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CEO & Corporate Reputation. Jeanette Dyhre Kvisvik Manager, Burson-Marsteller, Norway Hotel Nordica, Reykjavik, Thursday 21. September. CEO Reputation.

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ceo corporate reputation
CEO & Corporate Reputation

Jeanette Dyhre Kvisvik

Manager, Burson-Marsteller, Norway

Hotel Nordica, Reykjavik, Thursday 21. September

ceo reputation
CEO Reputation

“Despite the size and complexity of modern corporations, the person in charge still sets the tone, defines the style, becomes the company’s public face.”

Fortune, November 18, 2005

“It takes a lifetime to build a reputation, and only a short time to lose it all.”

Joseph Neubauer, CEO of Aramark, BusinessWeek, September 23, 2002

corporate reputation

Corporate Reputation

“ If you lose dollars for the firm by bad decisions, I will be understanding. If you lose reputation for the firm, I willbe ruthless.”

Warren Buffett

how to build trust
How to build trust

Stakeholder map- The various needs for communication

The media

Public opinion

Political society

CEO &

company

Internally

Financial society

agenda
Agenda
  • Global Survey- CEO Capital and Corporate Reputation 2005
  • Norwegian Survey- CEO and Corporate Reputation 2006
  • An example- Norsk Hydro- Norways second largest oil company
building ceo reputation global
Building CEO Reputation - Global
  • Now in its fifth wave, Burson-Marsteller’s first CEO Reputation Study was conducted in 1997
  • The research was conducted online with the Economist Intelligence Unit (EIU), a world leader in global business intelligence and the business–to–business arm of The Economist Group.
  • The sample includes over 600 business influentials from 65 countries:
    • 146 CEOs
    • 146 senior executives
    • 188 financial analysts
  • 103 business journalists
  • 102 government officials
how much does ceo reputation matter
How much does CEO Reputation Matter?
  • On a global basis, the CEO is held responsible for 47% of a company’s reputation. Europeans and North Americans attribute less responsibility to the CEO than do Asia/Pacific and Latin American influentials.

2005 CEO Contribution to Corporate Reputation

how does ceo reputation pay off

SCORECARD

North America Buy or recommend stock

Latin America Recommend company as alliance partner or good place to work

CEOs Maintain confidence when share price lags

How does CEO Reputation pay off?
  • Paying attention to what a CEO has to say and recommending the company as a preferred partner is the greatest benefits of having a good CEO reputation.

The scorecard identifies regions and segments where scores are higher or lower than the average.

what builds ceo reputation

SCORECARD

North/Latin America Demand high ethical conduct

North America/Asia/Pacific Foster corporate governance

Latin America Attract quality management team

Financial Analysts Manage crises/downturns effectively

What builds CEO reputation?
  • Credibility, attracting quality management and communicating a clear vision internally are the top three measures that shape CEO reputation. Delivering financial results is necessary for a CEO, but being credible is paramount.

Top 12 of 20 CEO qualities

what builds ceo reputation europe
What builds CEO reputation- Europe
  • All business influentials agree that credibility drives CEO reputation. Demanding high ethical conduct ranked relatively low for European influentials, possibly because Europeans already expect strong ethics from their companies’ leaders.

Top 12 of 20 CEO qualities

= lower than total

= higher than total

top 25 most admired ceos
Top 25 Most Admired CEOs
  • Worldwide, Bill Gates is the most admired CEO by business influentials by a large margin.
  • Steve Jobs and Warren Buffett rank a distant second and third.
  • CEOs from North American, European and Asian/Pacific companies are represented on this most admired list.
top 25 most admired ceos european influentials
Top 25 Most Admired CEOs: European Influentials
  • Among European business influentials, Bill Gates is the most admired CEO worldwide.
drivers of corporate reputation

SCORECARD

Europe Stakeholder honesty and ethical behavior

Asia/Pacific Honesty with stakeholders and good governance

Communicating externally

CEOs Focus on serving customers

Financial AnalystsHonesty with stakeholders and effective internal communications

High quality management

Drivers of Corporate Reputation
drivers of corporate reputation1
Drivers of Corporate Reputation
  • Europeans rank external communication as the number one driver of company reputation.

