Corporate Eye

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Archives for July 2008

Once Again It’s Leadership Integrity

Despite Sarbanes/Oxley, business schools ramping up Business Ethics courses and lofty Corporate Codes Of Ethics, the Mortgage Market crisis indicates that we still have problems with integrity and ethics. While the mortgage crisis focuses on financial services companies, it is yet another wake-up call.

Leadership integrity and ethics continue to be lacking. For example in The 2007 ETHICS RESOURCE CENTER’S NATIONAL BUSINESS ETHICS SURVEY® (registration needed but worth it) indicates —

  • Ethical misconduct in general is very high and back at pre-Enron levels – during the past year, more than half of employees saw ethical misconduct of some kind.
  • The number of companies that are successful in incorporating a strong enterprisewide ethical culture into their business has declined since 2005. Only nine percent of companies have strong ethical cultures.
  • Many employees do not report what they observe – they are fearful about retaliation and skeptical that their reporting will make a difference. In fact, one in eight employees experiences some form of retaliation for reporting misconduct.

In the report the Center indicates “The Ethics Landscape Is Treacherous – Corporate America Is at Great Risk.” This is very sobering, however since 2002 and Sarbanes-Oxley, there have been similar cautionary tales apparently with little effect. Some may indicate a need for more regulation. But this is not the answer since rogues will always find ways to get around these. The solution must be a serious effort from senior leadership tobuild an organization wide ethical culture.

The Ethics Resource Center offers some useful suggestions.

Consider these additional suggestions as you build integrity within your leadership team. They are aimed at integrating Integrity within the organizational culture. You must address “the way we do things here in company x”, or the norms governing how people make decisions each day.

  • Integrity starts with the Board of Directors who develops an ethical practices statement and demand adherence. Violators must be publicly admonished similar to what Jack Welch did at GE
  • Ensure these practices flow easily throughout the culture and embedded in the formal and informal company practices
  • Stop the scoundrels at the gate – when recruiting leadership positions, use new approaches to reviews and assessments designed to surface integrity issues. Bristol-Myers, Pfizer and smaller companies such as Spartan Stores are using innovative approaches to filter out candidates with Integrity issues. Yes it is possible to interview for integrity see “Can You Interview For Integrity?”
  • Put Integrity components in compensation/incentives programs for all not just executives.
  • Communication between leaders and people in the organization deteriorated despite polished multimedia techniques. Your message may be lost in the technology. Tell stories about authentic leaders at company meetings, publish them in company newsletters. Tell them about company performance. Avoid fancy slides, just tell them the facts.
  • Leader development programs must include a first course/seminar in Integrity.
  • Be seen by your people. Let them see and talk with you in a relaxed place. If you “hide” in your office, it’s difficult to build Integrity.
  • Turn bureaucracy on its head.
  • Tough decisions always challenge Integrity. Such times require courage to do the right things. Don’t waste time over analyzing. Embrace integrity and you’ll know what to do.
  • No more “yes men/women”. Surround yourself with trusted people with diverse viewpoints who tell you what they really think about your ideas. Building Integrity takes time and continuous vigilance to maintain.

I will be interested to see what, if anything, will happen to improve corporate ethics after this latest scandal.

5 Factors of Brand Positioning

Last week, I wrote about how to break through branding clutter by defining your brand’s unique value proposition then owning it in the the marketplace thereby establishing your brand’s position.  Today, let’s take a look at the 5 main factors that go into defining a brand position.

1. Brand Attributes

What the brand delivers through features and benefits to consumers.

2. Consumer Expectations

What consumers expect to receive from the brand.

3.  Competitor attributes

What the other brands in the market offer through features and benefits to consumers.

4.  Price

An easily quantifiable factor – Your prices vs. your competitors’ prices.

5.  Consumer perceptions

The perceived quality and value  of your brand in consumer’s minds (i.e., does your brand offer the cheap solution, the good value for the money solution, the high-end, high-price tag solution, etc.?).

Take some time to create a thorough picture of the current market and how your brand fits in that market to determine your brand’s current position.  If that’s not the position you want for your brand, take the necessary steps to change it based on the gaps defined when you analyzed the five factors above.

Do you use any other factors in your brand positioning definition process?

Image: Flickr

Yum! That’s Good!

What is the best way to market your media message and create warm and fuzzy feelings in customers?

By giving.

