Corporate boards are putting more pressure on CEOs to build corporate reputation, which is perceived as more important than it was four years ago by global company CEOs, presidents and chairmen who responded to the survey conducted by recruitment firm Korn/Ferry International.
The fifth annual corporate reputation watch survey was conducted in conjunction with ORC International in August and September 2003. Some 257 executives with qualifying titles of CEO, president or chairman from 199 public and 54 private companies across the US, Asia and Europe were surveyed.
In response to high profile cases of corporate malpractice and diminished corporate reputations over the last two years, 65 per cent of CEOs surveyed said it is their personal responsibility to manage their companys reputation.
In addition, 64 per cent said that their companies have reviewed auditor and accounting relationships and 55 per cent said they have revised codes of conduct.
These findings reveal that most of todays corporate leaders believe their own ethical behaviour is critical to how their companies are perceived, and more and more are increasingly implementing measures to ensure that the mistakes of yesterday are not repeated, said Paul Taaffe, chairman and CEO of Hill & Knowlton.
CEOs overwhelmingly (78 per cent) pointed to customers as having the greatest impact on reputation, with print media (48 per cent) and financial analysts (44 per cent) rounding out the top three.
In todays hypersensitive environment, including tougher public scrutiny, increased media coverage and multiple shareholder interests, a minor blemish can later have a major impact on a company, Paul Reilly, chairman and CEO of Korn/Ferry International argues. Stewardship of corporate reputation can make a significant difference in share price, talent acquisition and retention, and ultimately on a companys brand.
CEOs agreed that corporate social responsibility (CSR) initiatives contribute to corporate reputation. Overall, eight out of 10 CEOs said that CSR initiatives contribute at least moderately to their companies reputation, but only three out of 10 said they contribute a significant amount. European CEOs place a higher weight on CSR initiatives. 94 per cent believe CSR initiatives contribute at least moderately to reputation.
CSR initiatives are primarily viewed by CEOs as necessary for recruiting and retaining employees (71 per cent), favourable media coverage (51 per cent) and promoting transactions and partnerships (40 per cent). Surprisingly, increasing sales and enhancing share price are mentioned more frequently by CEOs as objectives of corporate reputation, rather than corporate social responsibility.
The vast majority of CEOs believe the recent focus on more stringent corporate governance and board oversight is going to be a permanent fixture in the corporate landscape. While most CEOs believe boards of directors are doing a good or excellent job in performing an oversight role, a majority (68 per cent) also believes that a higher proportion of independent directors will become a long-term outcome of increased corporate governance.