Honesty with stakeholders was ranked relatively low, possibly reflecting a European expectation for honest behavior.

= lower than total

= higher than total

payoffs of good corporate reputation

SCORECARD

Latin America Confidence that company will do the right thing

Latin America/Asia Pacific Better relations with regulators/government

CEOs Confidence that company will do the right thing and a higher share price.

Payoffs of Good Corporate Reputation
  • Attracting top talent is the biggest payoff of developing a good corporate reputation. Other perceived payoffs include the ability to attract new business and increased customer loyalty.
our approach
Our Approach

Reputation Report Card

CEO Reputation Report Card

Culture Capital Assessment

Corporate Equity Analysis

Seasons of a CEO

Environmental Scan

Competitive Platform Analysis/Benchmarking

Corporate Reputation Research

CEO Reputation Research

Corporate Brand Valuator

Fortune’s America’s Most Admired Companies

Fortune’s Global Most Admired CompaniesReputation Index

Brand Asset Valuator (BAV)

Client Charter

Desired Business Results

CurrentReputationScorecards

Insights

Analysis

Assessment

Results and Measurement

Creative Execution

Strategic Programming

Media Relations

CEO Dance Card

Investor Relations

Employee & Constituency Engagement

Web Communications

Corporate and Internal Advertising

Customized Training Programs

Corporate Social Responsibility

Corporate Identity

Vision and Values

CEO Platform Development

CEO’s First 100 Days

Integrated Communication

Strategy

Brand Definition

Thought Leadership

Strategic Stakeholder

Messaging

Leadership Development

Rewards & Recognition

Crisis Preparedness

Measurement Planning

Foundation Consulting

Stock Price/Market Share

Rankings & Scorecards

Feedback Analysis

Culture Quotient

Recruitment & Retention

Media Coverage/Penetration

who are the respondents
Who are the respondents?

100

Investorer

90

Government officials

Journalister Media

80

Investors

70

Analytikere/ Meglere

60

The only survey in Norway measuring reputation amongst Business Influentials

Business journalists

50

Toppledere

40

Financial analysts

30

Executives

20

10

0

Source: Burson-Marsteller og Research International Topplederundersøkelse 2005

3

a good reputation is a rapidly increasing success factor in today s society
A good reputation is a rapidly increasing success factor in today's society

The power of reputation

Sum up

CEO Reputation

is responsible for

47 %

of a

Company Reputation

which influences

Profitability

- Share price

  • Revenue
  • Turnover

Other factors

- Alliance/ merger partner

- Recruiting and retaining

- Power

  • In business
  • Politically

Kilde: Burson- Marsteller analyse; Burson-Marsteller/ Economist Global CEO Capital, 2005

slide26

2005

2003

Quality of leadership and ability to adjust to change is the most important drivers when investing in companies

What is most important when deciding to invest in a company?

48

Leadership

40

47

Adjust to change

25

38

Quality of products

and services

38

38

Credibility

42

31

A trusted and good management is more important than financial situation

Financial situation

25

29

Innovation

13

28

Specific skills or technology

17

27

Ability to recruit and retain

26

21

Loyal customers

29

16

Strong brand

22

14

Financial track record

23

10

Environmental focus

11

8

Social responsibility

12

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Data: Tall i % av base: 135/88. Figuren viser andelen som har svart 9-10 på en 10-delt skala for betydning for valg

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide27

2005

2003

In addition, the CEO reputation affects other key success factors for the company…

To what extend does your opinion of a CEO affect your will to.....

