Ipsos Corporate Reputation

The role of the CEO in external communications

Communicators have to be selective about the frequency and nature of the top executive’s participation, balancing the benefits and risks of bringing a powerful voice into the conversation.

 

Use of the CEO as one of the company’s primary communicators is influenced by industry norms, the nature of the message, and the target audience – with cultural and generational differences in how stakeholders respond to a CEO as an important consideration.
Council members highlight the risk of the CEO’s personality and corporate identity becoming intertwined, as well as the potential to polarise media opinion.
The CEO must be regarded as credible, authentic, empathetic, and transparent if their communications are to have a positive impact. In some cases, other employees may have greater cut-through on a specific issue or with a certain audience.

 

Today, the toolbox of a communications professional is wider and deeper than ever before. From traditional resources such as press releases or spokespeople pertinent to the issue at hand, to newer methods such as social media, blogs or interactive multimedia platforms, the array of options is continually evolving. Within this modern environment, the medium and spokesperson can be as important as the message itself, with the decisions made by corporate communicators playing a crucial role in shaping the image the company is able to create for itself.

Among the decisions facing communicators is the role that the CEO should play in supporting stakeholder engagement. Here, the devil is in the detail.

On the whole, Reputation Council members see the Chief Executive as playing an important communications role. There is a caveat though: the leader is not a communications ‘silver bullet’. Their involvement should be assessed carefully, balancing risk and reward, with consideration given to whether the CEO’s personality and characteristics fit the specific brief.

"EVERY CEO SHOULD BE NAMED THE CHIEF REPUTATION OFFICER FOR HIS OR HER COMPANY."
Balancing risk and reward

In balancing the potential risk and reward of involving the CEO, Council members highlight some key factors to consider.

 

RISK

Overexposure. This could erode the impact of their voice and place unnecessary focus on less important issues.

"If people like me do their jobs well, then the nature of the enterprise should do the heavy lifting when it comes to external perceptions. If it were up to me, I would have the CEO out there three times per year and I hold them in reserve for really big issues or circuit breakers."

Difficulty in distinguishing the person from the company. High-profile CEOs can generate increased scrutiny and pose a challenge when personal views differ from the corporate position.

"It humanises a company, gives it personality and a vision. But the risks are that it becomes too connected with the individual and the personal behaviour impacts the business when they go off the rails, for example, in the case of Tesla."

Personality traits could undermine effectiveness.

"It’s important to speak for the company, but it depends on the CEO’s personality. They need to be comfortable on social media and able to speak on broad topics. The CEO can bring transparency to the company. It’s important to speak on business-critical issues, but there are some cases where the CEO can be too much – sometimes a rank-and-file employee is more authentic."

REWARD

Personification of the company’s values. The CEO is the company’s ambassador, conveying a vision and setting the company’s tone and image.

"We live in a media society that is more strongly personalised than before. If you have a CEO who is an authentic communicator, who is able to excite, then you have the best marketing or PR strategy possible."

A sense of authority. The CEO’s voice emphasises the importance of the message, maximising the chances of engagement.

"It is extremely important for a CEO to act as their company’s figurehead for communication. Nowadays, companies cannot be represented by their brands only: CEOs are required to play a primary role in their companies’ communication efforts because they are the decision-maker ultimately responsible for their companies’ actions."

The face of the company in a major crisis. Instilling confidence, being transparent and outlining short-term and long-term actions.

"I think when the company has an imminent crisis situation, with damages to third parties, the CEO needs to participate and communicate decisions around investments, continuity, etc. that affect stakeholders, be it employees, partners or suppliers."
The portrait of a top communicator

As one might expect, the CEO needs to be a well-rounded leader for him or her to run the organisation successfully. There are, however, useful characteristics to take into account when looking to apply their role to the world of communications. The views of the Reputation Council can be distilled into three guiding principles.

 

Credible and reliable

In order to come across as an authoritative figure in front of key stakeholder groups, competence in the job is essential, as well as a solid track record delivering on the company’s vision. Key audiences need to believe that the person in charge of the organisation is a capable individual who will be in the post beyond the short-term and can take decisive action to steer the company in the right direction.

"Firstly, a master of the brief, so you do need to know the detail, you need to be able to speak credibly to a number of people, know how much things cost, to be able to describe your operations properly, not just in a flippant way. That would be the foundation."

Charismatic, confident and empathetic

Successfully running the business is simply not enough for the CEO to become a valuable asset for the communications function. He or she needs to appeal to and captivate audiences. They need to be relatable but display confidence and a feeling of security both in the tone and content of the message.

