Consulting Corporate Finance Management. Brand and Reputation in the Boardroom. The role of the CEO with regard to brand and reputation

Transcription

1 Consulting Corporate Finance Management Brand and Reputation in the Boardroom The role of the CEO with regard to brand and reputation

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3 Table of contents 1. Introduction Brand and Reputation Research design Results and conclusions Implications and recommendations About Boer & Croon About the author A selection of recommended literature

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5 1. Introduction Many a CEO is looking to find the right balance in his* own positioning. The modesty of Dutch CEOs results in them not seeing themselves as the personification of the company. They do, however, accept the role of figurehead, particularly during difficult times. This is one of the conclusions of the research study Brand and Reputation in the Boardroom carried out among 20 Dutch CEOs by Boer & Croon associate Koenraad van Hasselt, as part of his Masters degree. In the past, Boer & Croon had already commissioned research on the view taken by Dutch top executives on reputation management ( Executives on Reputation, Ron van der Jagt, 2005). In supporting this new study, Boer & Croon hopes to get a better understanding of the CEO s personal commitment to the corporate brand and the reputation of his organisation. The research will provide an impetus for furthering professio-nalism and strengthening Boer and Croon s activities in the areas of reputation, branding and communication. The purpose of this qualitative research was to gain a better understanding but due to the scope and purpose of the study the findings cannot be considered as being representative of all Dutch CEOs. During the interviews with the CEOs it became clear that they concur with the value of the corporate brand as a binding factor between vision, culture and brand promise. According to the CEOs, customer satisfaction and delivering on the brand promise have the biggest impact on the corporate reputation, followed by stakeholder relationships and the reputation of the industry sector. Therefore, it is not unusual that in addition to value creation, CEOs are held accountable for soft performance indicators such as customer and employee satisfaction, diversity and the performance of the Board of Directors. * For easier readability, masculine pronouns have been used. 5

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7 2. Brand and reputation The relationship between brand and reputation is a fascinating one. The world of communication accommodates brand thinkers and reputation thinkers. Brand managers regard the corporate brand as the roots and ultimate purpose of the company. What matters is to make the brand promise relevant for all stakeholders. Reputation managers are more likely to focus on the licence to operate : without the support of the stakeholders the right of existence and the continuity of the company will be at risk. Consistently living up to the brand promise and a consistent way of expressing this promise have a positive effect on perceptions among the stakeholders. This calls for leadership and a structured approach. 7

8 3. Research design Interviews were carried out between May and September Twenty CEOs, from various industry sectors, contributed to the study. Name Company Name Company Niek Hoek Chairman BoM Delta Lloyd Wout Dekker Chairman BoM Nutreco Holding Joop van Oosten Chairman BoM Koninklijke BAM Groep Ad Scheepbouwer Chairman BoM KPN Peter Molengraaf Chairman Board of Directors Alliander Sander van der Laan Managing Director Albert Heijn Pieter Jongstra Managing Partner Ernst & Young The Netherlands & Belgium Jan de Jong Managing Director NOS Gerrit Zalm Chairman BoM ABN Amro bank Bert Meerstadt Chairman Executive Board Nederlandse Spoorwegen Willem van Duin Chairman BoM Eureko Gerrit Witzel Chairman BoM Heijmans Feike Sijbesma Chairman BoM DSM Peter Hartman Chairman BoM KLM Ben Noteboom CEO Randstad Holding Robert Swaak Chairman BoM PwC Netherlands John Paul Broeders CEO Koninklijke Vopak Jos Baeten Chairman Board of Directors ASR Nederland Sjoerd Vollebregt Chairman BoM Stork Gerard van de Aast Chairman BoM Koninklijke Volker Wessels Figure 1: This study was made possible thanks to the cooperation of the above CEOs. In addition to the interviews, a detailed literature study was carried out focused on the triangle brand - reputation leadership. The literature shows that the CEO plays a key role in the complex world of brand and reputation. On the one hand, he represents the organisation s heritage, culture and vision, but on the other hand he is, first and foremost, the person stakeholders hold accountable for the performance of the organisation. A strong brand gives direction to a company and a good reputation creates added value for, among other, shareholders, customers and the labour market. 8

9 The hypothesis that underlies the research is that there is a correlation between corporate brand characteristics and the personal involvement of the CEO with brand and reputation. In order to be able to properly identify the studied brands, the Brand/Reputation grid by Riezebos (2005) was used. This grid classifies corporate brands into one of four types, which have a focus on product, process, market or the organisation itself. This classification is developed by putting together the internal image ( how the company sees itself ) and the external image ( how others see the company ). Strong Market Organisation External image Process Product Weak Strong Self image Figure 2: Brand/Reputation Grid (Riezebos, 2005) 9

