Face Value-Your Reputation as a Business Asset


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Face Value-Your Reputation as a Business Asset

  1. 1. FACEVALUEYour Reputation as a Business Asset A report from Coutts & Co by Michael Hayman
  2. 2. A REPORT FROM COUTTS & CO FACE A report from VALUE Coutts & Co YourReputation as a Business Asset 1
  3. 3. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET CONTENTS 04 20 ABOUT THE REPORT THE MEDIA The importance of managing The Rt Hon the Lord Heseltine reputation effectively on managing the press 05 22 THE BANK AND THE AUTHOR ME, MYSELF AND MY BRAND About Coutts & Co and How CEOs have become the author Michael Hayman personification of their companies 06 24 THE CONTRIBUTORS MADE TO MEASURE Profiles of those who have Emma Willis on running an provided key comment eponymous business 08 26 FOREWORD IF YOU CAN’T STAND THE HEAT By the Earl of Home, Chairman, Tom Aikens on why he named his Coutts & Co restaurant after himself 10 28 INTRODUCTION ALL BUSINESS IS PERSONAL Author Michael Hayman The role of the business leader sets the scene 14 32 THE VALUE OF REPUTATION THE PERILS OF ‘PERSONALITY’ Why reputation is now one of the Robin Saunders on the pitfalls of most crucial business assets losing control of your reputation 16 34 THE QUESTION OF TRUST REPUTATION AND THE LEADER A look at people’s waning Doug Richard on the risks and faith in authority opportunities of public life 18 36 A CULTURE OF MISTRUST HOW NOT TO DO IT Peter Kellner on how public Anatomy of a reputational scepticism is affecting reputation meltdown2
  4. 4. A REPORT FROM COUTTS & CO38 54 HOW TO DO IT CONCLUSION Best practice in reputation Reputation: the undiscovered management country40 56 NET EFFECT COUTTS OFFICE DIRECTORY Embrace Web 2.0 or brace The Bank’s locations for impact across the UK42 58 KNOW YOUR STORY USEFUL CONTACTS Stay on solid ground How to reach the contributors44 SECRETS OF SUCCESS Getting the most out of an interview46 TRIAL BY MEDIA Max Hastings on the importance of image management48 KNOW YOUR RIGHTS Forearmed is forewarned50 USING THE LAW Alasdair Pepper on how the law can help protect your reputation52 MANAGING YOUR REPUTATION Advice on how to maintain a good public profile 3
  5. 5. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET ABOUT THE REPORT I ntangible but pivotal, reputation is a prized commercial asset. Face Value:Your Reputation as a Business Asset examines the role of today’s business leaders and the value of their own personal reputations in the making or breaking of the companies they run. There are many tangible factors that make up the reputation of a business. If you do not have a good product or service, you do not get on the pitch list. In an increasingly competitive marketplace, companies need to extract value and advantage wherever they can. Given that the media often seek stories about people, rather than organisations, many companies have sought to boost the personal profile of the business leader as a means of promoting the company as a whole. This is a valid and valuable strategy, but it is also a risky one. Reputation, like any other company asset, needs to be monitored, nurtured and managed. This report delivers insight into the business leader as the chief representative for a company on the public stage. It interrogates the idea that business leaders have a ‘face value’ and argues that this personal reputation “Reputation, is the canvas upon which much future business success will depend. like any other company asset, It brings together a personal viewpoint of the author, Michael Hayman, based on his needs to be own experience in business, politics and the communications industry, the sentiment of monitored, a series of interviews with business leaders, nurtured and research from YouGov and the views of a number of expert witnesses who have managed” developed a unique perspective on the issue.4
  6. 6. A REPORT FROM COUTTS & COBANK and the AUTHOR Michael Hayman Coutts & Co Michael Hayman is Coutts & Co is one of the UK’s leading private Chief Executive of The banks. It has provided pioneering private Communication Group banking services for more than three centuries. plc, a leading public Today, Coutts expertise meets the financial relations consultancy. needs of 100,000 diverse individuals worldwide. He provides senior communications counsel The issue of reputation has always been to clients including central to Coutts business. As far back as the De Beers Group, the Government of 19th century, Thomas Coutts endorsed the Dubai and Rio Tinto. earlier principle of safeguarding his Bank’s reputation through ample and easily available Michael is an accomplished speaker and author, reserves, but also by putting a great emphasis regularly addressing global business audiences, on the influence of the individual. As he saw governments, political leaders and business it, the honour of his family name, his ‘proud media on a range of communication issues. but modest’ character, and his qualities of competence, directness, friendliness and He was previously a Director at WPP natural caution were what would protect the consultancy Hill & Knowlton. Prior to reputation of Coutts. He felt very strongly this he was an adviser to the Foreign & that the responsibility for that reputation lay Commonwealth Office, to a former Secretary with him. Despite taking partners into the of State for Employment and a senior member business, he never placed the onus of the public of the Department of Trade and Industry perception of the Bank onto others. Parliamentary Select Committee. Today, the public face of Coutts encompasses He is a Fellow of the Chartered Institute each and every one of our employees, who of Public Relations, a commissioner to the play a vital role in maintaining Coutts reputation The Edinburgh festivals, and one of The Observer as a highly professional, respected and trusted newspaper’s Courvoisier The Future 500, a organisation. From our private bankers on the showcase of the UK’s top business talent. front line to the staff who support them in a variety of guises, our employees embody the timeless Coutts values of trust, understanding and expertise. Understanding the vital role of reputation in building sustainable enterprise is just one way we can support our clients in their business interests. 5
