A message from CEO
I had an interesting conversation with a friend who works in an executive communications function at a major corporation. His latest statistics on readership of his company’s Message from CEO were dismal. “The readership is diving and we’re seriously thinking of dropping the whole thing altogether,” he said.
The particular problem is not as unique as you may think. This type of communication started with employee newsletters sent out in the internal mail a few times a year, way back when they were printed on paper. Email increased their frequency because some misguided person successfully argued that emails cost nothing. The IT folks could check how many emails were opened and everyone was happy. But no one thought about – or measured – how much time people actually spent reading them. Sending emails with links to intranets explains how the real statistics are collected, causing serious headaches in communications departments. Instead of getting an impressive 90 percent email opening rate, you may find a 90 percent click-through rate with this important caveat: people may spend so little time reading your CEO messages that very little gets past eyeballs to reach brains.
My advice to my friend, after I read a few of the CEO’s messages, was to change the frequency and content. I said not to write them unless there is news that concerns all employees. If that means four messages from your CEO a year, fine. Frequency of the newsletters should be driven by content. And content is something that few organizations pay much attention to. How often does an awkward process mangle even the best-written prose?What I mean by an awkward process is when people from HR, legal, engineering and countless other departments discover their hidden writing talents and proceed to edit everything. Or so it seems when the copy gets back with countless comments and tracked changes. Get their input before you write your messages. Send them a draft for approval regarding accuracy of material related to their content expertise, not their writing talent.
The web is full of examples of messages from chief executives that insult their readers’ intelligence. The most common is a paragraph that starts with “As you may know…” followed by “news” that had been published and broadcast by every major news media outlet in the country for weeks. Other loser examples are sentences that start with “Keep in mind,” “Let me make this perfectly clear.” These and many others do nothing to keep your readers interested, while diminishing their respect for your chief executive.
Internal executive communications is critical, especially in tough economic times, for this simple reason: If your chief executive doesn’t communicate pertinent news affecting your employees, the rumor mill will do it. And the damage could be incalculable.
Primum non nocere
The whole issue of executive compensation is getting explosive again, fueled by the healthcare fight in the US.
The last round of executive compensation debate and media coverage focused on financial sector executives, essentially concentrating on the astronomical dollar amounts of their salaries. The story seemed to have lost its legs after the White House appointed a “Pay Czar” and the economy sprouted “green shoots.”
I’m not suggesting the highest paid hedge fund manager making $3.7 billion, and the next two managers taking home close to $3 billion each in 2007, does not look like excessive compensation. But, let’s face it – it’s not easy to imagine victims behind those mega numbers. That may change with Sick for Profit, a new campaign launched by Brave New Films’ Director Robert Greenwald last month.
What makes this new strategy more effective for the advocates of government-funded, single-payer healthcare insurance is the old, but valid PR adage: images unite, issues divide. Mr. Greenwald made a powerful, six-minute video juxtaposing images of the victims and salaries of CEOs in the health insurance industry. The video’s correlation between executive compensation based on profit and denial of claims for sick and dying patients is inescapable.
One patient was repeatedly denied payment for drugs she needed to stay alive, according to a quote from the video in the Huffington Post. “I tried to explain to them that if I do not have this, I will die. And the only response she gave me was, ‘OK.’”
Stephen J. Hemsley of UnitedHealth is one of the CEOs featured prominently in the video. He made $13.2 million in 2007, only 0.356% compared to the top-earning hedge fund manager in the same year. (Yes, that’s one third of a percent.) However, Mr. Hemsley did well with total value of unexercised stock options worth $744,232,068, according to the Sick for Profit website.
Gut-wrenching scenes of sick people, including babies, side by side with salaries paid to health insurance CEOs has made the mini-documentary a hit on YouTube, with more than 142,000 views. The Sick for Profit website got 15,419 visitors on August 10th alone.
