Category Archives: General Corporate

May 1, 2014 | cwinters | Tagged , , ,

When it comes to corporate reputation, trust begins at home

It’s always fun, and OK, even a bit vindicating, when you find actual data to support something you’ve always believed. Like the notion that reputation and trust begin at home, with your organization’s employees. If you haven’t seen this little tidbit here on this blog, perhaps a study featured in HBR will convince you.

You may have seen the headline that a quarter of employees don’t trust their employers. But what is more interesting than the headline, is the deeper dive into why and what that means. MWW friends, colleagues and clients may recognize a few of these tidbits:

  • Communication is key to trust….but what you do is more important than what you say
  • Two-way dialogue is more important that top-down communication
  • Telling people how and why is more important than the “what” or factual information

And for those among us who are challenged with managing multiple generations in the workplace (spoiler alert: we are going to talk about Millennials here) – workplace stress is defined very differently by the generations. And what your parents described as “knowing your place” Millennials describe as a major source of workplace stress: lack of participation in decision-making.

HBR is full of great information – too much for most of us to fit into our reading list. But this one is worth the read.

April 30, 2014 | cwinters | Tagged ,

Buffet Backtrack on CEO Pay: Reputation Buster, or Just Buffet Being Buffet?

The Oracle of Omaha has spoken, or in this case, not spoken. After boldly pronouncing large shareholders as the last line of defense on CEO pay just a few years ago, Buffet declined to vote against the Coca-Cola compensation packages he termed excessive. In fact, he declined to vote at all.

Is abstaining a cop out, or sending a signal, as Buffet suggests? And will his apparent lapse in backbone damage his reputation as the tough-talking, common sense billionaire who makes headlines any time he issues a pronouncement?

Buffet has built a reputation as being a contrarian voice, with results that consistently outperform the market. And that is his secret sauce: performance. So long as he continues to perform, any perceived “flip flops” in position will likely be chalked up to eccentric billionaire behavior. But should that performance wane…then we may see Buffet’s reputation decline like an OTC stock.

April 29, 2014 | cwinters | Tagged ,

Can you monetize your reputation? Ask Vernon Davis

Reputations are often described as “priceless” – particularly among those who’ve earned a stellar one. But the latest Fantex IPO of Vernon Davis suggests that reputation can be quantified, and even monetized.

If you haven’t been following, Vernon Davis is the world’s first publicly traded NFL player – offering fans an opportunity to “buy in” to his future earnings – which are presumably one part athletic performance (and contract payments) + one part endorsements (presumably the biggest upside is here). For sure, securing top dollar endorsement deals is about performance and exposure – and a trip to the Super Bowl sure wouldn’t hurt. But nothing kills endorsements quicker than a reputational problem. Ask Oscar Pistorius.

Arguments are raging about whether or not “buying in” to an athlete is a clever new investment opportunity, or a scheme to bilk fans of their hard earned money. As to the question of whether his personal reputation will impact the value of that investment – the answer is pretty clear.

This notion takes the practice of personal reputation management – whether for CEOs, athletes, musicians or elected officials to a whole new level. And goodwill banks will be more literally – banks, measured in dollars and cents, giving the notion of Return on Reputation a whole new meaning. And at least for today, Vernon’s stock is up.

April 7, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney v. JPMorgan Chase

And it all comes down to this: the final game of the tournament. The winner takes home the trophy, and the loser just takes the bus. In this matchup, we have two strong teams squaring off after two bruising rounds of competition. Here’s where things currently stand:

JCPenney

 

JCPenney came into the tournament as a serious underdog. They’ve been down before – way down – and rebuilding a championship-worthy team for a second time simply seemed like too much of a long shot. Just don’t tell head coach CEO Mike Ullman. He took on Toyota in the first round and General Motors in the second, handily beating both as the two automakers continued to struggle to overcome their own demons.

Coach Ullman has reignited the “Retailers” and their fans with a consistent emphasis on the fundamentals and a light touch of modernization – all while maintaining the iconic retail tradition that Americans love to love. By returning to discount pricing and coupons, loyal fans are returning, and with a fresh focus on online sale, particularly home sales, new customers are starting to take notice, as well.