  7. 7. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET THE CONTRIBUTORS The Earl of Home Lord Home was appointed Chairman of Coutts & Co in June 1999 and became Chairman of RBS Coutts Bank Ltd in March 2000. Lord Home is an active member in the House of Lords and was appointed Opposition Front Bench spokesman on Trade, Industry and Finance until his resignation in December 1998. He is also Chairman of Grosvenor Group Ltd, MAN Limited and a Board Director of The Dubai Financial Services Authority (DFSA). The Rt Hon the Lord Heseltine Lord Heseltine was a Member of Parliament for the Conservative Party for the Borough of Henley from 1974 to 2001. He has held many senior political positions, including Secretary of State for the Environment, Secretary of State for Defence, President of the Board of Trade and Deputy Prime Minister from 1995 to 1997. He is also a successful entrepreneur, founding Haymarket Publishing Group, the largest private magazine publisher in the UK. Peter Kellner Peter Kellner has been Chairman of leading market research organisation YouGov since 2001. During that time he has advised on polls and public opinion to institutions, including the Bank of England, the Foreign Office and the Trades Union Congress. Previously, he was a journalist and political commentator for more than 30 years, for a variety of media, including The Sunday Times and the BBC’s Newsnight. He has also been a visiting fellow at Nuffield College, Oxford and the Institute for Policy Studies.6
  8. 8. A REPORT FROM COUTTS & CODoug Richard Emma Willis Doug Richard is a highly Emma Willis is the founder successful UK-based of Emma Willis, a custom Californian entrepreneur. shirt making company. She Among other things, he is trained at the Slade School the founder and Executive of Art before starting her Chairman of Library business in 1987, designing House, an investment and making men’s shirts. research and consulting In 1999, she opened herfirm. He has recently shot to prominence as elegant and intimate shop in Jermyn Street,a ‘dragon’ (investor) in BBC’s Dragons’ Den. London. Her philosophy is to adhere to theIn 2006, he received the Queen’s Award for original traditions of English shirt making, usingEnterprise for his work promoting, developing, luxurious Italian and Swiss cottons, silks andand helping entrepreneurs. linens, many of which are exclusive to her collections. Emma Willis is men’s magazine GQ’s ‘Shirt Style Shrink’, answering a host ofSir Max Hastings questions on the subject. Sir Max Hastings is an acclaimed journalist, editor, historian and Robin Saunders author. He became a Robin Saunders is a foreign correspondent Managing Partner of and reported from more Clearbrook Capital than 60 countries and Partners. She first worked 11 wars for the BBC for Northern Trust inand the Evening Standard. After ten years Chicago and then movedas Editor and then Editor-in-Chief of The to London with Citibank.Daily Telegraph, he returned to the Evening After a stint at ChemicalStandard as Editor in 1996 until his retirement Bank and Deutsche Bank, she joined thein 2001. He received a knighthood in 2002. German state-owned WestLB in July 1998. In 1999, she helped turn around Bernie Ecclestone’s Formula One through a £792mTom Aikens securitised bond issue and brokered a Tom Aikens is a master £426m loan to finance the new Wembley chef and the founder of Stadium. After leaving the bank in 2004, she Tom Aikens restaurant. established the private equity investment He left London in 1993 firm Clearbrook Capital Partners. to work under Joel Robuchon in Paris and Gerard Boyer in Reims Alasdair Pepper before returning to Pied à Alasdair Pepper is oneTerre as Head Chef in 1996, where he became of the most experiencedthe youngest British chef ever to be awarded media lawyers in the UKtwo Michelin stars. He spent a year as Head and has been a partner inChef at La Tante Claire before opening Tom Carter-Ruck, the leadingAikens in April 2003. The restaurant won a defamation and reputationMichelin star in January 2004, and in 2005 it management firm in thewas named as the eighth best restaurant in country, since 1986. Hethe world in Restaurant’s Top 50. devised the MediaAlertService, which enables the firm to efficiently handle and assist clients with media interest. He is the Secretary of the Media Section of the International Bar Association and has spoken on the issue of reputation at conferences around the world. 7
  9. 9. A REPORT FROM COUTTS & CO FOREWORD T management not based on family if they failed to demonstrate aptitude, and quiet discretion. Today, we are observing a growing interest he value of reputation has in entrepreneurial businesses and the never been so important. personalities that lead them. This has meantTHE EARL OF HOME, Chairman, Coutts & Co This report examines the that, even more so than in the times of John role of reputation as a key Campbell and Thomas Coutts, the reputation business driver and the of an organisation and its leaders has become emerging challenges associated with it. unavoidably intertwined, with a proliferation of media ready to bring any impropriety to Reputation, simply put, is the impression the doorstep of the public. that others have of you. It is, therefore, an intangible but highly prized asset, often As such, reputation and the protection of equated with the goodwill of a business, and is it is now not only the preserve of big seen as a key source of competitive advantage. corporates, but also of individuals. Our work with many of the UK’s top business leaders Today, the emphasis placed on the various means that, at Coutts, we understand this faces of reputation is a relatively recent perhaps more than most. development, and its wide-ranging spectrum in the fiercely regulated financial world of Business leaders and entrepreneurs are the 21st century would be unfamiliar to the increasingly creating and influencing the founder and the partners of Coutts in the brands of the future. We have seen this 17th and 18th centuries.Yet there is no doubt especially in our work with entrepreneurs that reputation was of the highest importance and the discussion opportunities afforded to the early partners and to Thomas by the Coutts Forum for Entrepreneurs. Coutts, even if their way of interpreting and That is why we are delighted to be associated maintaining it varies from today’s demands. with this important report that seeks to bring new insight into what has, for many, For John Campbell and succeeding partners, remained an intangible, but nevertheless including Thomas Coutts, in the world of crucial, area of business life. banking, a man’s reputation was only as good as his credit. Confidence was inspired by prompt The author, Michael Hayman, Chief Executive payment of debt and open and honest dealings. of The Communication Group plc, examines The ‘promissory note’, the early cheque, was how businesses and individuals are increasingly exactly what it said: a promise to pay either on scrutinised in the modern world. He draws on demand, at a fixed or deferred period of time. real-life examples and case studies of leaders Campbell and his successors dealt in these and organisations under the public spotlight. notes and bills of exchange all the time.The ethos of ‘my word is my bond’ was vital. Joining him are former Deputy Prime Minister Lord Heseltine, former Daily Telegraph With the rise of the joint stock banks in Editor Sir Max Hastings, BBC2 Dragons’ Den the 19th century, private banks faced stiff entrepreneur Doug Richard, legal expert competition and many failed. Coutts had Alasdair Pepper, ‘super chef’ Tom Aikens, such a well-established reputation that it entrepreneurs Emma Willis and Robin Saunders could withstand the onslaught.There were and Chairman of YouGov Peter Kellner. a number of ‘panics’ in the 19th century, including the collapse of Overend & Gurney I hope you find the report thought-provoking. in 1866, a distinguished private bank.There It delivers real insight into how understanding was never a run on Coutts, nor any hint of the potential opportunities and risks to anxiety concerning the business.The lessons reputation can equip entrepreneurs and learned by Coutts in earlier times paid off in leaders for the challenges of the 21st century maintaining its reputation: a sound balance, wise business landscape. 9