10 As an extension to the brand/reputation grid model, the role of the CEO with regard to brand and reputation can be characterised as follows: Introvert (product-driven): Focus on internal communication, brings together all internal parties that have an effect on the brand and reputation, allows all parties to contribute, an atmosphere of openness and mutual trust. Modest (process-driven): Focus on functional communication, based on trust, stability and control, not aimed at brand and reputation. Extravert (market-driven): Focus on image, seeks publicity and thrives on it, comes across as being purposeful and self-assured. Very customer-oriented, challenges others. Brand champion (organisation-driven): Continually moves the goal posts, is at the forefront of industry developments, anticipates the future and steers innovation and change. Actively disseminates this to both internal and external audiences. Gives hope, outlook and manages to get his employees behind his vision. The interviews assessed whether the brand characteristics explained the CEO s sense of commitment to brand and reputation. In addition, four general explanatory variables were evaluated: personal experience and background, industry sector, whether the company is listed or not, and brand architecture. 10

11 Hypothesis: four types of brand/reputation orientation Extravert Champion Antecedents: possible explanatory variables Brand and Reputation commitmet CEO Consequences, vision on 8 themes Modest Introvert Figure 3: Research Model. The consequences are focused on the commitment, in practice, of the CEO. Time allocation, organisational context of brand and reputation, the priority on the management agenda and the CEO s KPIs were addressed, among other things. 11

12 4. Results and conclusions The main conclusion of the study is that the CEO s leadership style is not always consistent with the characteristics attributed to the corporate brand. The role the CEO sees himself in is one of bringing about a shift in market focus and culture; this also includes a shift in brand characteristics. A relatively large number of the interviewed CEO s consider their own leadership style to be visionary while the corporate culture is process or market driven. Company culture Company orientation Competitive Enterpreneurial Market Culture Controlled Family business Process Product Critical success factor Leadership style Winning Teamwork Competitor Visionary Reliable Unique products Monitor Facilitator # respondents Figure 4: Results business orientation and leadership style. 12

13 Product Process Market Organisation Introvert Modest 3 Extravert 2 7 Champion 1 2 # respondents Figure 5: Corporate brand typology and CEO commitment to brand & reputation. Figure 5 shows that there is not a one-to-one relationship between the corporate brand typology and the CEO s commitment. One of the main explanations for the affinity a CEO has with brand and reputation appears to be the industry sector in which the company operates. The interviewed CEOs in the construction and financial sectors were clearly cautious in positioning themselves and their companies. They claim this is due to the recent loss of trust these business sectors suffered. Many a CEO appears to be preoccupied with finding the right balance between cautiousness and exuberance concerning their own profile. The term Celebrity CEO, which never really became commonly used in the Netherlands anyway, is now definitely no longer relevant. Successful CEOs are leaders who set out the course behind the scenes with becoming modesty and ensure that the company moves in the right direction. All the interviewed CEOs accepted the fact that they are the figurehead of the company. Frequently it is not a chosen role but the CEO is simply seen and approached by the outside world as the one primarily responsible for the company. The shown modesty is to the Dutch CEO s credit: he does not see himself as the personification of the company but merely as a passerby allowed to play a prominent role for the company for a specified time. 13

14 I am the figurehead and set the tone as a role model 6 I take my responsibility, it comes with the job 4 I don t feel like a figurehead, others see it like that 2 Number of times mentioned (multiple answers allowed) When I become the personification of this company, I have to leave, otherwise this is doomed to fail I am the company, from head to toe, but the power comes from the collective I am the figurehead, but the company does not determine who I am, I am only allowed to do it for a certain time I am only a hired gun, with an impact for a certain period I am too old to change myself, it is easier to change the company I am the incarnated enterprise, in particular in times of misfortune Figure 6: CEO as figurehead. None of the CEOs interviewed doubted the importance of the corporate brand. They definitely realise that the brand is an important intangible asset (difference between market value and book value), but do not see the point of actually measuring the financial value of the brand. The CEO does, however, see the relevance of measurements in terms of brand visibility and brand preference. The CEO s role is that of steering the development of the corporate brand as this is directly linked (at least it should be) to the vision, mission and core values, all matters which he regards as his responsibility. In the first place, the CEOs see the corporate brand as a strategic issue, for example, when dealing with brand hierarchy (whether to endorse or not) and the positioning of the brand during mergers and acquisitions. Although the interviewees immediately associate the relevance of the corporate brand with customers and consumers, they also indicate the importance of the brand as a catalyst within the organisation. Particularly in international companies, the corporate brand sets a direction and provides consistency. A strong brand induces coherence in the way employees perform and present themselves. Brand compliant behaviour, i.e. living up to the core values and brand values of the company, is increasingly becoming one of the fixed performance indicators for employees, often laid down in companies performance appraisal systems. 14

