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Why high profile CEOs may produce better results
By Andrew McGuinness
The UK’s CEOs may prefer their relative anonymity, but research shows that personal profile and perceived company performance are increasingly tightly linked, says Andrew McGuinness.
Most of the time, CEOs are invisible. They’re busy running the UK’s 5.2 million companies. Most run small organisations, but 7 000 of them run firms with more than 250 employees, accounting for £1.87 trillion (R36-trillion) in turnover – 53% of the UK’s business total.
These CEOs have their hands on the levers of growth that affect us all – from the price of oil to the cost of a coffee. But if you can name more than 25, you’re probably one yourself.
In some ways it makes sense that companies are generally better known than the people in charge of them – where we buy our morning coffee is more important to us than the person remotely but ultimately responsible for getting it into our hands.
It’s also true that many CEOs are very happy with this arrangement and hold their relative anonymity as a sign of success: it’s all about the brand, the business – not them. Plus if a crisis occurs, it’s the company – rather than you personally – that will take most of the media flack.
But times are changing and CEOs may have to change with them, emerging from the wings to lead more visibly from centre stage. New research across business executives, politicians and journalists commissioned by frauds suggests that today, the perceived success of a company is indelibly linked to the profile of its CEO: the higher the personal profile, the better the perceived company performance.
In retrospect, this shouldn’t be surprising. The financial crash resulted in a dramatic deficit of trust between business and society. Large companies ceased to be regarded as trustworthy entities as consumers retreated to a position of deep cynicism.
Consequently the CEO became more personally responsible, both in the eyes of the public and investment communities. In a world where balance sheets can be massaged, supply chains hidden and failures smoothed, gauging the future potential of a business by looking at the whites of a CEO’s eyes becomes a valuable tool.
Today, the job of the CEO is not just to manage their company as an overall decision-maker, but also to act as a proxy for its level of trustworthiness. The research found that the average level of trust in a CEO was 40% – by contrast their companies averaged just 15%. But IAG, led by Willie Walsh – the highest profile CEO in the survey – had a company trust score double that average, at 30%.
Crucially, the research found that the most important characteristic in a CEO as a driver of his or her business’ success was not their trustworthiness itself (although this was important), but his or her vision for the future.
Vision is hard to communicate. The average vision score for our CEOs was just 27%. But it really matters. Just 3% of respondents thought that Ashley Almanza (CEO of G4S) was visionary, and a correspondingly low 9% thought the company would grow. Compare this with Andrew Witty at GSK – who 43% saw as visionary, translating into 62% who thought the company would see growth.
So it seems that CEOs can and should legitimately spend time and money improving their own profile, because it has a direct and tangible impact on the reputation of the company they run. And what they should be saying is “here’s my vision”, not just “trust me”. With a strong vision, trust will develop over time. The challenge is to define that vision and communicate it to a variety of stakeholders.
Given the prevailing cynicism of our times, this isn’t easy. To succeed, a vision must incorporate a purpose beyond profit. Why does the company exist? What social benefit does it bring? And what will it continue to do?
If a CEO can answer these questions, they should feel comfortable speaking publicly about them. They owe it to the future success of their business to do so. The era of the invisible CEO is over – it’s time they came out of the shadows.