Why CEO reputation influences brand perception

14 May 2020 | 4 min read | News
Paul MacKenzie-Cummins
Paul MacKenzie-Cummins

In life, we are encouraged to ignore what people say about us and instead focus on what we think of ourselves. That is easy to say but if you’re a business leader such advice will be at the detriment of the organisation you represent. This is because corporate reputation is shaped by the people who are its face, and there is a plethora of evidence to support this.

Global media agency Weber Shandwick produced a brilliant report which found that 45 per cent of business leaders attribute the overall reputation of their organisations to the reputation of their CEO. But it doesn’t stop there.

Indeed, the same report also showed a similar number (44 per cent) believe that the reputation not just of the CEO but that of the senior leadership team as a whole also plays a major role in how the organisation is both perceived by their customers and the profitability of the business. Take Shell as a case in point.

When it’s good

In 2014, Ben van Beurden was appointed CEO of the Dutch oil giant and immediately set about rewriting the narrative on how the energy sector is perceived. He set about “redefining what it means to be a good corporate citizen” by initiating the research and development of sustainable energy solutions that he was passionate about, and Shell’s customers were concerned with, too.

By addressing the elephant in the energy sector room (climate change), and putting his moniker on it, van Beurden has become a familiar face whose personal reputation has enhanced the public perception of Shell itself. How has this manifested in practice? The company has seen full-year profits in 2019 soar to a five-year high. Coincidence? I think not, and it is no wonder that Forbes ranked van Beurden as the World’s Most Reputable CEO in 2019.

The personal reputation of a business leader can also play a major role in affecting the fortunes of an organisation that isn’t doing so well. One example I have used time and again is that of Harriet Green.

Described by The Guardian as the “City turnaround specialist,” Green is widely recognised as a transformation specialist, and when she took over as CEO at the now beleaguered Thomas Cook in 2012 the company was on the brink of administration. Yet within two years she brought it into profit and growth from a market worth of £148 million to more than £2 billion. When she announced her decision to move on, the company’s value dropped by a £400 million overnight.

When it’s bad

Of course, if the CEO is known for all the wrong things, the impact can be altogether different. Elon Musk is a case in point. His tweets about taking Tesla private had no basis to them and were found to “create market chaos and hurt investors.” This cost Tesla and Musk $20 million…each.

Papa John’s is another example of what happens when the CEO or founder oversteps the mark. John Schnatter was the face of the pizza chain since its inception, having built the business from one to over 5,000 locations worldwide. But his comments about the demonstrations among some NFL players during the playing of the US national anthem met with stern reaction and consternation.

The NFL severed its ties with the Papa John’s while player condemnation of Schnatter led to an estimated four per cent decline in sales and his subsequent removal as CEO and face of the company – a fall of $21 million USD.

Perception is… everything

There was a time when all the CEO had to do was focus on the machinations of running the business – to ensure it remained competitive, financially viable and profitable. That is no longer the case. Consumer attitudes have changed and their purchasing decisions are increasingly influenced by those at the helm of their favourite brands.

Indeed, a report published by Global CEO RepTrak, a study of chief executive reputation, reveals the extent to which the paradigm has shifted: “Social responsibility, employee responsibility and environmental responsibility [carries] 32 per cent of the weight of reputation of any given CEO.”

This puts a lot of pressure on today’s business leaders. As such, the CEO’s role extends way beyond being the Chief Executive. They are the organisation’s Chief Storyteller and Chief Cheerleader whilst being aware that what they do and what they say can and often will impact the bottom line of the organisations they represent.

As Sir John Rose, former CE of Rolls-Royce put it: “You have to have a consistent message and be prepared to keep repeating it in a language that is simple and memorable.”