  10. 10. A REPORT FROM COUTTS & CO FINTRODUCTION rom celebrity business Government led by John Major, I witnessed leaders to entrepreneurs at first hand the shattering consequences of and super chefs, Britain’s damaged reputations stemming from the 1993 business reputations have ‘Back to Basics’ campaign. A key handmaiden in never had it so good. this great drama was a tenacious media. The role and leadership of Britain’s top business performers is fuelling a new era Journalists, often with more than just cause, of interest. revelled in exposing scandal after scandal, damaging the reputation of the Government. Thanks to prime-time television shows, such as Dragons’ Den and The Apprentice, we My argument is that the public interest has are witnessing a growing public fascination more recently been confused with what is in businesses and the personalities that interesting to the public, and this has been lead them. used to justify unparalleled levels of subjective investigation, comment and news. Former Is this just mere entertainment or does it Minister, Steve Norris, among others, used to reflect a more substantial transformation in use the phrase: “Why let the truth stand in the role of reputation and its net effect on the way of a good story?” business? This report argues the latter. At first, new levels of scrutiny found their The definition of value in business has way to the quoted community of publicly changed. Once, accountants could define a listed companies. After all, a business with company’s worth by totting up the value of real shareholders has a public duty to be transparent estate, inventorying stock and calculating the and accountable. depreciation of plant and machinery. Increasingly, however, private businesses run by Not any more. As we move ever further into entrepreneurs have emerged onto the front line a knowledge economy, a company’s value is of reputational scrutiny. This new line of attack increasingly determined by its intangible assets states that where stakeholders are involved, – the strength of its customer relations, the stories relating to any company and its leader quality of its software and the institutional meet a public interest test. knowledge of its employees. According to a study by the US Institute of Me, myself Practitioners in Advertising, more than and my brand three-quarters of the market value of the typical Fortune 500 company is now accounted We live in an era of information overload. for by intangible assets. Yet if reputation has a Take a leading global newspaper like the UK’s value, so the loss of reputation has a cost. Sunday Times. It contains around 500,000 words per edition. To read it at an average The UK famously has a schizophrenic attitude reading speed of 300 words per minute towards business and wealth creation, and would take some 28 hours. there is no shortage of companies and business leaders who find that their image To stand out in this ever more congested shifts from consumer champion to incompetent market place, people have become a powerful villain with dizzying speed. way of bringing a company story to life. In the political rather than the business In many cases, the brand of a particular sphere, as an adviser within the Conservative company, and that of its leader, has merged. 11
  11. 11. FACE VALUE: YOUR REPUTATION AS BUSINESS ASSET In today’s business environment, a company leader is often expected to be the personification of the company; he or she represents what the company is trying to do and the values by which it operates. The consequence is that the reputation of a company is now often inextricably linked to that of its leader. Yet, as with many merry-go-rounds, getting on is a lot easier than getting off. A high public profile may be a valuable asset when results are strong; but it becomes an equivalent liability in times of difficulty. Solid growth is no longer a story; it is only astronomic leaps that even get a look-in these days. Against this backdrop, the claims have become greater, the thinking ever more short term, the headlines more dramatic and the real results more questionable. disseminated globally, instantly and cheaply. A world of websites, chatrooms and blogs turns anyone with an internet connection into an Trial by media? expert commentator; rumour can take on the appearance of fact with startling speed. In this The media has, for the most part, provided a environment, effectively telling your side of the superb platform for enhancing the reputation story is both vital and increasingly hard to do. of business leaders, of large public companies and high-flying entrepreneurs alike. However, Situations can spiral out of control before an it is a complacent business leader who views individual or organisation can make an informed the media as a lifelong friend. The academic judgement about what is going on. From a legal C. Northcote Parkinson put it well when perspective, you never admit culpability until you he said: “The void created by the failure to are clear about the facts, and that takes time. But communicate is soon filled with poison, drivel delay carries with it a reputational cost. and misrepresentation.” The pressure of these two competing needs In recent years, the size of that void has is enormous. In preparing this report, I grown exponentially. Twenty-four hour global interviewed a FTSE 100 chairman who media, new media, broadcast media, print brought this to life when talking about his media, specialist media, citizen media – these own response to a significant crisis: “All those are just some of the critical scrutineers of advisers around me just confused the situation. public life today. More than anything I wished I had listened to my gut instinct, and that was to hit the issue The emergence of the internet has brought before the issue hit us.” with it the phenomenon of news being Reputation as a “They’ve all got a strategy until management challenge they get hit” A Roman general once said that in times of peace, prepare for war, and I think that this MIKE TYSON message is highly relevant today. The key is12