The video and the campaign made me think of Peter Drucker’s chapter called Not Knowingly to Do Harm, in his book Management, Tasks, Responsibilities, Practices. “The first responsibility of a professional was spelled out clearly, twenty-five hundred years ago, in the Hippocratic oath of the Greek physician: Primum non nocere – ‘Above all, not knowingly to do harm,’” wrote the great management guru of functioning capitalism. This applies to any professional, including managers.
Mr. Drucker brings up another issue related to not knowingly to do harm. He cautioned about American managers’ proclivity for violating the rule with respect to:
- Executive Compensation
- Use of benefit plans to impose “golden fetters” on people in the company’s employ
- Their profit rhetoric
The chapter ends with a warning that “…as the physicians found out long ago, it is not an easy rule to live up to. Its very modesty and self-constraint make it the right rule for the ethics that managers need, the ethics of responsibility.”
Excessive pay, justified by talent
Christopher Swann had an interesting commentary in Reuters Blogs yesterday, arguing that: “Excessive banking pay is a social ill. The sector has long sucked in far too much of society’s brightest graduates — putting them to tasks which often have little social value and at worst are parasitic.” These are fighting words, but Mr. Swann is not alone in making the argument that societies benefit little from the bloated and risk-driven financial sector, which tries to justify its compensation by so-called exceptional talent.
Many have questioned whether exceptional talent justifies high compensation. Robert Reich, for example, has this to say about talent in his recent post: “I needn’t remind you that over the last several years Wall Street has exhibited a truly astonishing lack of talent.” (Italics are mine.)
I came across an amazing piece by Malcolm Gladwell, via a guest article by Chris Bones, dean of Henley Business School, in the Economist. Mr. Gladwell’s wrote his piece in 2002, based on a book called “The War on Talent,” published by Harvard Business School Press. The book was written by three McKinsey & Co.’s consultants who headed a project with one objective: to find out what made the best performing companies great. They concluded that the very best companies had leaders who were obsessed with the talent issue. The book also provides valuable advice to leaders that want to make their companies exceptional: “Don’t be afraid to promote stars without specifically relevant experience, seemingly over their heads.”
It seems that not everybody benefitted from this newfound obsession with talent. One company that embraced the talent gospel with a vengeance was Enron. The company was billed $10 million a year by McKinsey & Co. and Jeffrey K. Skilling, Enron’s CEO, was once a McKinsey partner. “The only thing that differentiates Enron from our people is our people, our talent,” said Enron Chairman Kenneth Lay in The War on Talent book. And Mr. Gladwell finds one more priceless gem in the book: “… as another senior Enron executive put it to Richard Foster, a McKinsey partner who celebrated Enron in his 2001 book, Creative Destruction, ‘We hire very smart people and we pay them more than they think they are worth.’”
If you still believe in the talent principle, this is what you do. First, promote stars without specifically relevant experience, seemingly over their heads. Second, hire very smart people and pay them more than they think they are worth. What you may get is another Enron or another Wall Street meltdown.
Corporate communications is due for a reset
No company has ever gone under because of bad corporate communications. For those who think differently, please read a recent book by Jim Collins, How the Mighty Fall. I challenge you to find one instance where corporate communications caused a business to fail, and I doubt that it will ever happen in the future either.
But the function may be fatal for senior executives. And that’s true now more than ever before. In most cases, corporate communications has been treated by organizations as a nice-to-have department, rather than a must-have, strategic part of the business. I believe three factors are going to change this view, and transform the modus operandi of corporate communications.
1.) The economic cost of the recession – The crisis is not a typical downturn to be followed by a quick recovery, as we saw with recessions from the last few decades. This is serious. Third-quarter results may finally bring home what the recession is all about. Communicating how the crisis is shaping your corporation’s business strategy is no longer an exclusive purview of investor relations or your yearly social responsibility report. And don’t assume that senior executives are unaware of the problem facing their communications in the next few years. As one CEO told me last week, “we have to do better to understand and communicate what our business objectives are in this economic crisis and how we are relevant to our society.”