When it comes to March Madness, a true Cinderella story is born when the underdog defies expectations and captures the hearts and minds of tournament fans everywhere. JCPenney has been serving the American public for over 100 years, and its brand loyalty puts them in good stead now when they need it the most. It remains to be seen if the “Retailers” will have a fairy tale ending, but if they can keep their heads in the game and avoid any additional setbacks, this will be a very close game indeed.

JPMorgan Chase

 

After easily defeating Carnival Cruise Lines in Round 1, JPMorgan squared off in Round 2 against a tougher opponent but the “Bankers” held their own with strong performances centered on transparency and accountability. A few missteps led to a tighter contest than many had predicted, but head coach CEO Jamie Dimon rallied his team and they pulled out the win.

In the championship game, the “Bankers” will need more than just a strong track record. Coach Dimon has once again showed his willingness to make bold moves that strengthen his team, including the recent shakeup to the office responsible for the London Whale trading scandal by combining the Chief Information Office with the bank’s treasury department. This should lead to greater visibility and transparency across the units with responsibility for JPMorgan’s own finances and prevent another high-stakes failure.

Despite making all the right moves to get his team back on track, things are still far from over for the embattled “Bankers.” We still don’t know the full repercussions of the judge’s ruling in favor of shareholders who lost value in the London Whale scandal. As it continues to play out, it prevents JPMorgan from closing the book on this chapter of its history and truly focusing all the company’s efforts on the championship game at hand. A team distracted by outside events is quite unpredictable in these high pressure circumstances.

Winner: The winner of 2014 Reputation Bracketology is… JCPenney. In a hard fought contest that came down to who has moved farther away from their troubled past, the “Retailers” proved they truly are a Cinderella story. Despite the lead changing hands several times, Coach Ullman and his team proved they may be down, but they’re never out.

April 5, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney v. General Motors

JCPenney:

In the first round, JCPenney proved that returning head coach CEO Mike Ullman was onto something when the “Retailers” defeated Toyota to advance to the Final Four. When Ullman returned to the helm of the iconic American brand, he had his work cut out for him. The previous coaching staff had essentially run the program into the ground with new strategies that were poorly suited for its loyal fans.

By bringing the focus back to fundamentals, JCPenney is reviving the winning strategy that made it an American success story from the start. It all centers on building confidence in players, fans and stakeholders, through a steady commitment to customer service, cultivating talent and online retail. While it’s too early to tell whether loyal “Retailers” fans will renew their season tickets, a 25 percent jump in share price immediately following the release of the quarterly earnings report in late February indicates that something in Coach Ullman’s playbook is working.

If JCPenney and Coach Ullman can continue to shift the focus away from the disastrous decisions of the past and stay centered on the opportunity for change, growth and innovation, the “Retailers” could easily take home the trophy.

General Motors:

GM easily pulled off the first round victory on the strength of head coach CEO Marry Barra’s strategy of transparency around the mistakes made by the previous coaching staff and the institution of a new culture of accountability.

Unfortunately for the “Motors”, things have gone from bad to worse. After announcing the recall of another 1.3 million vehicles, Coach Barra made two appearances on Capitol Hill this week to testify about documents that show previous coaching staff were aware of faulty ignition switches, but deliberately chose not to fix them citing that “none of the solutions represents an acceptable business case.” Continuing her winning strategy, Barra apologized for the failure and announced two new additions to the roster – former U.S. attorney Tony Valukas, who will lead an internal investigation and disaster compensation specialist Kenneth Feinberg, who will evaluate options for payments to the families of accident victims. Both of these moves indicate that the “Motors” came to play, and Barra will not shy away from the increasing pressure of her new role.

While GM has been very effective thus far in rising to the occasion and making all the right moves, any team would be hard pressed to overcome the continuous drip of negative information. The hits just keep on coming, and it is unclear if we’ve heard the last of it. Will the momentum and goodwill built up to this point be enough for Coach Barra and the “Motors” to overcome the mess they’ve inherited, or will the consistently negative coverage break the spirit of this iconic team?