76

Recommended as a alliance/merger partner

70

74

Believe in company despite negative media coverage

34

71

Potential employer

69

70

Buy stocks in the company

72

Believe in company despite share price develops below index

61

62

46

Be informed of company's development

39

34

Buy company's products and services

24

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Tall i % av base: 135/88. Figuren viser andelen som har

svart 7-10 på en 10-delt skala for grad av påvirkning

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide29

There is a strong correlation between the CEOand the company reputation

Correlation

The correlation proves that the trust in the CEO is crucial for a company’s reputation

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

big changes in companies reputation since 2003 shows that the reputation is in motion
Big changes in companies reputation since 2003 shows that the reputation is in motion

100

Reputation is easily broken down in a crisis, but the reputation may be restored within 2 years

75

Company reputation

50

25

0

0

25

50

75

100

CEO Capital

Tall i % av base generelt inntrykk: 90. Figuren viser andelen som har svart 7-10 på en 10-delt skala for tillit (x-aksen) og andelen som har svart 7-10 på en 10-delt skala for inntrykk (y-aksen)

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

reputation recovery is possible but demands focus

Norway

2005

2,2

Global

2005

3,2

0

0,5

1

1,5

2

2,5

3

3,5

4

Reputation recovery is possible, but demands focus

Average in years

Comparison of the two studies shows that the time to recover the reputation is shorter in Norway than globally

Data: Tall i % av base: Norge 107 som har svart, Globalt: Ca 600

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

to build and sustain a company s reputation the focus must be on ethics good leadership and results
To build and sustain a company's reputation, the focus must be on ethics, good leadership and results…

2005

Ethics

87

Trust in CEO

79

Financial results

79

Quality products and services

78

Customer focused

76

Attracts and retain good employees

74

The focus on ethics is very high in Norway compared to the global and European results

Communicates effectively externally

73

Adjust to change

71

Corporate governance

66

Innovative

64

Social responsibility

55

Industry leading

54

A good place to work

53

Environmental

52

Stakeholder openness

52

Communicates effectively internally

49

Company size

14

Global company

12

0

20

40

60

80

100

Data: Tall i % av base: 135. Figuren viser andelen som har svart 5-6 på en 6-delt skala for viktighet

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide34

2005

2003

… the same criteria is also the most important to buildand sustain a CEOs reputation

How important is it for your trust in the CEO that…

71

Sets high ethical standards

62

66

Creates good financial results

58

63

Have a good management team

60

When the company reputation and the CEOs reputation depends on the same criteria, it shows how the company and the CEO is identified with each other

Have the ability to adjust to changes

62

54

58

Manage crisis in a credible way

50

Turn company's strategies into action

57

60

Informs of company's strategies and visionsto employees

53

52

38

Handles the media in a credible way

44

38

Focuses on customer relations

38

36

Retain and develops employees

37

Informs of company's strategiesand visions externally

31

29

30

Focuses on social responsibility

22

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100 %

Base: Tall i % av base: 135/88. Figuren viser andelen som har svart 9-10 på en 10-delt skala for viktighet

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

business newspapers are the most important communication channel for ceos and companies
Business newspapers are the most important communication channel for CEOs and companies

Fra hvilke kilder lærer du mest om toppledere?

TV, radio and the internet has become more important as a reputation communication channel the last two years due to a rapidly increasing focus in business news

In addition, conferences, seminars and other meeting arenas has increased in importance

Data: Tall i % av base: 135/88. Figuren viser kilder

der man lærer mest om den enkelte toppleder

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide36

…to acquire the trust of the employees

7 months (0)

…to establish good relations for the company

10 months(0)

…to improve the financial results

17 months (+1)

0 3 6 9 12 15 18

Months

…to attract a management team with the right competence

7 months (-1)

…to establish the company's visions and strategies going forward

8 months (+1)

…to turn a negative trend around

15 months (+1)

Tall i % av base: 135/88

Tall i parentes: antall måneders endring fra 2003

To build trust, a CEO must show the ability to take action within the first 6-8 months in the position…

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

do you believe that the chairboard fires their ceos too fast

The demands for the CEO ability to take action and show results are increasing

Do you believe that the chairboard fires their CEOs too fast?