2.) The social cost of the recession – It absolutely behooves me how little attention we are paying to the consequence of millions and millions of unemployed. We read every day about the great depression and stimulus packages introduced by FDR. What we have missed in these history lessons is how radicalized social and political opinions became back then, once the unemployment rolls hit 20 percent and more. We may not be at the 25-percent mark but, in real numbers, there are more unemployed people in the US today than at the height of the great depression. In 1932, there were 12.83 million unemployed. According to Bureau of Labor Statistics’ June 2009 report “the number of unemployed persons (14.7 million) and the unemployment rate (9.5 percent) were little changed in June.”
3.) The impact of technology fueled by a phenomenal growth of social media – This is not your father’s PR anymore. Worry less about information you send out and pay a lot more attention to what comes back. Formulate your strategy and engage your critics in a meaningful dialogue. Here’s an example on how not to do it on the age of social media: Goldman Sachs’ response, quoted in the New York Times, to Matt Taibbi’s article The Great American Bubble Machine, published in the Rolling Stone magazine. “[Taibbi's] story is an hysterical compilation of conspiracy theories. Notable ones missing are Goldman Sachs as the third shooter [in John F. Kennedy's assassination] and faking the first lunar landing.” Not a likely winner in starting a meaningful dialogue.
Another example to prove my point is an interesting paper about the changing role of corporate communications, posted in the Economist’s Management section, called “Corporate affairs, speaking with an authentic voice.” Written by A.T. Kearney, it explores the failure of corporate communications to align its objectives with business strategy and recommends a new reporting structure to improve its effectiveness. I may not agree with all of its recommendations, but it’s right in its conclusions – we’re due for a reset in corporate communications.
Tom and Jack: two alfadogs…
We have holidays coming up on both sides of the border, so I thought I would keep this one light. I checked Tom Peters’ blog last week, just to see what he’s up to lately. His book, In Search of Excellence, was a huge hit back in the ‘80s, though the book didn’t age as well as Mr. Peters’ reputation. He’s still considered an über-consultant, just as Jack Welch has been called the über-manager of the twentieth century. I noticed something else when I checked Mr. Peters’ blog: the great consulting alfadog is no friend of the great CEO alfadog, Jack Welch. Who knew?
Mr. Peters’ post “MBA Musings” had this to say, writing about a Financial Times article regarding a new oath for MBA students: ”Some of this seems to follow not only the financial crisis, but the famous/infamous recent Jack Welch disclaimer. Welch, father-patron saint-cheerleader-haranguer-in-chief of the ubiquitous ‘shareholder value movement,’ recently dissed the primacy of shareholder value as ‘the dumbest idea in the world.’ Presumably dismissing as scurrilous the primary thing you stood for in your widely heralded career does not tarnish your reputation (Welch was just reported as starting an online B-school); to me, it makes the former GE icon a self-anointed laughingstock.”
That’s adjective-rich, pretty personal and a bit funny too.
I did a little research and found that the feud may go way back when Mr. Welch became CEO at General Electric. GE was one of only a few clients Mr. Peters dropped. Janet Lowe’s book, Jack Welch Speaks: Wit and Wisdom of the World’s Greatest Business Leader, describes their early relationship: “Insiders said Welch and Peters became ‘mutually disillusioned’ with one another. Mr. Peters once called Welch’s style ‘management by fear.’” To be fair, there have been a few examples of Mr. Peters praising (except for the vision thing) Mr. Welch’s accomplishment, as in this Fast Company article:
“When we think of Welch, we do not ordinarily think vision. (What is GE’s vision? I haven’t a clue! “We bring good things to life” ain’t it.) We do think rigorous performance standards, empowerment (“WorkOut” in GE-speak), leadership, and talent development. Jack Welch, it turns out, is a great manager (see rule #1). But great managers are the bedrock of great organizations. To save you searching for rule #1, here it is: “1. Leaders on snorting steeds (the visionary greats!) are important.”