  12. 12. A REPORT FROM COUTTS & COto take control; get ready and build your the relationship between reputation and brands,reputation by design rather than allowing it the decline of public trust in companies andto grow ramblingly by default. Indeed, many business leaders, and offers practical tips bothbusiness leaders are often supported by highly on preventing reputational crisis and managingsophisticated corporate communications them effectively if they arise.departments who have the ability to viewbusiness reputation in the round. For those who are aware of reputational risk, are concerned about the threat it poses, andReputations built over the long term and are uncertain how it should be managed, I hopeon firm foundations engender trust. Look at this report provides a valuable starting point.Richard Branson or Bill Clinton. Neither withouttheir detractors, but both have weathered the My thanks are extended to thereputational storm, for now. contributors and especially to Coutts & Co, whose wise counsel,Business leaders should realise that their insight and support were central topersonality, record of achievements and way ofdoing business adds up to a brand. In the same the development of this report.way as Volvo is readily associated with safety,so in a similar way people have a perceptionabout you. Taking charge of your brand, andmanaging it effectively, is a vital challenge.Your weaponsShortly before leaving office, Prime MinisterTony Blair described the media as a “feralbeast”. The media may indeed be more thancapable of handing out a mauling, but withrights come responsibilities, and the mediacannot hide from these.The Reynolds Defence outlines specificobligations on the media to behave responsibly.Understand this check list and you have aformidable ally at your side.You also have the right to ensure that yourside of events is accurately reported. Get yourmessages agreed and stick to them. Legendhas it that Henry Kissinger regularly used toask the assembled White House press corps:“Do you have any questions for my answers?”It is still overwhelmingly the case that the vastmajority of business careers avoid a publicmauling or editorial assassination attempt. Buttimes are changing and with it so must theapproach of Britain’s business leaders.This report offers insights and recommendationsinto how companies and business ownerscan manage their reputation more effectively,through both good times and bad. It looks at 13
  13. 13. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET THE VALUE OF REPUTATION DEFINITION COLLINS ENGLISH DICTIONARY NOUN 1. The opinion generally held of a person or thing 2. A high opinion generally held about a person or thing 3. Notoriety or fame, especially for some specified characteristic14
  14. 14. A REPORT FROM COUTTS & COI debt crisis of the past two decades, has reached a similar conclusion. He told an interviewer that he had learned three big things in 50 years of banking: “The importance of people; the client pays the bill; and risk, especially n this new century, one of the most reputational risk, is crucial.” crucial business assets is reputation. It may be difficult to ascribe a hard Businesses acknowledge the risk. A recent figure to the value of a company’s PricewaterhouseCoopers survey foundreputation, but it is certainly not zero. Just that 50% of companies agree that loss oflook at Arthur Andersen, a century-old global reputation is the biggest threat to their business.accountancy practice and one of the five Meanwhile, a study by Aon Consulting ofbiggest professional service advisers of its kind 2,000 private and public organisations rankedin the world. It’s association with Enron, and the reputational risk as the most significant threat toreputational damage that caused, saw Andersen businesses, greater than crime, natural hazardscollapse within months as clients fled.Business commentator Jeff Randall put it asfollows: “In today’s commercial world, wherephysical assets form only a small part ofcorporate valuations, non-tangibles such asbrands, alliances and relationships make up thedifference – and these are often underpinnedexclusively by reputation. It has been called,‘the Cinderella asset’ – you never quite knowwhat you’ve got until it’s gone, then thedamage is unmissable.” “GLASS, CHINA ANDOnce lost, it is hard for a company or individual REPUTATION AREto win their reputation back. As BenjaminFranklin, the US founding father put it: “Glass,china and reputation are easily cracked, and EASILY CRACKED”never well mended.” and terrorism.Yet not all companies act on this knowledge. PricewaterhouseCoopersSome of the leading business people of the found that less than one quarter of companiesmodern age have spoken just as eloquently had a formal strategy to manage reputationalas Franklin. Warren Buffett, the legendary risk. And, according to a further study carriedUS investor, said: “It takes 20 years to build a out by The Economist, it is the most difficultreputation and five minutes to destroy it.” risk to manage.Small wonder that he once told his employees:“If you lose dollars for the company by bad Perhaps the subject is too vast for manydecisions, I will be understanding. If you lose companies to embrace. Professor Michaelreputation for the firm, I will be ruthless.” Power of the London School of Economics argues that once companies start to assess andJack Welch, the feted boss of General Electric, manage reputational risk, they find it hard towas similarly adamant: “One thing I learned stop. He wrote: “Reputation has become a newduring my years as CEO is that perception source of anxiety where organisational identitymatters. And in these times when public and economic survival are at stake. And ifconfidence and trust have been shaken, I’ve everything may impact on organisationallearned the hard way that perception matters reputation, then reputational risk managementmore than ever,” he said. demands the risk management of everything.”Finally, Bill Rhodes, Senior International Officer Managing reputation successfully is indeedfor US financial services giant, Citi, whose subtle daunting. Furthermore, it is becomingdiplomacy has been at the forefront of every increasingly hard to do. 15
  15. 15. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET THE QUESTION OF TRUST “The purest treasure mortal times afford is spotless reputation; that away, Men are but gilded loam of painted clay” RICHARD III, ACT 1, SCENE 116