15 CEOs consider it a priority to explain their vision and objectives internally and to express the core values. They use all means and tools to reach their employees and interact with them. The use of social media is still in its infancy and only a few CEOs use this medium. The Corporate Marketing or Corporate Communications Director, and sometimes a member of the Board of Directors, is responsible for the day-to-day running of the brand. CEO s consider the day-to-day brand responsibility as being operational and believe the corporate brand can be controlled. This is in contrast to reputation, which they believe simply just happens to a company and therefore deserves more attention. Without exception, the interviewed CEOs stated that they and they alone are responsible for the reputation of the company. They feel that it is something that they deal with on a daily basis. The interviewees cite customer satisfaction and the company s brand compliant behaviour as factors having the most important effect on the reputation, followed by stakeholder relations and the reputation of the business sector. In saying this, they are implicitly pointing at the relationship between corporate brand, or corporate brand promise, and corporate reputation. The CEOs consider employees and customers to be the most important stakeholders, followed by shareholders, the labour market and government authorities. This stakeholder orientation is not consistent with the image created, particularly in the media, that in their role, CEOs are only focused on shareholders or financial stakeholders in general. Reputation was included as a potential risk in the risk management policies of the companies interviewed but when asked what assessments and analyses this was based on, they could give no answer. The interviewees appeared to be unaware of the state of the art practices of reputation management. Only a few of those interviewed head a multi-disciplinary reputation steering committee responsible for measuring, analysing and monitoring reputation. 15

16 Although the CEOs are primarily held accountable for the financial performance of the company and value creation, they are increasingly being given other, softer, targets. These range from customer and employee satisfaction, the performance of the Board of Directors, the net promoter score and diversity, to helping in their own succession planning. Only in a few cases are reputation and brand defined as performance indicators for CEOs. It appears that the CEOs deem their own responsibilities and tasks in the areas of brand and reputation to be more important than do the Supervisory Boards, who determine the performance targets for the CEOs. Financial 16 Customer satisfaction 8 Employee satisfaction, engagement 4 Reputation 2 Role in the public cause 2 Integration process 2 Number of times mentioned (multiple answers allowed) For the first time my performance appraisal also contains a strategic and a behavioural component I am made accountable, among other things, for diversity, in particular the number of women in management roles My contribution to finding a suitable successor for me is part of my bonus targets My responsibility is now focused on the way the Board of Management is operating Net promotor score is one of my personal targets, in addition to the company wide financial targets I am made accountable for many things, the remuneration document spans some ten pages Figure 7: The CEO s KPIs. 16

17 5. Implications and recommendations The results of this study once again emphasize the time-honoured truism that change is the only constant for successful companies. Managing this process is one of the CEO s main tasks. CEOs acknowledge the importance of reputation and communication in successfully effectuating major changes. It is, therefore, in their best interest to familiarize themselves with the latest developments and methods in the areas of corporate branding and reputation management. Communications Directors should put themselves more in the place of their CEOs, interpret their assignment and understand their leadership styles. Communications professionals will have to speak the language of the Boardroom: objective, based on facts and substantiated with figures. The Communications function must make a measurable contribution to the implementation of major changes and, thereby, the organisation s objectives as a whole. Only then will brand and reputation earn the place they deserve on the Board s agenda. 17

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19 About Boer & Croon Boer & Croon stands for high-quality service in consulting, corporate finance and management. This unique combination enables us to come to grips with our customers strategic challenges and to find real solutions for them. From inspiration to implementation. We are unmatched in our ability to combine brainpower and decisiveness. An excellent mix enabling us to quickly break new ground towards improved, sustainable results. The group comprises approximately 450 experienced consultants, managers and support staff. Boer & Croon has many years of experience with assignments at the crossroads of strategy, organisation and communication. We consult and support top management of the corporate as well as the not for profit sector on change management issues where positioning, external perceptions, social responsibility and internal buy in are key. Nowadays, excellent communication is crucial for the (top of ) organisations, especially when sensitive issues are at stake, such as an impending crisis, an organisational change, relationships in a complex stakeholder arena, the introduction of a new strategy and mergers & acquisitions. We help clients from the perspective of four areas of specialization: Identity, mission and vision, positioning, brand strategy and reputation Issues management, crisis communication, stakeholders, media and public affairs Getting buy in and bringing the organisation into motion through change communication en strategic communication Organisation and professionalization of the communication function and interim solutions 19