And there is a tacit acknowledgement of the great CEO’s achievements: “I say ‘Get radical!’ That’s one thing. But then I show a quote from Jack Welch, who, after all, ran a $150 billion company (I didn’t): ‘You can’t behave in a calm, rational manner; you’ve got to be out there on the lunatic fringe.’ Suddenly my radicalism is ‘certified’ by a ‘real operator.’”
I searched in vain for anything Mr. Welch said about Mr. Peters. If you find anything, please let me know. In the meantime, happy Canada Day to my fellow Canadians and happy Independence Day to my American friends!
Communicating corporate culture
Improving corporate culture is one of those holy grails that management on every level talks about, hoping to influence how employees interact with each other and customers. I’m sure many of you lived through mergers and acquisitions and were told how these would produce far better results than either company could achieve on its own. (Yes, the word “synergy” is used a lot.) But based on statistics collected over decades, mergers have experienced dismal failure rates, even worse than marriages.
Corporate culture is often cited as a chief culprit in failed acquisitions. A book by Timothy J. Galpin and Mark Herndon, The Complete Guide to Mergers and Acquisitions: Process Tools to Support M&A Integration at Every Level, described a study of 190 CEOs, CFOs and other top executives with experience in global acquisitions (Watson Wyatt Worldwide 1998a). They found that “cultural incompatibility is consistently rated as the greatest barrier to successful integration but that research on cultural factors is the kind least likely to be conducted as an aspect of due diligence.”
Whether you are going through a merger or not, corporate culture is more than critical to your company’s health. “The thing I have learned at IBM is that culture is everything,” said Louis V. Gerstner Jr., former CEO of IBM. Managing corporate culture well and consistently should come before all else, including, for example, managing your brand. A dysfunctional corporate culture cannot create a trustworthy brand, even if you have a great branding agency. And there is another fallacy some companies pursue, often with a vengeance: the quixotic quest to change culture.
“Company cultures are like country cultures. Never try to change one. Try, instead, to work with what you’ve got,” said Peter Drucker. And working with what you got means communicating positive attributes of your culture, and highlighting characteristics that made particular individuals or groups in your organization successful. By creating personal narratives you make your stories real because they stick in people’s minds far longer than artificial, non-personal examples. These narratives can also show instances of corrective actions, when you feel that certain behaviours are inconsistent with the kind of corporate culture you want to maintain.
I have found there is something very personal about communicating corporate culture. You should give serious consideration to using social media to initiate a conversation with your employees and other stakeholders. By having a dialogue about your organizational values, morals and manners, you may find that communicating corporate culture is not about power projected from the executive office. It’s all about influence. (Please see my last post about the difference between power and influence.)
And if you’re still not convinced that communicating the right corporate culture matters, here’s one last piece of proof to consider. John Kotter and James Heskett of Harvard Business School made an interesting observation about the correlation between an organization’s culture and its performance: “We found that firms with cultures that emphasized all the key managerial constituencies (customers, stockholders, and employees) and leadership from managers at all levels outperformed firms that did not have those cultural traits by a huge margin.”
Undercover Boss
Undercover Boss is the first in a series of documentaries about CEOs who want to know what their employees really think about them and their company. In the first segment, a beard and workers’ protective suit allows Stephen Martin, the 43-year-old CEO of the Clugston Group, to live on the front lines for ten days. It was produced by Channel 4 in the UK, a commercially funded public broadcaster.
I found out about the series through a great article by Stefan Stern in Financial Times. Mr. Stern describes a key dilemma faced by many chief executives: “Employee attitude surveys, brown bag lunches, focus groups, informal chats: managers try quite hard to find out what their staff are thinking. But the results are mixed at best. What are your staff thinking? Admit it – you don’t really know.”
