Marketing
Why Your Reputation as CEO is Your Company ' s Most Valuable Asset
By Kehinde Ruth Onasoga
Let me paint you a picture.
At 9:47 am on a Tuesday, the Axois * board received a jarring call. Their CEO’ s latest outburst on social media had triggered a stock drop of 12 % in pre-market trading, thereby wiping out about $ 80 billion in market value before lunchtime.
What was the post about? A single LinkedIn post about a political view that had nothing to do with financial services, digital banking, fintech innovation and financial inclusion.
This had happened before.
And over the ensuing months, Axios ' reputation would collapse from 5th place to 95th place in national rankings. And being a well-known brand, consumer favorability would also plummet by 56 %, and the company would experience its first annual performance decline in over two decades.
The culprit wasn’ t failure, regulatory issues, or competitive pressure; it was a CEO’ s reputation risk, the most underestimated threat to modern enterprise value.
Perhaps less well-known is that a CEO’ s reputation has a direct impact on a company’ s value.
In a research carried out by Weber Shandwick, this value is pegged at 49 %, making it one of the most critical yet undermanaged assets in today’ s perceptive environment. That is, your reputation as a brand’ s CEO influences your company’ s value.
A recent research from the same study reveals that companies with highly respected CEO’ s outperform peers by 13 % in stock price performance, while the flip side, in a reputation crisis, can destroy billions in market value virtually overnight.
Steinhoff International is an example of such a company, losing approximately $ 15 billion in market value following an accounting scandal, with its share price down 96 % and a significant investor fallout in just months. And Olympus, the camera company, saw its stock valuation fall 75 % after accounting fraud revelations, wiping out over $ 5.5 billion in market value almost instantly.
Consumers today associate what a brand ' s face( usually its CEO) posts with its brand perception. Every social media post, statement, and political position becomes a business decision with quantifiable consequences. Much worse if it ' s a global brand, as the global impact will equally be evident.
For Axios, as one can expect, this flaw in reputational judgment led to an immediate business impact. The number of early investment withdrawals, license under suspension, and the decline in the number of new accounts opened dropped considerably.
Consumers today associate what a brand ' s face( usually its CEO) posts with its brand perception. Every social media post, statement, and political position becomes a business decision with quantifiable consequences. Much worse if it ' s a global brand, as the global impact will equally be evident.
How does this affect different stakeholders?
When addressing such issues, predictable patterns can be seen in how different stakeholder groups respond to a CEO’ s reputational issues, and the variation in this requires tailored approaches, with Customers showing the most volatile responses.
Research carried out by PwCTrust Report stated that 85 % of customers judge organizations by the quality of their crisis response. A study by Weber Shandwick finds that 66 % of respondents believe a CEO’ s perception affects company opinions.
The emotional connection runs equally deep, as 59 % of consumers are influenced by what top leaders communicate( hi LinkedIn), thereby indicating that authentic leadership is essential for customer retention.
Investors, on the other hand, have a more analytical response, but it also has an equally dramatic impact. When such a crisis occurs, as seen in our case study,
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