2003

2005

In time

In time

55%

32%

Too late

Too early

Too early

49%

16%

16%

Too late

30%

Data: Tall i % av base: 135/88

Twice as many business influentials than in 2003 believes that CEOs should be fired earlier

The percentage that believe the CEO should be given more time is down from 49% to 16%

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

zooming in on norway s 2nd largest company
Zooming in on Norway's 2nd largest company

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

hydro has the best reputation amongst business influentials

2005

2003

Hydro has the best reputation amongst business influentials

Company reputation

Hydro

88

79

78

50

78

27

72

73

Hydro on top

Potential reasons:

  • Good results
  • Strong management
  • High ethical standards
  • High profile- 100 years

72

69

60

56

24

53

28

46

42

41

39

33

12

27

78

25

16

13

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Data: Tall i % av base inntrykk: 135/88. Figuren viser andelen som har

svart 7-10 på en 10-delt skala for inntrykk

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide40

100

100%

Investors

93

Analysts

90

90%

Journalists

81

Executives

79

80%

Government

70%

60%

50%

40%

30%

20%

10%

0%

Hydro

Hydro has a solid and evenly divided trust

amongst key stakeholders

Company reputation – divided by stakeholders

Investors have full confidence in Hydro, but Hydro should strengthen its position amongst governmental officials and analysts

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

the hydro ceos reputation is the second highest amongst the measured companies

92

37

91

79

73

55

73

71

49

68

58

66

27

65

48

65

65

65

52

37

27

37

35

75

33

31

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Data: Tall i % av base: 135/88. Figuren viser andelen som har

svart 7-10 på en 10-delt skala for inntrykk

The Hydro CEOs reputation is the second highest amongst the measured companies

Trust in CEO

2005

2003

Hydro

Eivind Reiten is amongst the countries most trusted leaders and has increased the trust the last two years

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide42

100

100%

Investors

Analysts

Journalists

94

Executives

Government

92

90

90%

86

80%

70%

Hydro

The trust in the Hydro CEO varies more amongst the business influentials than of the company

Trust in CEO- Divided by stakeholders

Eivind Reiten has a higher trust amongst analysts than the company itself (79% vs. 94%)

Media and governmental officials has the lowest trust amongst stakeholders

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide43

Trust in CEO andcompanyreputation in 2003

Korrelasjonsområde

Svært godt

Hydro

Hydro had a high trust in both CEO and in company in 2003

Inntrykk

av selskap

Svært dårlig

Tillit til toppleder

Svært lav

Svært høy

Tall i % av base : 88. Figuren viser andelen som har svart 7-10 på en 10-delt

skala for tillit (x-aksen) og andelen som har svart 7-10 på en 10-delt skala for inntrykk (y-aksen)

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide44

Trust in CEO andHydrosreputation has increased further from 2003 to 2005

Korrelasjonsområde

Hydro

Hydro is number one

Danger- The only way is down

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide47

Corporate Reputation

“In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward.”

Alan Greenspan

Federal Reserve Chairman

slide48

2005

2003

Hydros toppleder har meget høy kjennskap

blant norske beslutningstakere

Kjennskap til toppleder

Hydro

Vår analyse viser at kjennskap er en forutsetning for topplederens tillit

Data: Tall i % av base : 135/88. Figuren viser andelen som har svart

kjenner svært godt/lite grann til

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide49

Myndigheter og journalister har best kjennskap til Hydros toppleder

Kjennskap til toppleder- fordelt på målgrupper

100%

Investor

97

97

Megler/analytiker

Journalist

Toppleder

92

Myndighet

90

90%

Hydro har lavest kjennskap blant meglere/analytikere, og forholdsvis lav hos investorer og andre ledere

84

80%

70%

Hydro

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

slide50

Investor

Megler/analytiker

Journalist

Toppleder

Myndighet

Tillit

Kjennskap

Tillit

Kjennskap

Tillit

Kjennskap

Tillit

Kjennskap

Tillit

Kjennskap

Tilliten til toppleder versus kjennskap til toppleder

Tillit til toppleder og kjennskap til toppleder - fordelt på målgrupper

Godt samsvar mellom kjennskap og tillit

Norske myndigheter har lavere tillit enn kjennskap til Reiten , mens det er omvendt for meglere og analytikere

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

hydros omd mme viser en solid oppadg ende trend fra 2001 2005

Svært

godt

Hydro 2005

Hydro 2003

Hydro 2001

Inntrykk

av selsk.