"They need to be able to talk about what the business does in a way that engages and connects with people. If they are not good communicators, that will land flat. The role of a CEO has got to change. They have to have more of the softer skills. They need to know about consumers and stakeholders and what makes them tick. They need to be able to engage on issues of concern. But if they have no empathy or no grasp of the issues, the best communications brief in the world won’t help!"

Honest, transparent and authentic

Displaying genuine motivations, with the best intentions at heart, is also vital. The credibility of the message, the CEO themself and the entire company are all at risk if stakeholders do not sense authenticity.

"Truthfulness, transparency, honesty, commitment, passion. But most of all, in the end you express what you are and what a stakeholder expects: a real speech. We are working very hard on this: to have coherence between internal and external discourse, this discourse to be transparent, to not try to hide, seeking to have the greatest transparency and honesty. This is absolutely fundamental."
When the CEO becomes a celebrity

What happens when the CEO is so good at being the figurehead of the company that their name becomes synonymous with that of the organisation? Examples such as Steve Jobs at Apple, Richard Branson at Virgin or Elon Musk at Tesla come to mind. Very often, these are strategic choices made in the early years, where a founder seeks the spotlight to help boost the profile of the company.

Overall, Council members feel that this has proven a successful strategy in the past for many, but it is a tactic that should be carefully thought through.

There is a need to consider not only the profile and abilities of the individual, but also industry dynamics, cultural nuances and generational differences.

"The popularity itself is not bad, but it must be related to the business so that it is a healthy relationship for the company."
"I think celebrity CEOs are a very dangerous game to play. I think celebrity CEOs are a problem here. The tall poppy syndrome [being targeted for criticism due to their success] makes it difficult for a prominent voice to be sustainably successful. I don’t think it is a good model in the current era because this culture is quite oppressive when it comes to success. Less of an issue in the US, where a celebrity CEO still holds some value. I don’t think millennials or Gen Z are particularly interested or respectful of middle-aged men and women who run companies – they are much more interested in brands and movements."

All in all, Council members see some risks if the image of the company and CEO merge into one in the public eye.

In situations where the CEO is an appointed figure who will lead the company for a number of years, rather than the founder and essence of the company, their profile should be moderated accordingly.

"Unless it is your name above the door, unless you are Elon Musk, you need to be very careful that you are the guy who for a period of time is running this organisation and you are a hired hand to do so and at some stage, you will stop being the hired hand and someone else will come in. And as long as all CEOs act like that, they won’t go far wrong, but quite a few don’t act like that."
"Having a celebrity CEO can be helpful but can be a nightmare, especially for the PR department because media will polarise. If they have built this profile around them and they might run their own Twitter account or something, it is very hard to manage the flow of communication and the content of communication. On one hand, that is good for transparency and openness, but on the other hand, he or she might need the time to evaluate information and talk to his or her lieutenants before making comments."

Final thoughts

Call on your CEO, but do so after careful consideration.

A communications strategy is successful when it’s able to deliver a clear and compelling message to the audience it is trying to address.

The company needs to act like a well-coordinated orchestra to deliver a compelling symphony.

The communications professional, as the conductor, can achieve this with a greater array of instruments than ever before. Here, the CEO can play the lead tenor or soprano able to unlock attention and convey the essence of the ensemble in a way no one else can.

However, like the valuable resource that they are, the CEO needs to appear at the right time and in coordination with the rest of the company.

Methodology: 154 interviews conducted with Reputation Council members between 25th June and 12th November 2018.

Read more from the Reputation Council...

Read more from the Ipsos Corporate Reputation Team...

It’s the environment, stupid!

ENVIRONMENTAL CONCERNS ARE NO LONGER JUST PRESSING ETHICAL ISSUES, BUT QUESTIONS OF FINANCIAL PRUDENCE. OVER HALF OF BRITISH CONSUMERS FEEL WE ARE EXPERIENCING A CLIMATE CRISIS, AND OVER ONE THIRD SAY THEY WOULD SWITCH OR BOYCOTT A FINANCIAL ORGANISATION IF ITS INVESTMENTS HAVE A DETRIMENTAL ENVIRONMENTAL IMPACT. DESPITE BIG CONCERNS AROUND COVID-19, THE ENVIRONMENT REMAINS A PRIORITY FOR THE PUBLIC, AND BUSINESSES WILL BE EXPECTED TO CONTINUE THE TRANSITION TO A SUSTAINABLE ECONOMY IN THE POST-CRISIS PERIOD.

