Dilemma about CEOs – vital spokesperson, but not trusted
Public relations practitioners are faced with a dilemma. Your CEO or your client’s CEO is obviously key spokesperson, but international surveys consistently find CEOs are not trusted. What can we do about this situation?
CEO reputation is important to an organization’s success and is one of its most valuable and competitive assets, according to Weber Shandwick’s 2015 global online survey, which found that on average 45% of a company’s reputation depended on the reputation of their chief executive officer.
Results from various countries were: UK 25%, France 36%, Germany 32%, USA 38%, Canada 28%, China 45%, India 56%, Malaysia 59%, Singapore 39%, Indonesia 68%, Australia 38%, Japan 28%, and South Korea 51%.
The overall average findings from this survey were consistent with a similar 2003 US survey by Burson-Marsteller, which found that on average about 50% of a company’s reputation could be attributed to the CEO.
The Weber Shandwick survey found significant benefits that result from positive CEO reputation include attracting investors (87%), positive media attention (83%), and crisis protection (83%). Strong CEO reputation also attracts (77%) and retains (70%) employees.
On the other hand…
The great irony about the CEO personifying their organization is that the wider community tend not to find CEOs as credible as other influencers. In other words, they trust CEOs less than other types of influencers. (Trust is a person’s expectation that the other party can be relied on, will behave as predicted, and will act fairly.)
Edelman has determined that organizational trust generally comprises 5 performance clusters – integrity, engagement, products and services, purpose, and operations – containing 16 specific attributes that build trust. Overall, the CEO never featured as the most credible person to deal with in those clusters.
Out of 5 influencer categories (CEO, employee, activist consumer, academic or media spokesperson), the 33,000 respondents generally did not consider the CEO the best person to provide credible and honest information about a company.
In response to a question on the different types of information that people read, see or hear about a company, the degree of trust globally expressed by respondents were:
- Engagement: CEO 21%, employee 47%, activist consumer 33%, academic 22%, media spokesperson 14%.
- Integrity: CEO 31%, employee 34%, activist consumer 22%, academic 27%, and media spokesperson 23%.
- Products: CEO 29%, employee 30%, activist consumer 29%, academic 37%, and media spokesperson 13%.
- Purpose: CEO 23%, employee 23%, activist consumer 34%, academic 34%, and media spokesperson 19%.
- Operations: CEO 29%, employee 31%, activist consumer 26%, academic 31%, and media spokesperson 15%.
This leaves the conundrum of the CEO being the key to organizational reputation while often lacking credibility in the wider community.
The survey found the average CEO credibility rating was much lower in developed countries (31% for US, UK, Germany, France and Japan), versus 61% for developing countries such as China, India, Russia, Mexico and Brazil. It would be interesting to see some research findings on the reasons for this. Would it have anything to do with the fact that CEOs in developed countries are paid around 80-90 times higher than the average worker in their organization?
It must be said that the low trust in CEOs has developed at a time when people around the world have comparatively low trust in key sectors of society. The 2015 Edelman Trust Barometer found 80% of the 33,000 respondents surveyed distrusted one or both institutions of business and government “to do what is right.” The trust level was below 50% in 21 of the 27 countries. Globally, the average rating of government was 48% while trust in business was a bit higher at 57%. These figures are concerning for society.
Implications for communicators
These results point to the need for a careful balancing act by public relations practitioners because the link between the reputation of the organization and the person who heads it is potentially dangerous: its reputational capital may rise and fall in line with the perception of the CEO, according to research by Murray & White in 2005. The achieving CEOs need to be recognized by key stakeholder groups for their achievements, but public relations practitioners should avoid the trap of trying to create a cult of the personality.
Stakeholders want a chief executive who personifies the values of the organization, who can speak up for the organization and the industry to make the company stand out from the crowd. The organization’s qualities are embodied in the CEO, who becomes a corporate brand. But common sense should apply.
Above all, it would seem, communicators should ensure their CEO is a model of integrity and ethical behavior. Even if people might be ungenerous in their general opinions of CEOs, their opinion of individual CEOs could be much more positive due to diligent work from communicators.