Brand Awareness

Creating brand awareness and loyalty in customers start by sharing something that makes a difference in people. Giant corporate moguls often do this by creating grants, special opportunities or giving a portion of their products or services to consumers as give-a-ways. Many times, these perceived “marketing strategies” backfire, causing feelings other than warm and fuzzy and can set a tone for a bad name instead of a good one with customers. However, if their actions are successful, customers usually remember them for a long time, citing their generous acts as reasons to reward them with repeat business.

The largest restaurant chain systems, Louisville, KY based company Yum! Brands Inc. does create those warm and fuzzies by giving away what their trademark brand is…food. They have done this by partnering with the United Nations World Food Program and other hunger relief agencies to reach out and make a difference. Their efforts have touched the lives of over 1.6 million people globally, concentrating on areas where there is a significant impact on world hunger.

The Right Way

What’s remarkable about what Yum is doing is the way they have chosen to make a difference and the impact that it has world-wide. Instead of a corporation this size simply profiting and enjoying its profits, they have taken an interest in local and international global affairs and decided to make a difference. As a parlay into success in media relations, instilling brand awareness and maximizing their message, Yum! has done a wonderful job of and is an example to the value of this type of public relations. As the parent company to their fast-food restaurants like Pizza Hut, Taco Bell and others, they are a leading example of what and how community interaction on a significantly broader level can help any company achieve that coveted word-of-mouth advertising and the aforementioned “warm-and-fuzzies.”

When is Sharing Not a Good Idea?

Consumers have a special knack for seeing right through messages that are only interested in their dollars. They know when they’re being “sold” to and when the only thing the company is after is their business solely for the sake of having their business. To that end, corporations would be wise to be careful when they share goodwill or attempt to broaden the scope of their audience by using certain tactics. They should be sure that their motives are pure, although there is nothing wrong with marketing to gain new consumers. The key to this type of marketing strategy to be successful is to know what the boundaries are and avoiding them at all costs.

After the company has achieved their objective in consumer relations, they can then enjoy the aftermath of increased sales, increased exposure, a successful marketing message and all of he good word-of-mouth advertising it can stand.

Now, I’d say Yum!, that’s pretty darn good!

Digging Deep for First Impressions

“Great Uncle ‘Erbert’s coming for dinner!” called my Mum.

“Not Great Uncle ‘Erbert!” yowled her children. He was old and grizzled with white facial hair which seemed to clump together for warmth in random places before hibernating up his nostrils every night.

The wind whistled around the gaps in his misshapen teeth and there was always that strange smell which I later came to associate with men’s public toilets. We tried to avoid him whenever possible.

In the same way, environmentalists avoid the mining industry whenever possible.

This is not surprising: an industry which digs large holes in the ground and then sloshes toxic chemicals all over the contents is unlikely to go down well with the green movement.

What is more mining companies, unlike Great Uncle ‘Erbert, are not fictional. In fact, they operate predominantly in developing countries and so should have a lot to say about their sustainable practices on their websites.

Wide Ranging Content
Anglo American is one of the largest mining companies in the world. Their operations stretch across the Americas, Europe, Africa and Australia and include household names such as De Beers and Tarmac.

Like any good corporate website, it has a link from its top banner to its sustainability section. This immediately places the issue on the same footing as Investor and Media Relations.

Anglo American Homepage

In addition, this link automatically expands to be a menu, allowing the visitor to gain access with a single click to topics ranging from Anglo American’s sustainability reports to its approach to HIV/AIDS.

Within the section here are links to a whole slew of policies, speeches and presentations, a discussion of “Good Citizenship” and descriptions of the eight international schemes Anglo American plays a part in.

There’s also a page dedicated to the sensitive issue of the transfer of a share of ownership, management and benefits of business interests in South Africa into the hands of those previously excluded under apartheid.

Most intriguing of all is the Anglo American’s Social-Economic Assessment Toolbox (SEAT). This methodology has been deployed in over 16 countries to support and engagement with local communities.

This will be covered in more detail in a future post.

Burying The Facts
Antofagasta is another FTSE 100 mining company. Formed from the Bolivian Railway Company, it mixes railway and water interests in South America with being one of the largest copper producers in the world.

On the corporate website sustainability is part of the Investor Relations section, accessible throughout the site from drop down menus from the website’s title bar.