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21 About the author Koenraad van Hasselt MBM is originally a linguist but also studied Public Relations and Mass Communications at the University of Utrecht and Brand Management at the European Institute for Brand Management (EURIB). He held several executive Communications positions at international companies, including Akzo Nobel (in the Netherlands and Germany), Canon Europe, Philips and KPN. At Philips Consumer Electronics he was Vice-President, with global responsibility for Corporate Communications and at KPN he was the Director of Corporate Communications. Koenraad van Hasselt runs a consultancy ( for Corporate Branding and Reputation management. He is currently Principal at RiiЯ (Risk2 Reputation) ( in London. RiiЯ measures, analyses and monitors reputational risk for large international organisations as an integrated part of their risk management system. Koenraad has performed various interim assignments for Boer & Croon, of which he has been an associate since

22 A selection of recommended literature. Cameron, K.S. and Quinn, R.E. (2006), Diagnosing and Changing Organizational Culture, Jossey-Bass, San Francisco, US. Dowling, G. (2006), Reputation Risk: It s the Board s Ultimate Responsibility, Journal of Business Strategy, Vol. 27 No.2, pp Gaines-Ross, L. (2003), CEO Capital, A guide to building CEO reputation and company success, John Wiley & Sons Inc., Hoboken, New Yersey, USA. Hansen, M.T., Ibarra, H. and Peyer, U. (2010), The Best-Performing CEO s in the World, Harvard Business Review, January Hatch, M.J., Schultz, M. (2008), Taking Brand Initiative (how companies can align strategy, culture, and identity through corporate branding), Jossey-Bass, San Francisco, CA. Ind, N. (2003), Inside out: how employees build value, Journal of Brand Management, Vol. 10, No 6., pp Jagt, A.R.J. van der (2004), Corporate reputatiemanagement (Bouwen aan vertrouwen in het transparantietijdperk), Kluwer, Deventer. Jagt, A.R.J. van der (2005), Executives on Reputation, Het topmanagement van het Nederlandse bedrijfsleven over corporate communication en reputatiemanagement, Boer & Croon Strategy and Management Group, Amsterdam. Kotter, J.P. (1996), Leading Change, Harvard Business School Press, Boston, USA. Khurana, R. (2002), The Curse of the Superstar CEO, Harvard Business Review, September Morhart, F., Herzog, W. and Tomczak, T. (2009), Brand-specific leadership: Turning Employees into Brand Champions, Journal of Marketing, Vol. 73 (September 2009), pp Olins, W., How Brands are Taking over the Corporation (2000). In: The Expressive Organization, linking Identity, Reputation and the Corporate Brand (Schultz, M, Hatch M.J. and Holten Larsen, M., ed.), Chapter 4, pp , Oxford University Press, Oxford, UK. Riel, C.B.M. van, and Fombrun, C. J. (2007), Essentials of Corporate Communication, Implementing practices for effective reputation management, Routledge, Abingon, UK and New York, USA. Ries, A., and Ries, L. (2009), War in the Boardroom, Why Left-Brain Management and Right-Brain Marketing Don t See Eye-to-Eye and What to Do About It, HarperCollins, New York, USA. Riezebos, R. en Van der Grinten, J. (2008), Positioneren, stappenplan voor een scherpe positionering, Boom, Amsterdam. Urde, M. (2003), Core value-based corporate brand building, European Journal of Marketing, Vol. 37, No. 7/8, pp

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24 aanpassingen: p. 3: Inhoudopgave > Inhoud Samenvatting eerst of inhoud eerst? Samenvatting = inleiding? p. 6: Titel opgesplitst in titel en intro-tekst p 9. introtekst aanpassen (RJ) p. 10: hoofdstuk 4 onderverdeeld in 4.1, 4.2 etc... titels boven 4.1 ed nu zelf bedacht, anders? p. 12: Op de volgende pagina s > hieronder? Boer & Croon Postbus AT Amsterdam Amstelveenseweg JK Amsterdam Tel.: +31 (0) Fax.: +31 (0) info@boercroon.nl Boer & Croon stands for high-quality service in consulting, corporate finance and management. This unique combination enables us to come to grips with our customers strategic challenges and to find real solutions for them. From inspiration to implementation. We are unmatched in our ability to combine brainpower and decisiveness. An excellent mix enabling us to quickly break new ground towards improved, sustainable results. The group comprises approximately 450 experienced consultants, managers and support staff.