Winner: In this clash of the iconic brand titans, we give the edge to JCPenney. The veteran coach using proven methods to emerge from crisis and bring back his team’s glory days is just too much for the smart rookie coach still dealing with a continuously unraveling legacy she inherited. We see a promising future for head coach CEO Mary Barra, but there’s light at the end of JCPenney’s tunnel and in the madness of March, having the worst behind you is always a winner.

Up Next: Our championship matchup between JPMorgan Chase and JCPenney

Here is our updated bracket:

April 4, 2014 | pwalotsky | Tagged , ,

Throwing in the Towel: How to Build Reputation in a No-Win Scenario

Last week, while most fans of college athletics were glued to their television screens as the March Madness Tournament pressed into the Sweet Sixteen, a much more dramatic event with long-term impacts for college athletics occurred in Chicago.

On March 26, a National Labor Relations Board regional office recognized Northwestern University football players as university employees capable of forming a union – not student-athletes who are exempt from organizing rights. This ruling sent chills down the spine of athletic directors and NCAA officials across the nation, and may be looked upon years from now as a seminal moment in amateur sports, comparable to Curtis Flood’s suit against the MLB’s reserve clause in 1969 which set the foundation for free agency in professional sports.

While a formal ruling that would allow college athletes to form a national union and collectively bargain for all college athletes is likely years off due to extensive appeals and litigation, between this instance, the ongoing O’Bannon case against the NCAA that is scheduled to see the inside of a courtroom this summer, and the recent anti-trust suit against the NCAA by star sports lawyer Jeffrey Kessler, the fundamental business model in college athletics is headed towards dramatic change over the next decade barring a dramatic collapse in momentum of the student-athlete rights movement.

On its face, the requests of these Northwestern college athletes who were recognized by the NLRB are exceedingly reasonable. These include: no loss of scholarship as a result of injury, healthcare coverage for injuries in practice and games, independent experts on sidelines to assess concussions, forming an educational trust to help former players graduate once their eligibility has expired, and “due process” for students who are removed from scholarship by coaches. Notably, the only talk around compensation is a nominal per-game stipend to cover reasonable expenses – something that most major conferences and even the NCAA’s President already support.

Furthermore, aside from this assault by litigation on all fronts, in the court of public opinion, we’ve reached a tipping point. Just this past week, major institutional media figures ranging from legendary sports writer Frank DeFord to New York Times business columnist Joe Nocera have celebrated the NLRB ruling and unionization for athletes. A year earlier saw a blistering cover story in the Atlantic Monthly that accused the NCAA of being a “colonial” institution and a PBS Frontline investigative report that exposed the double-standards and hypocrisy of the March Madness tournament with impoverish athletes enriching outlandishly paid coaches and administrators. Even President Obama has remarked that he’d like to see the NCAA do more to protect the health of athletes.

While the NCAA and universities are still aggressively trying to make their case – as the President of the University of Delaware attempted to on The New York Times op-ed page on Wednesday – the die has been cast. The remaining holdouts against NCAA reform are sentimentalists and those whose paychecks are tied to the current business model. The latest round of opposition – the idea that a union for college athletes is impossible to administer and impractical – has been dismissed by prominent labor law experts in academia like Peter Frampton of UC-Berkley. If there were strong and credible arguments left, one would think they would have been articulated by now.

While it may not happen today or tomorrow, change is coming, and from the NCAA and university perspective, none of the options are good ones. So, what to do when confronted with this type of no-win scenario?

In many cases – and this instance is no exception – opportunity in a no-win situation may be found through building reputation and good will in the long-term. Presently, the question that the NCAA and major universities are asking themselves is just how much negative press and litigation they are willing to endure to maintain the status quo. Do they proactively change and earn some good will, or do they hang on as long as they can until they’re forced to change by regulators or legislation?

Since the core of the NCAA’s business model is at stake, it’s likely they will fight aggressively to the very end to preserve revenue streams and keep their business model in place. After all, organizations that no longer exist have no further reputation to lose.

But major universities themselves will exist long after a decision is made. At a certain point, they will need to choose: do they proactively offer concessions to athletes? Or will they continue to pursue the status quo despite the writing on the wall?

The obvious, but painful decision is for universities to announce their support for making concessions proactively, and to make these pronouncements soon. While athletic departments will resist change aggressively, ripping the band-aid now prevents the long, slow drip of criticism and litigation. Furthermore, they have a seat at the table in making the rules, rather than leaving it to regulators or legislators.