  16. 16. A REPORT FROM COUTTS & COT rust is an essential part of doing business, yet forming that vital bond is increasingly hard for all companies.The public’s trust in authority asa whole is waning, requiring leaders in all spheresto work harder to secure their reputations.In 2003 and 2007, market research andpolling group YouGov surveyed public attitudeson trust. The survey asked: “How much do “THE PUBLIC’S TRUST IN AUTHORITY IS WANING” were required to spell out their remuneration in detail for the first time, giving the media an easy opportunity to track levels of executive pay and match it to company performance.you trust the following to tell the truth?” ofprofessionals in 25 fields, ranging from family The second contributing factor to the growingdoctors to teachers, police officers, plumbers climate of mistrust is a more aggressiveand electricians, as well as captains of media. The rise of the internet has spawnedindustry and politicians. instant news and comment, making the news environment much more competitive.With the sole exception of judges,YouGovfound every group to be less trusted in 2007 The media cannot rely on simply reporting thethan it had been four years before. news any more, but must seek to break it. This hunger for scoops, assisted by new tools suchWhat explains the seemingly inexorable as the Freedom of Information Act, has turneddecline in public trust? There are two mutually even mini scandals into front page news. Whatreinforcing trends that have added to the is clear is that this style of media is not going tochallenge of managing reputation. disappear any time soon.The first trend is the development of a more The result is what could be termed theopen, transparent and accountable society, which reputation paradox – as those in authoritymeans that those in authority operate under a are subject to more extensive best practicemicroscope as never before.The ministers’ code, standards and disclosure requirements thanthe Committee on Standards in Public Life, and ever before, so the public believes them eventhe strengthened register of members’ interests less. Transparency goes up; trust goes down.have created a yardstick against which politicians’behaviour can be measured. Viewed against this background, it is clear that establishing a reputation for integrity andThe incidence of political sleaze and self-dealing fair-dealing is harder than ever before. Theis probably no higher than it ever was, but public is cynical about what those in authorityindividual cases are more likely to be exposed, are telling them, requiring leaders in all spheresthe media coverage more extensive and hostile, to devise inventive strategies for establishingand the sanctions more severe than in the and maintaining their reputation.past. In the words of the Nolan Committee,established by the Major administration inthe context of the ‘cash for questions’ scandal:“We cannot say conclusively that standards ofbehaviour in public life have declined. We cansay that conduct in public life is more rigorouslyscrutinised than it was in the past.”Business people as much as politicians havelearned to operate under the new rules. It is onlyten years ago that executives of listed companies 17
  17. 17. A REPORT FROM COUTTS & CO Growing public scepticism means it isPETER KELLNER increasingly difficult to manage reputation T companies deliver record profits – after its last set of results, Shell was reported as making a profit of £1.5m every hour – does the public view this as the result of brilliant he public is in a management and business leadership, or mistrustful mood. Our further evidence of ‘rip-off’ Britain? I am polling found that every not aware of any polling that answers this group in authority save question, but I suspect the latter. one (namely, judges) were less trusted in 2007 than they had been The demands of the media contribute to the four years previously. This finding is hardly problem. Business is complex and not easily surprising.Think of the ‘dodgy dossier’, the reported, so that stories tend to focus on David Kelly affair and subsequent Hutton individuals rather than institutions – think of report,The Daily Mirror’s faked photos, and how much better known Amstrad is as a result the recent revelation that TV phone-in of the profile of its founder, Sir Alan Sugar. competitions were rigged, and it is no surprise that the public’s faith in authority is waning. “COMPANIES Part of the reason for this decline in trust is TEND TO BE A culture of mistrust the more intense media scrutiny of those in positions of authority. Despite this heightened attention, however, public understanding of HEROES OR business has barely improved. When the City of London sponsored the Money Zone in the ill-starred Millennium Dome, they VILLAINS” commissioned research into how well the The media is also poor at reporting shades public understood the worlds of business of grey – companies and their bosses tend and finance. either to be heroes or villains with few points in between. The results revealed startling ignorance. People understand companies as consumers Today, the environment in which power is – they know whether they enjoy a positive exercised, whether by politicians or business shopping experience at Marks & Spencer leaders, is harsher. Standards of behaviour or suffer interminable delays at the hands may well have improved, but so too has of a budget airline. But they know little scrutiny, and the punishment for transgression about the business behind the brand, is undoubtedly more severe. This has made and even less about companies with no managing reputation both more important and consumer-facing operation. more difficult than ever. Britain’s love-hate relationship with success Peter Kellner is President of YouGov, also plays a part. When the UK’s largest the AIM-listed market research and polling company. 19
  18. 18. A REPORT FROM COUTTS & CO Carefully managing the press can be vitalTHE RT HON THE LORD HESELTINE to building and maintaining reputation T o understand the relationship between politicians and the public, it is necessary to understand the media that both connects and stands between the two. The media has diverse owners, including National Institutions (BBC) and private trusts (The Guardian) that are independent from proprietors, but most of the media is owned by public companies. depend on the media to get their ideas across. They have to know where potential allies are The Financial Times provides a consistency of to be found. They have to persuade proprietors quality commensurate with the expectations of and editors to back them. They have to judge its audience. For the main, the big Fleet Street the pay-off by giving scoops to assumed friends. nationals are controlled by proprietors or editors with political agendas that too often It is easy for an MP to get himself referred to as tip their reporting towards something close “a prominent backbencher” by a judicious leak to propaganda. The spectrum of reporting or criticism of a colleague. It is harder to gain ranges from those who genuinely try to serious editorial support. report responsibly in the pursuit of truth and balance, through to others who deliver I have very clear views and some advice for flagrantly partisan bigotry. politicians in dealing with the media. Always remember that they are not there to be on The choice of editor reflects the attitudes of