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Executive Matters

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Executive Matters

Executive MattersIssue 1 | April 2017

Date
13 April 2017

Emma Woollcott Legal Director

In today's world, when a company does something wrong, the braying public demand to see a senior head roll. After the Volkswagen PR disaster, CEO Martin Winterkorn knew he had to go.


Senior executives under pressure in the cut-throat world of modern reputations

In today's world, when a company does something wrong, the braying public demand to see a senior head roll. After the Volkswagen PR disaster, CEO Martin Winterkorn knew he had to go. The calls on social media were too strong. Winterkorn's sad statement - "I am doing this in the interest of the company, even though I am not aware of any wrongdoing on my part"- highlighted that even if CEOs feel they lack responsibility for what went wrong, they know they have to take the hit to save the corporate brand. Winterkorn – and his advisers – were only too aware that the CEO is seen as the embodiment of the company, whether they know about what has been going on or not. To claw back any credibility, Volkswagen had no choice but to let him go.

How is this different from the old days? Senior executives have always taken the heat when a company is in the firing line. But now, the calls to 'kill off' a CEO or Board Member come ever more quickly and vigorously. Rumours spread on social media, and anger heightens in minutes and hours, not weeks or months; and the public communicates its emotions vociferously. With increased expectations of transparency, companies and their leaders are simply expected to be more accountable. People want their leaders, whether business or otherwise, to be visible and squeaky clean. They demand executives tell us when things go wrong, and why, and often hold them to unrealistic standards.

In an age where reputations are lost with a misjudged tweet or a leaked personal email, a company's reputation is increasingly linked to the good character of its senior staff. A survey undertaken by Weber Shandwick in 2014 revealed that senior executives attribute nearly half of their company's reputation to the standing of their CEO. And the reputation of CEOs and senior executives will matter even more to company reputation in the future. Those who behave 'badly' have a direct impact on the success of their company – affecting public confidence, retention rates of high-level staff and even profitability.

In a move away from the bold, brash, fast talking CEOs of the last century, a new word is being bandied about: humility. That elusive quality is now considered a key attribute for any senior executive. The days of CEO 'celebrities' are gone; now we want ethical, humble leaders who engage with the public and who feel the consequences of their decision-making or at least do a good job of looking as if they do. Hisao Tanaka, CEO of Toshiba, resigned in July 2015 after the company said it had overstated its profits for the past six years. In his resignation statement Tanaka talked sincerely about the company needing to change its ways and to "build a new structure" to reform itself.

As well as leading corporate strategy, senior staff now bear the burden of ensuring their integrity and demeanour pass muster too. Media training and crisis simulations are now standard practice for CEOs and senior executives, but those who invest real time and focus on how their core values will be communicated in times of scrutiny will fare best when push comes to shove.