CEO reputation is a significant driver of company value

A CEO’s reputation is inextricably tied with the company’s corporate reputation. Studies report this to be as high as 70%, contributing to half of a company’s market value. While the statistics can be debated, a CEO’s reputation certainly has a major impact on the company’s bottom line.

CEOs are increasingly under pressure to set the tone and shape the company’s reputation and standing with key stakeholders, including customers, employees, shareholders and community members. The way the CEO communicates with those stakeholders drives their perceptions of the company as a whole.

Expectations have changed

Where once, a CEO’s reputation hinged on running a profitable company, today’s CEO is expected to be purpose-driven, not only in the interests of his or her company, but its employees, society, and the company’s relationship with them. What was once a case of influencing a tighter group - media, investors, analysts, regulators - companies must now consider the views of a much broader set of stakeholders. 

Perceptions must be managed

A CEO’s reputation is shaped by the perceptions of both internal and external stakeholders. However the growing complexity of a company’s stakeholder audience coupled with the pervasiveness of the internet and an unrelenting media cycle makes it harder than ever to manage. CEOs are expected to not only lead internally, but occupy a prominent external leadership position. CEOs therefore need to increasingly approach reputation with a leadership platform that balances the need to engage regularly on a range of business and community topics along with the long-term priorities of the business.

An executive profile is essential

Executives need to proactively create and maintain a positive online reputation; to demonstrate credibility and build  trustworthiness. They should present clear evidence that supports their leadership skill and ability to act as a custodian of all stakeholder interests, customers, employees and investors. People researching the brand should find positive content about the CEO’s overall career, and their continuing work to improve the company in terms of living its values, growing revenue, social responsibility and overall corporate citizenship.

CEO reputation drives company value

If material impacts on company value weren’t enough, consider the many benefits of cultivating a highly regarded CEO reputation: attracting and retaining employees, influencing purchasing decisions and increasing customer loyalty, attracting investors and generating positive media and brand attention. A strong CEO reputation also builds the trust and goodwill that better protects the CEO and the organisation in an emerging crisis. This is particularly relevant given that 2019 was noted for the most CEO exits on record - many as a result of CEOs professional and personal conduct.

Senior leaders matter too

The CEO is not the only leader who influences corporate reputation. Other top executives have considerable influence and can add substantial credibility to the company’s narrative. Other executives can play a powerful role as storytellers in the development of a strong company reputation. 

So if CEO reputation is critical, how does a CEO get known and heard, respected and ultimately, understood?

As we look to build CEO reputation, we can take learnings from well studied corporate reputation - a principal driver of which is stakeholder engagement to shape perception. After all, reputation is the beliefs or opinions that stakeholders hold about an organisation. Engagement enables CEO’s to influence what and how people think of them and their companies. 

Through a carefully and strategically managed CEO engagement program. we can elevate a CEO’s reputation, and by extension, the company’s reputation too. This can be dialled up, toned down and calibrated to the situation and events that occur. 

To learn more about positioning and profiling CEO’s and executives to build reputation, check out our article here.