your side or a friend. The odd one may become the owner. For example, many of Fleet Street’s either or both for a while, but for the majority high-profile editors take the political stance of you are no more than the raw material of their the proprietor and point their paper towards a trade. Succeed and you will be suffocated with target market that thinks much like the owner, friendship. Fail or become embroiled in scandal with no plans to change much about its view and suddenly that ‘named reporter’ you trusted of the world. The further from Fleet Street, has become ‘our special correspondent’ hunting the less the political direction and predictability. you down anonymously with the pack. Journalists can be serious specialists with a deep commitment to the truth. At the other extreme But remember, as I do, that they represent a are the footloose hacks, who are in it for the balance to what would otherwise be the money, the thrill of the gutter and all you find unbridled abuse of power by governments. there. But, for the large part, journalists tell it The Government machine of 1986 would have as they see it. They are independently minded, buried me without trace after I resigned. So suspicious and questioning. would some of the proprietors. But they couldn’t because too many journalists and programme But the media has its own demanding disciplines, editors wouldn’t let them.The media as well as such as circulation figures, readership profiles my ideas kept me afloat. Indeed the media built and advertiser demands. Once appointed, an me up to the point that, despite four years on The media editor can become anything from a ruthless the backbenches, I was a serious candidate for dictator to a tolerant consultant. The former the highest office. No one knows more than I do may be more effective if they serve audiences that, warts and all, a free and varied press is an anxious for a clear, simple message and essential feature of a free society. intolerant towards qualified argument. The Rt Hon the Lord Heseltine is a Politicians live a life interwoven within this mesh former Deputy Prime Minister and of the principled and the prejudiced. They founder of Haymarket Publishing Group. 21
  19. 19. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET ME, MYSELF AND MY BRAND T oday, more than ever before, leaders have become the personification of the brands that they represent. They need to crystallise the best attributes and the best values – they are the emblems and the hallmarks of their businesses. It is not just celebrity business leaders whose reputation is pivotal to the business. For those “The most that may be less well known, their reputation with their specific stakeholders is no less important thing important in their own business environments. about how you This reliance on powerful personalities is no present your accident. It is people that count and personalities are the best way to bring out the value of the business is how you brand and spark a company into life. People present yourself” need to see themselves very much like a brand and the challenge of a brand is to positively RICHARD BRANSON position itself in the minds of the market.22
  20. 20. A REPORT FROM COUTTS & COIn just the same way as business brands exist, Take the acres of broadsheet coverage spentthere is no doubt now of the existence of the every week profiling the personalities that leadpersonal brand, which is very strong among Britain’s businesses.business leaders whose reputations are often atthe heart of the overall success of the business. For some, this is yet further evidence of a national obsession with celebrity. For others,Sometimes the leader’s identity is a very overt it is a sign of something more significantsymbol of the business’ success; it is the sign and substantial.above the shop door where the name is quiteliterally the brand. In an age where intangible assets count, it is the people stories that often help sell.In an era of information overload, businesses As one famous entrepreneur said: “I like tohave increasingly looked to new ways of work with people I like.”standing out from the crowd and often thebest way to do this is to promote the Providing good products and doing good workpersonalities of leaders. It is almost as if alone only gets you so far in a story-focusedpeople have become immune to information. market. It is simply not good enough becauseTo this end, ever more creative strategies a lot of people do it. And part of the problemare required to cope with the deficit in for competing marketers is that there is nohuman attention. shortage of good companies. “I LIKE TO WORK To this end, the building of a positive profile is part of the WITH PEOPLE everyday work of most business owners. I LIKE” Once the preserve of the press officer, communication is now more readily handled at board level. Indeed, for most business leaders, the role of communicator-in-chief goes with the territory.Personality mattersThe personal brand is serious. “I had enjoyed all the thinking about their Uniqueparticularly relevant and benefits of people around me, Selling Point (USP), butprevalent for the entrepreneur, but when I set up Travelzest it undoubtedly more effortwhere so much of the success was just me,” he recalls. “I had needs to be devoted toof a business depends on them. to persuade people that I was Unique Story Telling (UST).When entrepreneurs first absolutely 100% committedset up a business, they have to see it through.You have to This is a crucial reasonto sell themselves. sell yourself and your concept, about why they are successful and demonstrate to clients and not just because theyChris Mottershead agrees. that you don’t intend to fail.” have the best product,After quitting his job as distribution network ormanaging director of Airtours sales people, but becauseto found Travelzest, he found “UST not just USP” they effectively positionthe biggest challenge was Numerous business leaders their offering in the mindsto persuade people he was spend countless hours of prospects. 23
