Friday, January 30, 2009

Status and Reputation

I had a facinating discussion this week with a colleague of mine at the LeBow College of Business at Drexel. Dr. Dali Ma teaches management and has been studying status of companies within the financial services sector. Our discussion focused on what status means to various industries and how this differs from reputation.

It is apparent after my discussion that companies within a given industry have a sense of status. In the pharmaceutical industry, it might be who has the deepest pipeline and best R&D; in financial services, it might be who has the highest return on assets under management; etc. These are "within industry" status determinants.

At the same time, there are judgements about status by other stakeholders. At different points in time, the status determinants within the industry may no longer be as viable as those outside the industry. An example can be seen currently in the reaction by the public and elected officials to the bonuses being paid by those on Wall Street. A year ago, these bonuses would not have been an issue. They are today because 1) the financial institutions are getting government bail-outs, and 2) because the entire economy is down.

I do a lot of work with the pharmaceutical industry and this discussion with Dali really got me thinking. At what point does status shift from inside to outside the industry? Can people within the industry do a better job of anticipating this status shift and adapt with it? The pharma industry has done a generally lousy job in this regard. It has been an industry focused on status within; it has fought demands to change the determinants of status and now is struggling to adapt. The chemical industry went though something similar in the late 1970s and early 1980s when the environmental movement was emerging. The industry "hunkered down" and judged itself against set industry standards. The determinants of status started to change and the industry had to then change to adapt. It was pulled rather than working its way through the situation on its own terms.

At some point in most industries, some company emerges to meet the new status determinants or attributes. That new "star" becomes the most reputable within the industry group. Over time, the star causes all others in the industry to change and a new status is created, at a higher level of expectation than existed previously.

This is an emerging area of research. It is being led by sociologists like Dali Ma at Drexel and Brayden King at Northwestern who calls it "legitimacy", which is the same as the concept of status. I lived through several status shifts within industries--chemical, pharmaceutical and telecom. My interest has been piqued.

Tuesday, January 27, 2009

Company Culture and Reputation Turn Together

Imagine that you were looking at three gears, all interlinked. The bottom and largest gear might be Corporate Culture, the norms of behavior of people in the organization--how they treat one another and who gets rewarded; the middle gear would be the rewards and punishments in the company; the top gear would be the behaviors and communications, which influence how the organization is perceived, i.e. its reputation. One gear moves the other and so on.

This is the way that culture and reputation are interrelated. Not only does culture determine how people "do things around here", but it also determines who gets hired (the personality types), the training (formal and informal), what managers get promoted, etc. Once an organization's reputation gets established, it influences who is attracted to join the company, and the process goes on and on.

Too many reputation managers simply look to communicating with employees and with the outside. Communications falls on deaf ears when the expectations and experiences make it mute. There are many organizations that espouse one thing and do the other. Good executives are often confused by this. They need only look at the real influence on reputation--their organization's culture.

Wednesday, January 14, 2009

Communicattors Should Worry About the Big Things

I read and article in the Wall Street Journal this past week that quoted a good friend of mine, Bill Heyman, CEO of Heyman Associates, an executive search firm that focused on corporate communications. I have known Bill for more than 20-years. There are none better at what they do.

The article referenced a candidate for the top communications job at a large company. The candidate turned the job down because it did not report directly to the CEO. Bill Heyman was quoted in the article as advising the candidate to "play by the rules of the company", but the candidate refused.

There is a major problem when the focus becomes to whom one reports rather than what one does for a living. To think that someone cannot be effective if they do not report to the CEO, or that they will be more effective if they do report to the CEO is pure folly. The fault lies with a plethora of PR organizations and firms that keep insisting that the top communications job is just too important to report to anything lower than the CEO.

When I worked at Bayer Corporation, I reported to the Chief Administrative Officer, along with the general counsel, the CFO, and all other corporate staff officer. No one other than the CAO reported to the CEO. This reporting relationship did not diminish my standing or my influence. I had an open door to the CEO and saw him perhaps more than anyone, including the CAO. I was his counselor, his confidant. I held enormous power and influence in the company. Would it have been any different if I had reported directly to the CEO? No! Similarly, Joyce Hergenhan, the now retired head of commmunications at GE and a very powerful figure within the company reported to the head of HR.

Only about 48% of heads of communications report to the CEO, or so they claim. I would guess that the number is far less than that in reality. There is such a premium put on the reporting relationship that many heads of communications feel less than adequate if they admit to reporting to someone other than the CEO.

Why all of this tumult about reporting anyway? I think that there are some people within the communications profession who really do believe that their counsel might not be as well heard if they did not have the direct reporting relationship. However, most others want this reporting because they are insecure. The profession of communications is a fairly insecure one as a whole, always fretting about lack of influence or lack of a "seat at the decision-making table".

The lack of influence of some will not change with reporting lines. It will come when there are better people within the profession to whom people in the organization want to listen to. Business people get listened to; communicators do not. When communications people think and act like business people rather than like artists and "creative types", they gain access to every door in the company.

I know I had enormous influence in my career. I was paid as well as anyone in the company, my counsel was sought by many throughout the company, and I was highly regarded by my staff and peers. This had nothing to do with reporting lines, but rather with my expertise and knowledge. Perhaps that's what Bill's candidate should have been worrying about.