Antofagasta Sustainability Page

But the single page isn’t much to look at on arrival. Two links to extracts from the Antofagasta’s Annual reports and, a little bizarrely, a link to the Spanish-language website of one of its mines in Chile.

This means the content does have one thing in common with the Anglo American site: both are devoid of any firm figures concerning their sustainability measures.

This is a shame because the PDF documents both supply are stuffed full of the kinds of facts and figures which analysts love to pore over.

In addition, the Anglo American sustainability report contains 16 Key Targets covering environmental, governance and social aspects of the company’s performance.

Similarly, the Antofagasta report contains details of various awards the company’s installations have won alongside their progress towards ISO 9001 certification.

No need for Mining
These are almost unforgivable errors in a major company’s web-based presentation of its sustainability credentials.

It may be too much to hope all companies will have data-mining tools implemented on their websites, allowing analysts to investigate their raw data as best they see fit.

However, one of the traditional ways of presenting your best side is to publish a table showing progress towards a static target. Both companies have missed a golden opportunity of doing this.

Companies need to get wise to the data they have within their control and use it as effectively as possible within a web based environment.

Visitors to the Anglo American website would leave with the distinct impression of “all fluff and no substance”; those to the Antofagasta website may think the company just didn’t care.

These first impressions last. Great Uncle ‘Erbert may have been a leader in particle physics, but because he never told us we simply think of him as a smelly old man.

Similarly companies, especially those involved in naturally unsustainable past-times such as mining, need to be careful. Otherwise the truth may be lost to bad first impressions.

Missing Links in Corporate Governance

My recent post on Corporate Governance ratings highlighted a recent study that questioned the relevance of rating agencies scores to corporate performance. Seems that the agencies are missing something.

Some observers feel that ethics may be the most important business leadership issue of this decade.
Alan Lane Ethics The Global Challenge Communication World I November-December 2005

When in December 2006 the Gallup organization asked Americans who they trusted to act honestly and ethically, only 18 percent rated the ethical standards of business executives as “high” or “very high.”
The Board’s Role In Ending Investor Skepticism By Harlan R. Teller JANUARY/FEBRUARY 2008 THE CORPORATE BOARD

Seems that the rating agencies overlook that good corporate governance consists of “hard” quantitative criteria (board structures, compensation, options) which they monitor and “soft” more qualitative criteria (code of ethics, corporate culture of the organisation, and the ethical behavior of employees and senior management) which are sparsely covered.

There is some hard performance evidence on the importance of soft criteria —


Corpedia has identified a basket of stocks whose ethical practices have resulted in a competitive advantage versus their peers. We call it the Ethics Index. Ethics Index companies have outperformed The S&P 500 by more than 370% over the past five years.

Hmmm looks like the soft stuff really matters.

While regulations touch on ethical matters, the problem is that it is a external mandate. Matters of ethics and integrity must be motivated and enforced internally. Ethics must start with the Board and be continuously cultivated, encouraged and enforced through all levels of management. A culture stimulating ethical behavior must be established internally.

As Tom Tierney, former managing partner of Bain Consultancy remarked, “Corporate culture is what determines how people behave when they are not being watched. ”
Narayana N. R. Murthy Chairman of the Board Infosys Technologies Limited

Corporate Governance rating agencies would well to consider looking at the following items that at least give some good indications of internal ethical practices–

  • Integrity hotline available on public website
  • Corporate Values include ethics/integrity
  • Corporate Policy on Corporate Governance available
  • Company has Chief Ethics Officer
  • All documents relating to how ethics are integrated with Corporate Governance are viewable

This is a partial list, but it is an example of what must be done to find those missing links.

Turn Brand Negatives into Brand Positives

Is there an aspect of your brand that is viewed negatively by consumers?  If so, it’s quite possible that your brand negative could be repositioned or recommunicated to become a brand positive.  Remember, much of branding and marketing is about consumer perception.  How do consumers perceive your brand, and what is its position in the marketplace relative to other brands?  By massaging consumer perception, you can turn threats into opportunities.

Take a brand like Listerine for example.  Listerine has battled a negative brand image as a mouthwash with a terrible taste since the day it arrived on the market.  In fact, the taste is so awful and the mouthwash is so strong that people have difficulty rinsing for the required 30 seconds recommended on the Listerine label. [Read more…] about Turn Brand Negatives into Brand Positives