  21. 21. A REPORT FROM COUTTS & CO Running an eponymous business comesEMMA WILLIS with a heightened sense of responsibility M original style with a common thread linking all the products and the image of the business. I feel confident that this is a strength as it cannot be imitated. y first ambition was to be an I use all English manufacturing for my shirts and artist and I ties, and have built a strong relationship with studied at the my suppliers. Perhaps being so visible and Slade School accountable to them, as well as to my staff and of Fine Art. Towards the end of my first term, customers, helps build trust in this important I answered the Main Hall telephone. area of the business too. “Could we speak to Emma?” said a voice. A possible disadvantage of putting my name to the company is that I am held directly “It’s Emma speaking,” I replied. responsible for any failures, as well as successes, but this accountability adds to the excitement Made to measure “We’re delighted to inform you that you have of running my own business. won the Young Portrait Artist of the Year award.” I let myself believe for a glorious moment before having to ask: “Which Emma did you want?” “I DID DREAM “Emma Sergeant” was the reply. OF HAVING One day, I thought, I want the answer to be MY NAME UP Emma Willis. Although I am loath to admit it to my children, I did dream, like my actress grandmother, of having my name up in lights. IN LIGHTS” So there are my less than admirable motives. I have designed the shop to create a sense of an Putting my name to the company has made me English drawing room with hand-made cabinets directly responsible for the business and brand, for fittings, an oak staircase, stone floors, music, and the relationship with the customer, and I flowers and paintings. And a drawing room enjoy this responsibility. needs a host. My presence in the shop is made more important by it being named after me, but I know that every cotton or silk that I buy, and I seem to be choosing my staff accordingly. the make of my product, is a reflection of my own taste and I can be judged by it. I only buy Several times, customers for whom I have what I honestly love, for quality, colour or design, made shirts ten or 15 years ago, when I ran and I think having an eponymous business keeps my business without a shop, have come in to me true to this, resulting in an individual and joyfully greet my beautiful 24-year-old retail manager, Alexandra with: “Emma, you’re looking amazing!” and then, there was the American tourist asking in a slightly incredulous voice: “Is Emma Willis still alive?” Emma Willis is the founder of Emma Willis, a custom shirt making company. 25
  22. 22. A REPORT FROM COUTTS & CO There’s nowhere to hide when you open aTOM AIKENS restaurant with your name above the door T he name ‘Tom Aikens’ did not leap out at me as the one to choose for my restaurant, which I opened in 2003. I started with a list of about 100 names, but frankly, most of them were rubbish. A restaurant’s name matters hugely – it should tell you something about what the restaurant’s If you can’t stand the heat… about, and what it is trying to do. At the Opening a restaurant is one of the hardest same time, it must avoid being either banal or things you can do. People think how romantic pretentious. The name does mark the place and jolly it is to have a lot of friends over – if you get it wrong, the business does suffer. for dinner every night. The truth is, it’s relentlessly hard work. I also wanted the name to be an expression of me, my character, and my approach to I believe that if I hadn’t called the restaurant cooking. Ultimately, my own name seemed after me, it may well have buckled. Speaking simplest and best. both as a chef and a business entrepreneur, the opening months of a restaurant – as you seek There was a sound commercial rationale for to attract favourable reviews, build a client base this. At the time, I was a well-known chef with and establish your reputation – are particularly a fairly high media profile. The industry and gruelling and nerve-racking.Without the food writers knew me and my background, so brand awareness that my previous career there was a brand already in place. Because had generated, I am not certain that we would of my name, people had a view of what kind have made it through that launch period. As of restaurant it was going to be, so calling the it was, we won nearly 25 awards in our first restaurant Tom Aikens saved time in terms of year – no other restaurant has come close to restaurant PR and profile raising. matching that achievement. At the same time, there is considerable Establishing a reputation as a top-end pressure attached to having your name above restaurant is both vitally important and the door. People expect to see you, to know difficult to do. Customers paying a lot of that you’re cooking – which is why I’m working money for the best cuisine expect a ‘no in the kitchen at least five days a week. mistakes’ service. In any business, this is impossible. In a pressurised environment like I opened the restaurant in 2003; it was a very a restaurant, it is harder still. Mistakes occur; scary feeling. When you name your business it is how you manage them that matters. after yourself, ultimate responsibility falls to you and you alone. Everything eventually lands I once made the mistake of getting into a on your shoulders. If the business fails, you’ve dispute with a customer, and it ended up all got that round your neck. over the papers. Quiet professionalism would have been a better idea. Next time, I’ll leave I opened Tom Aikens after three years out the house manager to deal with it. of the restaurant trade, having left Pied à Terre in 2000. For two months before Tom Aikens is one of the most successful opening, I was in an almost continuous state young chefs in the UK and founder of of worry. Could I do it again? Could I commit Tom Aikens restaurant. to the hours, run a kitchen, cope with the stress? I had quite serious concerns about taking it all on again. 27
  24. 24. A REPORT FROM COUTTS & COI n the field of corporate reputation, the individual and the business are not easily separated. Shelly Lazarus, the CEO of Ogilvy and Mather, put it thus: “Everything a CEO says and does is no longer personal. It isattributed to the company.”An Economist Intelligence Unit survey askedcompanies who within the organisation had“major responsibility” for managing reputationalrisk – 84% responded “The CEO”.Increasingly, it is not just business celebritieslike Sir Alan Sugar or Sir Richard Bransonwho personify their business, but every chiefexecutive. When the company succeeds, it isthey who take the credit. Conversely, whenthey fail, the company suffers.Carly Fiorina, Chief Executive of Hewlett-Packardfrom 1999-2005, was one of America’s mostvisible business leaders, frequently photographedalongside Hollywood celebrities and politicians.The press speculated that, following her businesscareer, she would run for office.Her visibility and fame became a hindrancefollowing the controversial acquisition ofCompaq in 2002. The merger did not gosmoothly, results were inconsistent and Fiorinainevitably copped the blame. In 2005, she wasdismissed by the board, prompting a 7% jumpin the share price.Fiorina later said: “The worst thing I could haveimagined happened. I lost my job in the mostpublic way possible, and the press had a fieldday with it all over the world.”The concept of a business celebrity is notnew. Sir John Harvey-Jones, the former Chief “EVERY CEO PERSONIFIES THEIR BUSINESS” 29
