CEOs Receive Nearly 60 Percent of the Blame When Company Reputation Is Damaged

CEOs Receive Nearly 60 Percent of the Blame When Company Reputation Is Damaged

February 28, 2007

Triggers of Reputation Failure Identified
Executives Underestimate Impact of Leadership Departures

    NEW YORK, Feb. 27 /Xinhua-PRNewswire/ -- Global
business executives assign nearly 60 percent of the blame
to CEOs when companies lose reputation after a crisis
strikes, according to a new Safeguarding Reputation(TM)
survey by global public relations firm Weber Shandwick with
KRC Research.  This finding did not significantly differ
among regions.

    CEO RESPONSIBILITY FOR REPUTATION LOSS

                              Total        North
                             Global       America      
Europe         Asia 
    Average percent of 
     blame attributed to 
     CEO after crisis 
     strikes                   58%          60%          
57%          57% 

    Source: Weber Shandwick Safeguarding Reputation(TM)
survey conducted with KRC Research.

    Note: Results for Brazilian executives are included in
the total.

    Weber Shandwick's survey also identified the key
triggers of reputation failure that if caught early could
reduce the chances and extent of CEO blame.  A majority of
executives surveyed cite major triggers of reputation
failure as financial irregularity (72 percent), unethical
behavior (68 percent) and executive misconduct (64
percent).  Other frequently mentioned strikes against
reputation revealed by the survey are security breaches (62
percent), environmental violations (60 percent), and health
and safety product recalls (60 percent).  Despite
widespread media coverage, and in some cases severe
consequences for any wrongdoing, key triggers continue
unabated -- alleged stock-option backdating, corrupt
governance, consumer information security, pipeline leaks
and salmonella or e-coli scares, among others.  

    "Interestingly, many of the reasons causing
companies to suffer reputation loss are self-inflicted. 
Financial irregularities, unethical behavior and executive
misconduct are all issues that could be prevented if
companies had better controls in place," said Weber
Shandwick's Chief Reputation Strategist Dr. Leslie
Gaines-Ross.  "As more reputations deteriorate
worldwide, companies need better reputation radar systems
to identify and track approaching reputation threats -- 33
percent of the Global Fortune 500 experienced reputation
deterioration in their 'most admired' status in
2005."

    Also noteworthy is that today, global business
executives underestimate the severity of a number of
significant reputation threats.  Approximately one-third of
survey respondents place CEO compensation, online attacks or
rumors and top executive departures low on the list of
triggers that tarnish reputations.  Companies continue to
overlook how damaging threats from online activists and
pressure groups can be if they are not prepared to respond
quickly and decisively.  The survey also underscores how
executives around the world might be underestimating the
negative impact of executive turnover. 

Factors That Can Significantly Damage Reputation
% Always/Usually

                               Total        North
                              Global       America      
Europe       Asia 
    Financial irregularities    72%          74%         
70%          71% 
    Unethical behavior          68           66          
69           61 
    Executive misconduct        64           59          
65           56 
    Security breaches such as 
     loss of confidential 
     information                62           60          
60           60 
    Environmental violations    60           60          
59           55 
    Product recall based on 
     health and safety issues   60           47          
64           58 
    Regulatory non-compliance   59           49          
62           53 
    Factory breakdowns or 
     explosions resulting in 
     injuries                   59           56          
57           61 
    Labor strikes or unrest     40           31          
42           39 
    Ongoing protests by 
     special interest groups 
     or NGOs*                   38           29          
41           34 
    Risky supply chain partners 38           30          
40           33 
    Support of unpopular 
     public policy position     38           31          
39           34 
    Public controversies over 
     high CEO compensation      36           29          
36           40 
    Online attacks or rumors    25           16          
28           27 
    Top executive departures    17            9          
19           12 

    Source: Weber Shandwick Safeguarding Reputation(TM)
survey conducted with KRC Research.

    Note: Results for Brazilian executives are included in
the total.

