7 Unexpected Ways Smart CEOs Deliver Exceptional Value

Golden egg

Analyzing CEO Valuation and the Steps You Can Take To Improve What You Bring To the Table For Your Company

When it comes to delivering value to shareholders or investors, CEOs know the drill—streamline operations, invest in growth, and build a powerful culture.

But did you know your reputation as a CEO can also affect your valuation more directly than you realize?

John S. Varley, CEO of Barclay’s, captured it well when he said that “financials alone are not enough to measure either performance or health. Soft-side strategies are the foundation stones of hard-side strategy success. They are additive, not alternative.” 

According to the Echo Research and Reputation Dividend study, Apple currently has the most potent corporate reputation, worth 58% of its shareholder value. The reputations of ExxonMobil and Chevron followed in the rankings, at 56% of shareholder value each ($645B).

Looked at this way, CEO reputations contribute a total of $3.19 trillion to market cap in the S&P500 alone.

Former federal reserve chair Allan Greenspan put it this way:

“In today’s world, where ideas are increasingly displacing the physical in the production of economic value, competition for reputation becomes a significant driving force, propelling our economy forward.”

Do some rough napkin math, and it looks obvious that a CEO’s impact on the valuation of their company is between 10% and 48%. That is an enormous responsibility—and an enormous opportunity.

Digging into the scale of this opportunity, Burson-Marsteller conducted a study last year of 1,155 US chief executives, senior managers, financial analysts, institutional investors, business media, and government officials, finding that 48% of company reputation is directly attributable to the CEO.

Nearly all business influentials reported to Burson Marsteller that CEO reputation influences their decisions to:

  • invest in a company (95%).
  • believe a company under pressure from the media (94%).
  • recommend a company as a good alliance/merger partner (93%).
  • maintain confidence in a company when its share price is lagging (92%).

 Moreover, business influentials are more likely to recommend a company as a good place to work (88%) if the CEO is favorably regarded. -Marsteller

You, as CEO, are empowered to make an immediate and meaningful impact on the reputation, and thus the value of your firm.

This is good news—it’s a relatively simple lever and at a truly “human” scale—you don’t have to hire 500 people to impact a CEO’s reputation. In fact, one or two small-scale, authentic initiatives can manage well.

This information about how critical a CEO’s reputation is to their company’s value and growth can be tough to face. Our culture has far to come in treating the people at the top fairly—if it ever does.

SEE ALSO: How To Turn Your Ego Into Leadership

 

If your sense of duty and responsibility calls you to use your reputation for the good of your company, then here are some thoughts drawn from other CEOs that may help you go about doing it.

  1. Accept that communicating more frequently than you may be already doing is part of the job in our media-crazy culture.  (It’s not that you love attention, even though truly many people may not understand that.)
  2. See yourself as the scout for the company when it comes to conversations and reputations, not necessarily as the “figurehead.”
    The scout faces risks, difficult terrain, and known or often hidden enemies.  Using this language—scout instead of figurehead, seeker instead of top guy—can help socialize your communications initiatives.
    Have open talks with your board about this research so they know where you are coming from if you decide to write a book, build a blog, or become more of a presence on Twitter.
  3. Use language with an implied humility—something you probably already do in conversation but may be less used to in formal writing.
    Use words about growing into, becoming, developing and working toward instead of words such as capitalizing, delivering, establishing, and maintaining. A more aspirational and intentional vocabulary, such as one you’d use with peers or your board, reads well in Tweets and blogs and can deflect criticism around arrogance or market projections.
  4. Make it a practice to admit an area of insecurity or concern. Challenge yourself to do this once a month. Start small.
    For one thing, you have areas of doubt naturally—you’re human. For another, it’s a sign of strength in today’s CEO, not weakness, to discuss areas where you are not certain (while obviously avoiding issues that will directly raise your investors’ fears).
    Investors who know you are truly looking at “the real issues” in a thoughtful way actually can become MORE secure that you’re truly digging in, and not whitewashing or greenwashing.
  5. Don’t feel the need to justify or defend. Instead, share, educate about, and explain your point of view. With much of today’s digital media, you can invite your community to comment back.
  6. Use praise.  Your Tweets and blog posts can be powerful ways to praise things that are going right in the organization—a division that exceeded safety numbers, a plant that just met EPA standards, a sales team that went over quota, a record number of patents—there are lots of ways to find real things you can praise, tweet about, and share satisfaction over. Be sure to call out specific people (even by their Twitter handles if you can find them).
  7. React to situations. Giving your calm, intelligent reaction to recent legislation or news allows you to shape opinion simply by spending a few moments with your laptop.  And in fact delegating this assignment (the draft work) can help you test the thinking of a second or third in line.

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Image: iStockphoto

About The Author

Lisa Calhoun, MBA, is founder and CEO of Write2Market, a B2B marketing and public relations company that is recently recognized among the Top 100 Agencies in the United States. She is a contributor for for Entrepreneur, Forbes, Fast Company and CEO.com, and a former president of Entrepreneur's Organization Atlanta.