Corporate Eye

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Archives for December 2008

Financial Crisis and Leadership or Lack Of

In my book, written after the “Enron Era”, I wrote about a Business School-Media-Corporate complex —

This Business School-Media-Corporate complex seems to have engaged in a group think of enormous proportions—professors, consultants, journalists, students and executives all feeding on their own diets of best practices, theories and what defines leadership.

  • Business schools taught Ethics as a sideline.
  • Many companies have lofty Mission Statements and Operating Practices statements that address ethics, but do little to enforce them.
  • Journalists give interviews to glitzy executives who brag about what they are doing to improve profits.
  •  Executives courted Wall Street analysts who might improve their stock ratings.

Business is at a crossroads. Capitalism is facing a crisis. All of us who believe in business—from CEOs to business-school professors—must recognize that we have contributed to this crisis. 

“Memo to: CEOs,” FastCompany, June, 2002″

Once again we have a flood of articles about a Leadership Crisis. There’s Fortune Magazine’s “How the fallout from the financial crisis could breed a new type of corporate leader”. Then there’s BusinessWeek’s “Leadership and the Financial Crisis”. And again there’s the debate about the role of Business Schools.

Enron Era Redux? No, this crisis is much worse. The impact of the Enron era was primarily limited to employees and investors. The current crisis has brought us to the brink of an international economic collapse.

In some of my posts, I have singled out some companies such as Nexen and Rio Tinto as models of ethical practices. Unfortunately for many of us, their model was not replicated in the companies that caused the current crisis.

Perhaps Warren Buffett has the key —

Executive compensation is the acid test of corporate governance. Financial incentives determine what objectives an organization pursues, and they drive the way managers conduct a business.

Boards should add an ethics component to senior management’s compensation package.  Components of typical executive compensation include —

  • a cash base salary;
  • annual (short-term) incentives;
  • long-term incentives;
  • supplemental retirement; and
  • other executive benefit.

Adding an ethics component should not be difficult and would contribute to improved ethical behavior. This will be covered in a future post.

A final insight on effective leadership is offered by Carly Fiorina, former CEO of HP. In a Wall Street Journal Opinion piece she said —

There is no doubt that government will now play a greater role in key industries. While this expanded role is perhaps vital for a time, our Founding Fathers knew that government’s power should be limited. If we are to emerge stronger from our current crises, businesses must restore their credibility and regain the American people’s trust by embracing accountability and transparency.

At no time in human history have we been so unconstrained by our array of capabilities or so challenged by our worst excesses. Never have common sense, good judgment and ethics mattered more.

Indeed.

Getting the landing page right for investors

There are many theories regarding landing pages within and without the Investor Relations field. 

One idea is that a landing page should be quick loading and serve merely as a sign post that the user has arrived at their intended location. 

Another theory suggests that as much information as possible should be placed on the landing page in order to provide an interface which requires the fewest clicks from a user in order to reach the information they were looking for.  However, this can lead to an unpleasant looking page that is so full of information that it appears unfriendly and perhaps takes longer for the user to find what they are looking for despite any savings in how many clicks it takes to get there.

McAfee Landing Page

McAfee IR Landing Page - Click for Larger Image

The McAfee investor relations landing page is a solid example of a page which contains lots of information while maintaining its overall readability and aesthetics.

When first viewing the page, one is struck by the fact that although the page remains fully branded, there are remarkably few graphics.  This is accomplished by using not only the corporate logo in the upper left corner, but also by using a branded logo as the graphic that accompanies the top news story in the main content area. By using this technique, the page avoids the sparse look that comes from no graphics, while not wasting any area for superfluous design elements.

The other design element which allows for McAfee to get so much information onto this single page is that the separation between sections has not been aggrandized by large overbearing fonts, nor complex scrolls or other design heavy separators.  Instead, simple (and proven) gray bars are used with bold text.  Thus, the content areas are well separated, again without the cost of space loss.

What remains is a landing page that contains the beginning of virtually all of the basic information any investor might be looking for.  Just a quick perusal of the landing page shows just how much information has been loaded at the investor’s fingertips:

  • Current Stock Quote
  • Most recent webcast
  • Most recent earnings information
  • A year’s worth of previous earnings info
  • Most recent news release
  • Company Profile
  • Upcoming Events
  • List of Press Releases
  • Investor Relations Contact Information
  • Stock Listing Information

This array of information often takes many investor relations websites several pages to convey to the investor at any level.  The success of this arrangement comes from the idea that while a user will appreciate fewer clicks to find the data they are looking for, it is impractical to simply provide multiple full content documents on a single display.  Thus, when the McAfee IR landing page displays the “Corporate Profile,” it makes no attempt to display the whole text, nor even a major portion thereof.  Instead, a quick overview of what the company does (often referred to in marketing as an “elevator pitch”) is paired with two links.  One link goes to the corporate brochure, which no doubt contains a much more complete picture of the company profile, and the other goes to a corporate fact sheet, which contains much of the other information a user might want  regarding an overview of the company.

