article

03.14.09

5 Reasons Celebrity CEOs Crash & Burn

In a volatile economy, how can respected corporate chieftains avoid becoming villains overnight? Media strategist Judy Smith breaks down the tricks of successful CEOs—including never agree to an interview that focuses on your personal success.

Now that Bernie Madoff will be trading in his jet-setting lifestyle for a more humble existence (with a big, mean, short-tempered cellmate), I’m reminded of one of the oldest adages in public relations: Americans love to build people up to hero status, only to see them fall. Other than political figures and pop stars, no other group has been a bigger target of our love affair with the rollercoaster ride than CEOs. Rightfully given near-deity status in the early days of industrial America, the J.P. Morgans, Rockefellers, Carnegies and Vanderbilts of the world not only ran our country; they were also revered—and often despised—as larger-than-life personalities who could perform feats mere mortals could only dream of.

When times are good, a CEO should remain poised and composed. When times are difficult, a CEO should remain poised and composed.

After the breakup of monopolies and the exertion of the government’s authority over business, we ushered in a new era of CEOs that were less well-known, more backroom operations mangers than cheerleaders-in-chief. The modern age of the hero-CEO arrived just as the media and investor relations (more specifically the activist-shareholder) environment turned the spotlight not just on the performance of the chief executives running our corporations, but also the personalities of those (overwhelmingly) guys pulling the strings.

Starting arguably with Lee Iacocca of Chrysler, Jack Welch of General Electric and Roger Smith of General Motors, the modern CEO became as ubiquitous as the company logo. Companies seemed to take on the personalities of their leaders the way dogs begin to look like their owners. This phenomenon showered these executives with billions of dollars in compensation and golden parachutes. But with those perks came the scrutiny of being held responsible by the media for every uptick and downward movement of their businesses.

CEOs had entered the Gilded Age of Davos trips, talk-show appearances, book deals and even their own TV shows. But that brought with it the very real possibility of being fired, vilified or even led away in handcuffs (or “imprisonment” in one’s Park Avenue penthouse). Communications, messaging, investor relations, and public relations have always played an integral role in establishing the most important asset next to capital for a company: confidence. And with the rapidly changing, proliferating media circus we have all learned to know and love, the most successful CEOs have been those who learned how to best manage their image and their messaging.

Modern-day CEOs have discovered, the hard way, that the road between hero and heretic can be short indeed. Just look at Bank of America CEO Ken Lewis’s triumphant appearance on 60 Minutes a few months back, where he was championed as a Southern Cool Hand Luke while his New York peers were eviscerated as greedy know-nothings. Since then, Lewis has been grilled on Capitol Hill, lambasted in the press, questioned by New York State Attorney General Andrew Cuomo and had his head called for by angry investors. Lewis isn’t alone. From his compadres in the financial-services community—like former Merrill Lynch head John Thain and Maurice R. "Hank" Greenberg (formerly of AIG)—to Rick Wagoner of GM and Starbucks’ Howard Schultz, how the mighty have fallen.

Scandal-plagued CEOs like Ken Lay of Enron, Bernie Ebbers of WorldCom and Dennis Kozlowski of Tyco couldn’t escape an actual court, let alone the court of public opinion. And other than Michael Milken, crooks and swindlers like Charles Keating and Ivan Boesky overwhelmingly disappeared into the abyss. The lesson here is that ethical lapses and outright thievery leave little room for to establish positive narratives. So I will focus on addressing the PR challenges of CEOs that stem from performance and valuation issues, as opposed to personal conduct and ethical issues.

Here are a few dos and don’ts for CEOs who want to be more Pope and less Paris in the eyes of the public:

DON’T

Allow your personal star to rise too high

While it may be tempting to bask fully in the glory of success, remember: When a CEO takes too much credit for the good, they will receive far too much criticism for the bad.

Delay in responding to ethical challenges

Nothing kills a CEO’s credibility faster than legal, regulatory and/or ethical questions. While acknowledging that we live in a highly litigious society, a CEO should still treat every legal inquiry as a potential poison pill.

Agree to an interview and/or feature that focuses on your personal success

Nothing breeds resentment, and motivates the sharks to begin circling, quite like a self-indulgent story regarding a CEO’s amassed wealth. A CEO can brag about the amount of company stock they’ve purchased, as well as charitable and philanthropic activity, but not about how many homes and cars they own. The business community measures its (ahem) manhood by money earned, but that doesn’t mean the executive should rub the amount in everyone else’s face.

Respond directly to specific media outlets/pundits

CEOs who allow themselves to be drawn into personal feuds with media outlets or pundits are likely to lose, and lose badly. We all know the cliché about the barrels of ink, but remember—while it’s the media’s sole purpose to come after you every day, a CEO actually has a company to run. Issue corrections, ensure that you rebut misstatements of facts, but under no circumstances should you elevate a pundit to the CEO’s level.

Allow circumstances to dictate your demeanor

When times are good, a CEO should remain poised and composed. When times are difficult, a CEO should remain poised and composed.

DO

Emphasize only the strengths that address the specific needs of the company

If the company is in need of inspirational leadership and a strong manager to take control of a complex and diversified organization, I would recommend that a CEO emphasize these particular qualities. If the company brand is humble and blue-collar, emphasize one’s humble beginnings and connection to the workers.

Continuously tout positive information especially in difficult times

When tough times hit, CEOs tend to retrench into a bunker-like mentality and stop emphasizing positive information about the company—almost accepting the premise that there’s no good news to report. I recommend precisely the opposite approach.

Spread the positive exposure to all levels of your organization

Ensure that the success story involves workers at all levels of the company. Not only is it accurate, it’s also helpful to show that the CEO can be trusted and has a firm grasp of the company from top to bottom.

Nip internal personal-conflict stories in the bud ASAP

The press loves nothing more than public spats between the CEO and their subordinates. Keep internal disputes in-house and always take the high road when the press tries to stir up a conflict.

Act boldly in touting improvements that are within your control

Administrative reform, cost-cutting initiatives, any improvement that isn’t subject to the ebbs and flows of the broad economy are great sources for emphasis.