  25. 25. FACE VALUE: YOUR REPUTATION AS A BUSINESS ASSET Executive of ICI, was the first of the modern business TV stars with the series Troubleshooter “ORDINARY in the late 1980s, but the phenomenon has multiplied greatly since then. MORTALS Even the comedy schedules are not immune NEED NOT from our obsession with the way business works – not when the biggest TV hit of recent times was called The Office. APPLY” As business has become ever ‘sexier’ in the new The role of communication managers is to century, so managers of all kinds have become, build a positive reputation stock for chief to use Fleet Street’s favourite and extremely executives with a wary eye on that dreadful accurate metaphor, ‘fair game’. Dispatches and moment when something serious goes wrong. Panorama are as likely to investigate companies For, in many respects, the modern business as they are governments; business leaders as leader faces the same kind of superhuman they are arms dealers. task that has long confronted politicians. You are not permitted to display normal As for newspapers, the days when a departing human fallibilities. chief executive, a boardroom row or a price rise would be confined to the business pages That applies to your private life, your salary, your are long over. Bonuses, golden handshakes, ethical conduct, your knowledge of the balance share options, perks, private equity deals, sheet and your firm’s accounting policies. commodity prices – no matter how technical the detail, the daily dealings of multinational You are meant to be a leader and a delegator, corporations can be pushed and spun into avoid being an egomaniac empire builder, and front page news. yet know everything that goes on at all levels of your company. No wonder it is said that One leader put it that in the 19th century people “ordinary mortals need not apply.” of ability went into the military; in the 20th century they went into politics; and in the 21st Business leaders need to tread carefully to ensure century they go into business. Business leaders the balance between getting their story on the are often interesting, powerful and relevant. record and not over hyping their own success. Re-building reputation The wise words of Benjamin seemed doomed to live in back into the hospitality Franklin notwithstanding, his father’s shadow. That business, creating RF Hotels, personal and corporate weak point was exploited a distinctive, growing and reputation can be re-built. mercilessly by Granada’s highly profitable collection Gerry Robinson during his of European city properties. Failure at some point does successful bid for the Forte Granada, meanwhile, had a not need to mean the end; Group in the mid 1990s. torrid time managing the in fact, it is often the Robinson loved to point Forte assets, and disposed of beginning. From Steve Jobs’ out that Forte had been out them all within seven years much publicised reincarnation grouse shooting on the day for a poor return. as Apple’s leader to Sir he launched his initial bid, and Rocco Forte’s leadership the image of the spoiled and Re-building reputation is a of RF Hotels, the lesson patrician elder son stuck. difficult and time-consuming is that reputation is a job. The most important long-term game. At 51, Forte had a huge lesson is to manage fortune but no job. Rather reputation right first time, The son of a great than live a life of privileged so there is no need for a entrepreneur, Rocco Forte obscurity, he launched rescue operation.30
  27. 27. A REPORT FROM COUTTS & CO Avoid letting others boost your profile forROBIN SAUNDERS their own benefit. Control is everything A Another example was when we helped to finance the re-building of Wembley stadium, a transaction that garnered a lot of press attention to me even though there was a s a private equity large team involved. I actually gave very few investor and interview comments as I didn’t see how it was financier, I aim to helpful for the transaction. back managers who are the best Still, a few uncomfortable moments aside, I in their business. Sometimes that means taking didn’t see where this was heading until 2003, on big personalities with a high public profile when a WestLB loan turned sour. Suddenly my – which sometimes scares off other investors. high profile became a millstone for me and the For me, performance matters far more than a bank, magnifying the interest in the negative controversial profile. It may be easier to work story line as it gathered speed and momentum. with a low-profile company led by low-profile This quickly became uncontrollable. Forget managers, but I’m not put off by column inches. trying to manage my reputation; I lost the ability even to correct basic facts. In my career, I have been fortunate to back the likes of Philip Green, Bernie Ecclestone, A media presence can be valuable and when Robert Tchenguiz and others, all of whom coverage is focused on the company and its were seen as controversial mavericks at the marketing messages, profile is invaluable. As time of their respective pivotal transactions. soon as it becomes too personalised, however, The perils of ‘personality’ More importantly, from my perspective, it can become uncontrollable. In hindsight, I each had, and continues to have, unique was naïve to take a laissez faire approach to talent in their fields of expertise. Ultimately, a snowballing public profile. At the peak entrepreneurial and managerial excellence and of frenzy, I received several letters from business ‘nous’ trumps all other considerations. FTSE CEOs (some of whom I knew, some I didn’t) encouraging me to “shake it off”. However, I have a cautionary tale – and I felt as if I had joined a club of those who personal experience of how quickly a high had experienced the full press cycle. public profile can become a liability. In 1999, while at WestLB, my team led a bond issue for Today, four years after leaving WestLB, I have a Formula One, the international motor racing successful private equity company.We adopt a championship, and Bernie Ecclestone and I gave low public profile, for obvious reasons. Despite a press interview about the deal. My personal my desire for a life out of the public eye, I profile rapidly became uncomfortably high. agreed to do this article to share the risks of running the gauntlet of a public profile gone out The following year while at WestLB, I was of control. As silver linings go, it’s a modest one. given the brief to build its principal finance operation. In retrospect, my ever-growing Robin Saunders is the Chief Executive public profile was used on behalf of the bank of Clearbrook Capital. as a whole, for its portfolio companies and bank borrowers seeking to raise their own profiles. I did not court the press, but I did allow borrowers to include me in deal profiles, believing it to be harmless. I remember one Sunday when my picture appeared on the front cover of almost every broadsheet business supplement detailing the allocation of capital by the bank to our Principal Finance team. In reality, the details had been in the public domain for months without being reported. The facts had not changed, only the media’s knowledge of them. 33