You can add town hall meetings where questions are often planted and staging is more reminiscent of a rock-star spectacle than a genuine dialogue. And let’s not forget emails from the CEO. The readership of those decreases as you move down the organization. Yes, the rate of opening the email may be 96 percent but that statistic is as meaningless as the number of hits on your website. Remember when MBWA (Management By Walking Around) was all the rage? Nice, but they often look like a royal family walkabout. A walkabout also happens to be a purported Australian aboriginal ritual of manhood. You may argue that all of these attempts at a dialogue are better than nothing and I would have agreed with you three years ago. Today, they remind me more of a definition of insanity – doing the same stuff over and over, expecting different results.
Mr. Martin, the undercover boss, learned a few interesting things. According to Personneltoday.com, “Martin said he was able to get an ‘unfiltered view’ of how his staff saw the company and the issues they were concerned about, identifying real problems with communication and skills.” And it gets better, or worse, if you’re doing executive communications for Mr. Martin. One of the biggest problems he identified was “his regular e-mail communication and notices to staff about developments within the business were not getting through to many of those working on the construction sites.”
“I thought I was getting my message out there about what we were doing, but it became clear that workers on site were not getting that message because we were not talking to them in a format or language they wanted,” Mr. Martin said.
According to Personneltoday.com, Martin is trying to overcome these problems by setting up teams consisting of labourers, supervisors and managers who meet frequently to discuss developments in the workplace.
The solution, by mixing different layers of organization, is bound to improve the exchange of ideas. But it’s tough. Mr. Martin and other CEOs are trying to overcome barriers to communications erected by a command-and-control management and communications structure we’ve had for 150 years, originally patterned on the old Prussian army. The attempt may get rid of some of the filters that exist between each layer, but will not provide that “unfiltered view” acquired by going undercover. Mr. Martin may also want to consider adding another tool – social media. This would be a more interactive and personal way to communicate with his organization compared to traditional broadcast tools like email.
Channel 4 will broadcast Undercover Boss in two weeks. CBS is planning to broadcast “the new reality series” later this year.
Social media and blowing smoke at Starbucks
Adam Broitman’s piece in iMedia Connection – “Social media: whose job is it anyway? – asked six thought leaders to define social media.
Here are their responses:
1. Social Media is the creation, sharing, and commenting on digital content.
2. The sharing of information between people.
3. Any form of media that alows for immediate, public consumer response that’s incorporated into the content produced.
4. Social media is media in any form for any platform created by, for, and with consumers.
5. Social media is simply talking *with* — not at — your constituencies (customers, friends, partners, prospects, etc.) & engaging them online.
6. Tools and processes used to connect, share, and to organize and collaborate with others.
Twitter rules were followed, so each answer had to be 140 characters or less. If Twitter had more characters, perhaps they may have expanded their answers to include social activism, but answer #5 covers it best from my perspective, with one caveat: without the right message (content) and strategy, you’re not going get results with social media.
PR Week Breakfast Briefing had an interesting item about a social media campaign reported by Los Angeles Times this morning. Starbucks Chief Executive Howard Schultz was targeted as anti-union, with his company exploiting workers. The campaign – launched last week by Brave New Films of Culver City – has its own website, stopstarbucks.com, and a video called “What do Starbucks and Wal-Mart have in common?” The video should be watched by every corporate and executive communications department.
It starts with Mr. Schultz’s interview on 60 Minutes, which goes downhill for him in a blink of an eye, thanks to Scott Pelley, the 60 Minutes correspondent.
While the interview was generally favorable to Starbucks, Mr. Pelley zeroed in on a Starbucks’ message that had come back to haunt them:
“One of our colleagues coined a phrase a long time ago and said, ‘We’re not in the business of filling bellies.
We’re in the business of filling souls,’” says Schultz.
“Oh now, come on,” says Pelley. “No wait a minute. That’s too … this is a company. This is a corporation. Come on.”
“OK, it is a corporation,” Schultz acknowledges.
“You’re blowing smoke now,” Pelley replies.