Finally, I would be remiss not to mention the first-mover’s advantage. It does not apply in this instance because first-mover schools that act on their own could be punished by the NCAA and excluded from their sanctioned events. However, when an entire industry is faced with a no-win scenario and the path forward is apparent, being the first to break from the pack can have substantial reputational benefits. If you ever find yourself in a situation that’s seemingly without hope, consider your long-term reputation as a way to find opportunity and a light at the end of the tunnel. And if you have the chance, act before your competitors to earn the greatest amount of reputational benefit.

April 3, 2014 | cwinters | Tagged ,

Reputation Bracketology: General Motors vs. Bank of America

General Motors: A few months ago, GM seemed to be leading the charmed life. The “new GM” had put the bailout behind the company, and exuberance for its new CEO Mary Barra abounded. And then came the recall. Some experts say that Toyota’s settlement is a precursor for what may come for GM, which could change its game. But for right now, GM gets high marks for an effective, transparent response. Prior to the recall, Barra highlighted reducing bureaucracy as one of her priorities, and a culture of accountability will serve the company well during times of trouble. As a new CEO, she has the ability to be the person who solved the problem, without necessarily carrying the baggage of creating the problem.

Bank of America: Thomas Jefferson had a bank account at Bank of America. They are, after all, Bank of America. Just a few short years ago Bank of America was touting its “higher standards,” was growing rapidly and seemed certain of an entrenched position among America’s leading companies. Until the company wasn’t.

Today, it seems the company has a lot of work to do if it wants to be seen as more than just a profit monger. Clearly, tone deaf is a trait that is pervasive in financials services, as evidenced by Bank of America’s decision to increase ATM fees in the midst of a reputational firestorm. This is one case where use of the CEO seems ill-advised, as he seems to make things worse, not better. Bank of America has the lowest customer satisfaction of its peers, and although profitable, its financial performance is showing signs of vulnerability and volatility.

Winner: GM, because it is rising to the occasion far better than Bank of America. Of course, should the investigation reveal that corporate bureaucracy or greed caused a “hush up” – the outcome may be very different in future rounds.

Up Next: The first match up of the Reputation Bracketology Final Four.

Here’s our updated bracket:

 

April 2, 2014 | cwinters | Tagged ,

Reputation Bracketology: JCPenney vs. Toyota

JCPenney: I’ve said it before, and I will say it again. It’s hard not to root for JCPenney. They are another company we’ve been watching for years here at ROR. Mike Ullman is a veteran of retail turnarounds, and he’s fixed JCPenney once before. He is bringing back the proven game day strategies of private label brands and promotions to drive customer traffic. Reliable moves like closing unprofitable stores, and doubling down on key categories like home goods should serve JC Penney well. Ullman also knows how to establish benchmarks and communicate progress in a turnaround – he’s outlined a plan that stakeholders can understand and support –and he is delivering against that plan.

Toyota: If JPMorgan Chase is peaking at the right time, Toyota is doing the opposite. We’ve been following Toyota’s woes here on ROR for a few years now, and despite some valiant efforts to focus on safety, such as the launch of its new Collaborative Safety Project, Toyota is announcing recalls almost as frequently as retailers report same store sales. The recent Lexus recall, combined with the $1.2 billion dollar settlement makes the company an underdog in this tournament.

Winner: JCPenney. Because great coaches win big games.

Up Next: General Motors vs. Bank of America

 

April 1, 2014 | cwinters | Tagged ,

Reputation Bracketology: JPMorgan Chase vs. Carnival Cruise Lines

Continuing in our matchups for Reputation Bracketology, today’s pair: JPMorgan Chase vs. Carnival Cruise Lines – both companies on the reputation bubble.

JPMorgan Chase: JPMorgan Chase is scrappy. Most people would count out any company that paid a $13 billion fine to the Department of Justice. But this is a situation where the “strength of schedule” matters – and since financial institutions are among the most hated, least trusted organizations on the planet, being less hated than Bank of America may help JPMorgan Chase pull out a win. The company’s game strategy is transparency and accountability – owning its problems and defining the path forward. However, as executive pay continues to dominate discussion, Jamie Dimon’s 74 percent pay raise could plague the company if they advance to the further rounds.