Whilst it doesn’t roll off the tongue with as much zest, James Carville’s ‘the economy, stupid’ slogan is aptly modified for Larry Fink’s announcement earlier this year that BlackRock would base future investments with environmental sustainability as a central goal… ‘It’s the environment, stupid!’. If anyone could ‘wake up’ the market to the tipping point which has now been reached around the environment, it is the Chief Executive of the world’s largest asset management firm. “Awareness is rapidly changing” wrote Mr Fink in the company’s annual letter, “and I believe we are on the edge of a fundamental reshaping of finance”. This has been compounded more recently, with the announcement that the UK’s biggest pension fund, the government-backed National Employment Savings Trust (Nest), will begin divesting from fossil fuels, and BlackRock “launching a selection of ESG multi-asset ETFs, to provide investors with a cost-efficient, transparent and sustainable way to invest”.

Data from Ipsos’s 2020 Sustainable Business Monitor survey amongst the British public echoes these sentiments. With a majority of the public now feeling we are dealing with a climate crisis, it appears that cash may no longer be king in investments. Only 21% now claim to care more about financial returns on investments than on whether the financial provider is ethical in how it invests money. This is compared to 28% of the public who prioritise ethics over financial returns and 26% who feel they should be given equal footing. Even allowing for the possibility that consumers may not be quite so ethical when faced with this trade-off in reality, it is clear that there has been a change in the drivers of investment decision making.

Returns on investment or ethical considerations?
Views on Climate Change

The growing imperative for investors to prioritise companies with a good sustainability track record is brought into sharper focus when looking more closely at the attitudes of millennials. Findings from the Ipsos Sustainable Business Monitor show that 54% of 18-34 year olds would be concerned about investments in Oil and Gas, compared to 47% for the UK public overall. This isn’t limited to the UK either; sustainable investing interest among US millennial investors jumped from 84% in 2015 to 95% in 2019, according to Morgan Stanley’s Institute for Sustainable Investing.

Which sectors concern the public regarding investments?

So, what does this all mean? Unsurprisingly, that Fink is right.

Over one third of those asked said that investment in projects or companies that have a detrimental environmental impact would lead them to ‘switch from’, ‘stop using’, or ‘boycott’ a financial organisation. Indeed, sustainable investing is ranked alongside executive remuneration – an issue that has a long track record of being a strong driver of negative opinion for the finance sector.

Switching / Boycotting financial organisations

This sentiment is further reflected at a global level when looking at Ipsos data from the recent Earth Day 2020 report, highlighting that even when set against the crisis situation that COVID-19 has presented, concerns around the environment remain steadfast. Over 7 in 10 people around the world agree that climate change is as serious as the pandemic, whilst 65% agree that in the economic recovery from COVID-19, it’s important that government actions prioritise climate change.

Seriousness of climate change in comparison to COVID-19
Support for a 'green' economic recorvery from COVID-19

Recognising the growing commercial opportunity facing the sector, and the long-term risk of investing in environmentally unfriendly industries, Fink notes that “as a fiduciary, our responsibility is to help clients navigate this transition [the reallocation of capital]. Our investment conviction is that sustainability and climate-integrated portfolios can provide better risk-adjusted returns to investors”.

But where does this leave industries which have been traditionally harmful to the environment, such as the oil and gas industry, for a long time the bedrock of investment portfolios and still an essential service despite growing environmental concern?

In light of BlackRock’s position, The Economist wrote: “[t]o cynics, all the climate-friendly noises amount to little in practice, since few people are ready to make carbon-cutting sacrifices that would force oil firms’ hands. But noises are sometimes followed by action. Should they be this time, the 2020s may be do-or-die for the oil industry”.

It isn’t a case of ‘adapt tomorrow or die’ for fossil fuel companies however, and Fink makes this clear, forecasting “the energy transition will still take decades”. Citing fairness and justice, “we cannot leave behind parts of society, or entire countries in developing markets, as we pursue the path to a low-carbon world”. The demand for energy will continue whilst technology works to bring cost-effective replacements to conventional fuel sources, but it is incumbent on the sector to aggressively pursue cleaner energy; not only from an ethical perspective, but also in order to remain an attractive investment. The same is also true for a number of other sectors which have for a long time been harmful to the environment, and must adapt with the new way of sustainable investing.

Companies from within the fossil fuel and investment sectors which are leading the transition to a more sustainable future are on the right path, reinforced by public support. This should not be derailed. Communicators in these sectors therefore have the opportunity to maintain messaging around this transition, but with fairness in mind, should also remain sensitive to the societies whose energy programs are not as developed as some of the leading world economies. The transition to sustainable investing will need a collective effort – innovation from industry, reallocation of risk, government support and sustained societal scrutiny, but in adopting Fink’s position, it should be worthwhile effort for investors, producers, and consumers, from both an environmental and a financial perspective.

Contact: Alex Russell - Email | LinkedIn

Reputation Council Quickfire Survey: Members’ Perspectives on ESG

Our Quickfire surveys provide us with fast views and responses on the world’s most pressing issues.