CEO CAPITAL MODEL

CEO Capital: A Guide to CEO Reputation and Company Success (John Wiley & Sons, available on www.amazon.com) confirms what every executive knows to be true: the reputation of a company and its CEO are inextricably linked. Weber Shandwick’s Chief Reputation Strategist Dr. Leslie Gaines-Ross describes in practical terms the strategies for CEOs to use to earn and sustain enduring and lasting company reputations.

A practical manual for corporate executives, CEO Capital isolates best practices for CEOs as they navigate their way through their first 100 days to their last 100 hours. Four objectives are identified:

• To demonstrate how important CEO reputation is to a company’s reputation
• To isolate the determinants of CEO reputation
• To establish a working model for building CEO and corporate reputation
• To describe how CEOs master the stages of their tenure to leverage their company’s standing and ultimate destiny

Topics addressed in this no-nonsense manual include: preparing for the CEO transition; putting employees first; setting an agenda; declaring what matters; communicating personally and symbolically; planning for the first anniversary; minding your stakeholders; leading with “thought leadership”; reinvention and execution; and leaving a legacy.

The book’s first section shows why CEO reputation demands our undivided attention. Just like any other wealth-creating asset, CEO reputation needs to be invested in, earned, and leveraged over the long–term to reap enduring benefits. The next section examines the mind-set and behavior of CEOs through the five stages of executive tenure, explaining how each step provides distinct opportunities to build credibility, integrity and solid internal communications leading to the company’s long-term viability. The final section discusses various corporate trends that will affect chief executives in the 21st century, addressing how executives can meet the challenges of a society characterized by ever-accelerating change, scrutiny, and demanding constituencies.

The term “CEO Capital” refers to the wealth or equity created by a CEO’s reputation that if harnessed properly can benefit a company’s overall reputation and bottom line.

The important point is that CEO capital is not something that happens overnight – it happens through deliberate process with the goal of leveraging the weight in a CEO’s capital to enhance a company’s reputation and distinguish itself from its competitors. There are five discernable, predictable stages of this metamorphosis: 1) the countdown, 2) the first hundred days employees first, 3) the first year, 4) the turning point, and 5) revision and reinvention. Taken together, these stages outline how CEOs can build strong reputations to achieve greater shareholder value, employee commitment and a meaningful corporate culture.

Stage 1: The Countdown

The quiet leadership often associated with this stage should not be confused with ineffectiveness. This time is critical in providing a strong foundation for the subsequent stages, particularly in terms of establishing a tone for the overall leadership approach.

Key Steps:

• Get your transition team on board
• Emphasize that an orderly transition is in place
• Address why "you" were chosen
• Prepare to answer what will remain the same and what will be different
• Be patient: give yourself time to find your sea legs
• Jointly establish a clear division of labor
• Draw up a CEO constellation chart
• Communicate communicate communicate

Stage 2: The First Hundred Days

In this stage, the new CEO must quickly and credibly take hold of the organization. There is a need to focus internally, build momentum and keep eyes wide open and ears to the ground, ever vigilant for warning signs. The pressure to perform should not cause CEOs to act in haste. It is far better to begin getting one’s house in order.

Key Steps:

• Employees first
• Get your senior team aboard
• Set your own agenda
• Tend to your board
• Declare what matters
• Identify your short–term wins
• Communicate personally

Stage 3: The First Year

The remaining part of the first year is critical to developing the new CEO’s capital. By the first anniversary, the CEO should have successfully become immersed in the business, learned quickly, listened to new voices and cultivated a CEO persona.

Key Steps:

• Immerse yourself in the business
• Listen to new voices
• Benchmark through research
• Find your no. 2
• Choose your operational tenet
• Articulate and embody a code of ethical conduct
• Show your softer side
• Cultivate your folklore
• Become a narrator CEO
• Practice the language of leadership
• Make sure you are heard
• Begin pinning down a strategic vision
• Beware the five-quarter rule

Stage 4: The Turning Point

During this pivotal stage, the CEO commits to a strategic vision and takes meaningful steps to transform the organization for the better. This stage requires putting stakeholders at ease by delivering results, confirming members of the senior team and seeking input from special interest groups. At this point, the CEO embarks on a plan for the future and leads with thought. Once CEOs have passed successfully through this stage, they can truly be said to have generated substantial CEO capital.

Key Steps:

• Show them a direction, forge a vision
• Show them a working top management team
• Show them the money
• Seek input from independent parties
• Mind your NGOs
• Start networking
• Be Internet savvy
• Identify a thought leadership platform

Stage 5: Revision and Reinvention

The last stage of building CEO capital begins at approximately the 2 year mark and continues into the fourth year. The CEO’s strategic vision should now be in place. That said, the vision needs to be flexible and capable of evolving over time. This stage is neither a time to coast nor to rest on previous triumphs but rather a time to refine and consolidate strategies and actions.

Key Steps:

• Tighten the structure
• Execute to deliver
• Put the customer front and center
• Keep it burning
• Consider your legacy
• Reinvent

The PriceWaterhouseCoopers Global CEO Survey examined the role of how CEOs view governance, risk management and compliance (GRC). In high numbers, CEOs credit GRC with having a major, positive effect on legal liabilities (64 percent) and on reputation and brand (56 percent). However, they perceive other benefits less clearly.

A 2004 Capgemini survey of more than 100 senior executives revealed that nearly half (47 percent) reported that enhancing corporate reputation is the top way for a new CEO to demonstrate leadership.

What Best Demonstrates Leadership by a New CEO?

The study also examined the areas in which are positively impacted by a CEO’s reputation as an innovator – with competitive advantage and differentiation ranked at the top (54 percent).

 

Further, when asked to rank the importance of various traits, a CEO’s reputation inside their industry was ranked at a 2.22 on an importance scale from 1-5 (with 1 being the highest).