Carnival Cruise Lines: Carnival Cruise Lines is like the Rocky of Reputation Bracketology. The company keeps taking punches, but keeps getting back up. A weak “conference” with everything from fires on board, to widespread illness to passengers falling overboard on cruise liners keeps Carnival on its heels. However, it has managed to work towards winning back customers without massive reductions in price – so I wouldn’t count them out just yet. This one might go to the buzzer.

Winner: JPMorgan Chase, but not by much. The customer base for cruises has more options, and a recessionary environment has them coming into the “tournament” in less than optimal condition. When swabbing the poop deck becomes literal, it’s tough to rally. Despite some setbacks involving executive pay and ill-conceived holiday cards, JP Morgan Chase may be peaking at the right time.

Up Next: JCPenney vs. Toyota

 

March 19, 2014 | jzeitz | Tagged , ,

Wonks Beware

We’ve been following with more than passing interest the recent controversy concerning a letter signed by over 500 leading economists, in opposition to a $10.10 minimum wage. Essentially a response to an earlier letter signed by over 600 economists in support of a wage hike, the recent circular raises perfectly legitimate questions that any college student should expect to encounter in a macro-economics class: is a higher minimum wage the most effective means of raising people above the poverty line, or does it have the opposite effect of encouraging employers to eliminate jobs and raise prices – two unintended consequences that might bear down hardest on people living in poverty? Indeed, many progressive economists contend that the minimum wage is a less effective means of fighting poverty than more redistributive measures like the Earned Income Tax Credit. Surely that’s what many of the 500+ economists had in mind when they wrote that poverty is a “complex issue that demands a comprehensive and thoughtful solution that targets those Americans actually in need.”

So why the controversy? Because it turns out that the opposition letter originated with the National Restaurant Association, and many if not most signatories – including Vernon Smith, a Nobel Prize winner from Chapman University, who agreed to distribute the letter – had no idea that the association was spearheading the effort. Smith was approached through a third-party intermediary, and he in turn contacted other economists, thus shielding the restaurant lobby from exposure. Or not, as it turns out. The association didn’t hide its tracks all too well, and its detractors now have ammunition to discredit the letter. For his part, Smith stands by his effort, affirming that he is “only interested in the ideas and the content,” though adding that he “really [doesn’t] know” who created the content.

Is this a black eye for the National Restaurant Association? Not really. We expect advocacy and industry groups to line up third-party experts and endorsements. It’s what their members pay them to do, and realistically, it’s a perfectly legitimate form of persuasion – certainly more substantive and far less offensive than buying influence through (the legal) bundling of campaign and PAC contributions. After all, the pro-minimum wage letter signed by 600+ economists was distributed by the Economic Policy Institute, an organization that receives almost one-third of its funding from organized labor. We can do worse than to have labor and industry groups disseminating the thoughts and wisdom of professionally trained economists and inviting an informed debate about the merits of the minimum wage and the EITC.

But there’s a reputational lesson in this for scholars, who often labor for years in anonymity and then jump at the chance to stake out a public position when their work becomes immediately relevant to the debate. Their currency is their knowledge. You wouldn’t write a $1,000 check to an organization you’d never heard of, so why would you sign a letter for that same outfit? A few years ago, I got a call from an old friend with whom I’d worked on several political campaigns. He knew that I was a professionally trained historian and asked me if I could help engineer a letter challenging the conservative argument that FDR and other New Dealers had opposed the right of public employees to bargain collectively. The idea was to get other historians to sign on. For the record, I strongly support the right of public employees to bargain collectively. But I couldn’t spearhead such a letter: first, it’s an inconvenient fact that many leading liberals did oppose public sector unions through the 1960s; and second, I really didn’t want to compromise my hard-earned reputation as a scholar by endorsing a campaign without knowing its provenance. So academics beware. When a nice man knocks on your door and asks you to sign a letter, find out who sent him. He’s getting paid a lot of money to line up your endorsement. You’re not. Don’t stake your reputation, which you earned over many years of hard work, on momentary relevance. It’s not worth it.