Easy navigation from the landing page to other more specific information is made easy by a clear easy to read menu bar at the left and a compact and user friendly toolbar across the top.

Best Practices – Layout Design for Maximum Information

Contrast the McAfee IR landing page to your company’s investor relations landing page.  Are you able to communicate as much information to a prospective or current investor as quickly?  Does the graphical design of your landing page use up valuable real estate that could be better spent communicating with your investors?  How many clicks does it take to find the same information?  For example, a shareholder with physical stock certificates looking for contact information for the IR department, or the transfer agent will require how many clicks to find the same information on your site?

Of course, copying the success of others is rarely the answer, but the layout and design used by McAfee provides a compelling case for the much information on the landing page paradigm without falling victim to its potential flaws.  Studying what works here can help lead to ideas that will work for you as well.

9 in 10 Emails are Spam Says Cisco Annual Security Report

Each year, Cisco publishes its annual security report.  This year’s report tells us that 90% (or nearly 200 billion) of all the email messages sent each day are spam.  Next time your leadership comes to you and asks you to put together a marketing or branding email campaign, and you tell them to invest in measures to ensure your email is not diverted to recipients’ spam folders, but to save money, they say no, show them this report.  Every step you can take to ensure your email messages get to the recipients’ inboxes are essential to your campaign’s overall success.

Perhaps the biggest challenge of creating a successful email campaign isn’t getting people to open your message and follow your call to action, but making sure they get to see it sitting in their inboxes.  Even the most compelling title for your email doesn’t help if consumers never see it.  At the very least, an email authentication program is critical.  While not full-proof, it certainly increases the chances for your email to make it to its final destination correctly. [Read more…] about 9 in 10 Emails are Spam Says Cisco Annual Security Report

Governance Visualization — An OCEG Masterpiece

In one of my posts I wrote about a standout Corporate Governance organization Open Compliance and Ethics Group (OCEG). Another post covered Corporate Governance Visualization, the use of graphics to convey and explain Governance matters. I’d like to combine the two themes.

Corporate Eye has received permission to link to OCEG’s seminal visual on Corporate Governance. Think of it as “everything you wanted to see about Governance.” This is a landmark effort and visually shows all Corporate Governance practices and stakeholders, and all relationships and linkages.

You may access the visual here.

You will need to register for free subscription: well worth it you will get access to the visual and more. Also don’t worry about e-mails, OCEG respects your privacy.

For those who have an interest in Corporate Governance, OCEG and the visual is a must.

The Minimalist Approach to IR Websites

Mies van der Rohe, one of the founders of modern architecture, famously said, “less is more”.  I have now found an investor relations website that attempts, unsuccessfully, to put this into practice.  

Kroger, a U. S. supermarket chain, has an investor relations section that consists of four pages.  The initial page contains a table with quarterly high and low stock prices and six facts about the company: number of employees, number of shareholders, shares outstanding this year, shares outstanding last year, stock ticker and exchange it is listed on.  

That’s it, nothing else, which makes it kind of difficult to form any sort of investment opinion about them.

I thought that was minimalist, but the next page takes it a step further.  Their FAQ page lists exactly six questions that they deem important enough to list.  On the third page, the effort to supply useful information about the company is not better. You want a report about the company?  Your first default is that the company sends you off to the SEC Edgar database.  You want to see the company’s annual report?  You have to dig through 73 pages of a proxy statement before you get to the most recent annual report.  No indexes, no tabs – you’re on your own if you want to find helpful data.

Finally, the webcasts page lists a link to a single upcoming event – no archive of past presentations, nothing to give you much context.

Oh well, I’ve never been much of a fan of modern architecture anyway.  In this case I think more would be more.  

Kroger has evidently decided one of two things: 1.) They are only going to provide the minimum amount of information they possibly can, or 2.) Let all those pesky investors go somewhere else to find the information.  After all, there’s a whole world wide web of information out there.  In either case, they are effectively driving investors away.  That can’t be good for their stock price.

Consumers Trust Corporate Blogs Least of All

A new report from Forrester Research, tells us that only 16% of online consumers trust corporate blogs, putting corporate blogs at the bottom of the trust scale, lower even than personal blogs. 

That’s not good.  However, it definitely reinforces what bloggers already knew but corporate executives have trouble believing – blogs that simply regurgitate corporate rhetoric are useless.  So what’s a company to do?  How do you create a corporate blog that’s actually useful?

There are a number of companies that have launched successful corporate blogs, but they’ve done it by listening to consumers.  Companies like Dell and Apple have turned their blogs into customer service portals and places where real conversations take place.  Rather than simply speaking at consumers through their corporate blogs, Dell, GM and Apple have embraced the main purpose of blogging by creating a communications device that speaks with consumers, values customer opinions, listens to customers and responds to them.  Rather than simply delivering marketing messages, the information on these blogs is useful and helpful to consumers. [Read more…] about Consumers Trust Corporate Blogs Least of All