Svært dårlig

Tillit til toppleder

Svært høy

Svært lav

Tall i % av base inntrykk: 135. Figuren viser andelen som har svart 7-10 på en 10-delt

skala for tillit (x-aksen) og andelen som har svart 7-10 på en 10-delt skala for inntrykk (y-aksen)

Hydros omdømme viser en solid oppadgående trend fra 2001-2005

100

90

80

70

60

50

40

30

20

10

0

0

10

20

30

40

50

60

70

80

90

100

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

hva tar vi med oss videre
Hva tar vi med oss videre…
  • Hydros omdømme helt på topp
    • ” The only way is down”
  • Tilliten til Hydros toppleder Eivind Reiten er forholdsvis ujevnt blant beslutningstakerne
    • Hydro bør fokusere mer på kommunikasjon mot myndigheter og media
    • Hydro kan fokusere mer på kommunikasjonen mot analytikere

* Kilde: Burson-Marsteller og Research International Topplederundersøkelse 2005

management team reputation
Management Team Reputation
  • Six out of ten worldwide business influentials (60%) believe the reputation of the executive management team is more important now than it was two years ago.

Importance of Executive Management Team Vs. Two Years Ago

slide54
Selskapets omdømme blir stadig viktigere, og tillit til toppleder er nå avgjørende for selskapets omdømme...

Hvor stor betydning har tilliten til en toppleder for din oppfatning av selskapet

Vår globale undersøkelse viser at topplederen utgjør 47% av selskapets omdømme

* Kilde: Den globale undersøkelsen CEO Capital laget av Burson-Marsteller og The Economist (EIU), gjennomført høsten 2005

who wants to be ceo1
Who Wants to Be CEO?
  • A majority (54%) of global business influentials do not want to be CEO.
  • Europeans (60%) and North Americans (64%) are less likely to want the job and Latin Americans are the most eager.

= lower than total

= higher than total

why want to be ceo

SCORECARD

Latin America Enjoy complex problem-solving

Executives/ Financial Analysts Can directly affect the business

Media/Government Can directly affect the business

Media Get to build leaders

Compensation is generous

Why Want to Be CEO?
  • Global business influentials believe solving complex problems is the most enjoyable part of being CEO. The top five reasons for wanting to be CEO reflect the desire to be involved in running the business at the deepest level.

* Does not include CEO responses

why want to be ceo1
Why Want to Be CEO?
  • Business influentials of all regions believe solving complex problems is the most enjoyable part of being CEO. Compensation and prestige are the least important factors to influentials, regardless of region.

* Does not include CEO responses

= lower than total

= higher than total

why not want to be ceo

SCORECARD

North America/Europe Sarbanes-Oxley/ Regulations

Asia Pacific/Latin America Sarbanes-Oxley/ Regulations

Europe Too much pressure to cut costs

CEOs Work/life balance and public scrutiny

Attract and retain talent

Why Not Want to Be CEO?
  • The biggest concern about being CEO is the lack of work/life balance. Other prevalent concerns are the quarterly earnings focus, general stress and public scrutiny.

* Does not include CEO responses

why not want to be ceo1
Why Not Want to Be CEO?
  • For all four regions, lack of work/life balance tops the list for reasons to not want to be CEO. Other prevalent concerns are the focus on quarterly earnings, general stress and public scrutiny.

* Does not include CEO responses

= lower than total

= higher than total

ceo reputation payoff in europe
CEO Reputation payoff in Europe
  • Influentials in Europe report that CEO reputation has the greatest influence on their likelihood to listen to what a CEO has to say and recommend the company as the preferred partner.

= lower than total

= higher than total

profitability vs social responsibility

Profit

Societal interest

Profitability Vs. Social Responsibility
  • Global business influentials believe that 74% of a company’s responsibility is to make a profit and 26% is to advance societal interest. The debate over profit vs. corporate responsibility continues to be hotly discussed in the media.*

Profit Vs. Societal Interest

* “Social Responsibility: Do The Right Thing,” BusinessWeek, 15 August 2005