no perfect success formula for building a

CEO’s reputation. The company’s status and the perso-

nality of the CEO must be taken into account when ma-

king an overall assessment of the company. When as-

sessing a CEO’s strategic competence, special attention

should also be paid to the skill with which he is able to

communicate strategic and product-related information

and on events of importance to the company. However,

the results of the survey also suggest that a company

would be exposing itself to risk by relying entirely on

the CEO for its image and that it would be prudent to

use other means of building its reputation.

Who wants to be CEO?

Additionally a number of external factors

are making a CEO’s career increasingly difficult.

CEOs need to assert themselves in an increasingly

demanding environment. This is reflected in the

high level of top executive turnover. The economic

constraints of globalization, growing public criticism,

increasingly strict regulation and burgeoning pressure

from investors inevitably lead us to ask what could

possibly motivate anyone to be CEO. An international

study carried out in 2005 by Burson-Marsteller in

conjunction with the Economist Intelligence Unit

came to some sobering conclusions. To the question

whether they themselves would wish to be CEO,

only 46% answered Yes, with 54% giving a negative

answer! In other words, a majority of global business

influentials has no interest in becoming CEO.

ceo reputation survey 2005_e

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