Now, the Vatican may get away with saying it’s in the business of filling souls, with a little smoke as a part of the ritual, but Starbucks? Ten years ago, the interview would have been sitting in the archives. But thanks to new media, it became an opening line in the union organizing effort, exploited brilliantly by the smart people at Brave New Films. By using social media, including Twitter, to hijack Starbucks’ own campaign, the union-organizing effort may or may not succeed. But consider this: the video was watched by nearly 40,000 people and an online petition demanding that Schultz “quit following Wal-Mart’s anti-union example” was signed by 12,000 people. And the damage to Starbucks reputation? Now that’s something to think about before you write the next, hopefully not a nebulous, message for your CEO without a proof point.
Executive profile database – the ready part
Ready-Aim-Fire is the essential mantra that should be playing in your head every time you’re preparing your executive for a media interview or a presentation. This post is about the “ready” part of the mantra, because without being ready your aim will be off and you may get fired.
An executive profile database should assemble everything each key executive has ever presented, including every interview, blog, twitter, audio and video. When it comes to interviews, make sure you have both – your records as well as the published/broadcast results. Include media training videos in the database to remind you of their strengths and weaknesses. The next step is to integrate all files and ensure that you have capabilities to generate reports by subject, type of media, interviewer and audience.
The database should be an integral part of your dynamic executive communications plan. In this case, the “dynamic” means that you keep on updating absolutely everything all the time. If you’re doing it right, these updates will trigger subtle and not so subtle changes in your plan for each executive. For example, if investors’ posts start tracking negative for any part of your business, it’s time to generate responses that may include your CFO or CEO when it gets serious.
The executive profile database will allow you to generate briefing material instantly and you can access it from anywhere, anytime. One more thing: make sure each executive has access to his/her own database.
If you need help setting up your executive profile database, please contact me at http://alfadogpr.com/contact/.
PS For those of you in the financial sector, please check Simon Johnson’s post and comments.
Something about teams… (next time you write a speech)
Now, I apologize for the rant, but do you ever question the use of “team(s)” in business? Let me explain. Have you ever played (yes, participation is important for the argument) in a team sport? That’s where your “team” has a meaning. Take volleyball as an example. You regularly rotate from position to position throughout the game, so each player has the same opportunity to contribute equally in a team effort. In fact, this is how my Mac dictionary defines teams: “a group of players forming one side in a competitive game or sport.” The dictionary definition suggests an egalitarian meaning, as in all players are equal or equally important.
In the business world, just take a look at any organization chart and it’s rather obvious that every team has a leader and some team members are clearly not as important as others. In fact, most organizational charts look like dog packs. In a functioning organization, there is a leading dog, then there’s a 2IC, followed by dogs to form a perfect pack. An org chart for a volleyball team would have one level. That’s nowhere near what some companies call “a flat organization.” There are no flat organizations.
When I was searching for my company name, I recalled a conversation I had with a CEO I worked for. We were coming back from a conference where he met other CEOs. After the meeting, I commented on how similar those CEOs were, to which he said, “Sure, we’re all alpha dogs.” Meaning: we’re all pack leaders. Or, as Cesar Millan, the great management guru says, there are leaders and there are followers. (I’m kidding about Cesar, but somebody should tell him to write a management book.)
There is another thing that bothers me about “leaders” who overuse the “we-are-a-team” mantra. More often than not, they use it to justify their inability to say: “I’m responsible for this the mess we’re in.” Dick Fuld, CEO of now bankrupted Lehman Brothers and voted by Portfolio.com as the worst CEO, had this endorsement by Fortune in 2006: “Fuld’s modus operandi has been to bind his employees’ fates together—to turn the culture from one of sibling rivalry to cooperation and teamwork.”
I think we should move away from this “team” business and focus on leadership. Funny enough, when you look at the dictionary definitions, this is what it says: “the ORIGIN Old English tēam [team of draft animals,] of Germanic origin about ’team;’ related to German Zaum ‘bridle,’ also to teem 1 and tow 1, from an Indo-European root shared by Latin ducere ‘to lead.’” In other words, it’s all about leadership. Can we agree on that?