    * Non-governmental organizations


    Regional Differences

    Overall, European executives appear more sensitive to
reputation threats than their North American and Asian
executive peers (most frequently respond "always or
usually" to factors that can significantly damage
corporate reputation).  

    Regardless of region, executives consider financial
wrongdoing and unethical behavior the most significant
threats to reputation.  Compared to their counterparts in
other regions, however, North American executives are more
sensitive to environmental issues, Europeans to health and
safety product recalls and regulatory non-compliance, and
Asians to factory breakdowns or explosions.

    Regional Top Five Factors That Can Significantly Damage
Reputation
    % Always/Usually

    North America             Europe                   
Asia 
    Financial                 Financial                
Financial
     irregularities            irregularities           
irregularities 
    Unethical behavior        Unethical behavior       
Unethical behavior 
    Security breaches         Executive misconduct     
Factory breakdowns or 
                                                        
explosions resulting 
                                                         in
injuries 
    Environmental violations  Health and safety        
Security breaches
                               issue product recalls  
    Executive misconduct      Regulatory               
Health and safety 
                               non-compliance           
issue product 
                                                        
recalls 

    Source: Weber Shandwick Safeguarding Reputation(TM)
survey conducted with KRC Research.

    "Companies need to put safeguards in place to
protect their reputations," added Weber Shandwick
President Andy Polansky.  "Our groundbreaking research
on how companies can safeguard and repair their reputation
is the foundation for Weber Shandwick's ongoing reputation
management services for clients around the world.  We can
help guide companies looking to identify the early warning
signs of reputation failure and take the right steps to
reputation recovery." 

    Safeguarding Reputation(TM)

    Safeguarding Reputation was conducted by Weber
Shandwick in partnership with KRC Research among 950 global
business executives in 11 countries spanning North America,
Europe and Asia. Brazil was the only Latin American country
participating in the survey.  All interviews were conducted
by telephone between July 20 and August 8, 2006.  The
sampling error for the total sample is +/- 3.2 percentage
points.

    About Weber Shandwick

    Weber Shandwick is one of the world's leading global
public relations firms with offices in major media,
business and government capitals around the world.  The
firm specializes in strategic marketing communications,
media relations, public affairs, reputation and issues
management, and offers corporate communications counseling
services.  Weber Shandwick also provides specialized
integrated services including Web relations, advocacy
advertising, market research and visual communications.  In
2006, Weber Shandwick was named Large PR Firm of the Year
(PR News U.S.), European Consultancy of the Year (The
Holmes Report) and Network of the Year (Asia Pacific PR
Awards).  The firm also won the United Nations Grand Award
for outstanding achievement in public relations.  To learn
more, please visit http://www.webershandwick.com.

    Weber Shandwick is a unit of The Interpublic Group
(NYSE: IPG), which is one of the world's leading
organizations of advertising agencies and marketing
services companies.

    About KRC Research

    KRC Research is a full service market and attitudinal
research firm.  Research partner to Weber Shandwick and
other Interpublic Group agencies, KRC specializes in
strategic communications research, including research to
support product communications, corporate communications,
public affairs, and social marketing.  KRC provides a full
range of primary research services, including surveys,
focus groups, and executive interviewing.  Find out more at
http://www.krcresearch.com. 

    About reputationRx
(http://www.webershandwick.com/reputationrx)

    Weber Shandwick's new reputationRx Web site provides
professionals interested in leadership issues with the
latest news, research findings, insights, best practices
and commentary on how to build and safeguard CEO and
corporate reputation.  It covers a full range of topics
such as reputation care and recovery, CEO turnover,
corporate responsibility, and strategies for communicating
CEO and corporate reputation.  The site is also continually
updated to include the most recent newsmakers and
fast-breaking trends that are transforming the business and
reputation landscapes.

    Contact

    Laura Bachrach
    Weber Shandwick
    212-445-8467
    [e-mail]


SOURCE  Weber Shandwick