As the media landscape has exploded, CEOs have become more visible than ever, not just in the financial pages, but more widely thanks to platforms such as Twitter and LinkedIn.
While some may be thrust reluctantly into the limelight, others have embraced their public profile and seem to thrive in its glare.
This can be good for business as people may be more likely to associate with a brand if they recognize and admire a CEO.
They may also be more ready to give the business a fair hearing when things go wrong, which can help to salvage the company's reputation in a crisis.
But, as we've seen from high profile examples in the news, the reverse can also be true.
The bigger the CEO's reputation, the harder they – and the company – can fall if they're the cause of adverse publicity.
"The bigger the CEO's reputation, the harder they – and the company – can fall if they're the cause of adverse publicity."
David Bennett | Global Head of Sales, Direct and Facultative
So how can businesses balance the benefits and risks, and minimize the reputational and financial fallout if things go wrong?
Engaging with stakeholders and monitoring your online presence can help identify potential risks before they turn into crises, while ensuring continued good governance can prevent a cult of personality taking hold.
The advantage of a well-known CEO
The days when CEOs could hide away from the public eye and just focus on the inner workings of their companies are gone.
Now, they're expected to engage with a growing list of stakeholders, including customers, investors, financial analysts and employees.
That means that many CEOs of large businesses are public figures to a greater or lesser extent. The difference lies in how companies approach it.
Some actively headhunt well-known charismatic figures who can be strong brand ambassadors, as well as business managers.
said their CEO's reputation helped attract investors.
Studies suggest this approach can be a big driver of business value. In one survey, executives estimated that 44% of a company's value could be attributed to their CEO's reputation, while 87% said it helped attract investors and 83% thought it would help protect the company in a crisis.1
The risks of the charismatic leader
The flip side is that benefits can be outweighed by risks when the CEO becomes too powerful or synonymous with the brand.
Whatever the CEO says can be taken as the corporate gospel and it can be very difficult for the company to distance itself from their words and actions.
The famous example of a UK jewellery chain led by a charismatic CEO who called his product 'crap' highlights the devastating impact that one misspoken comment can have.
The company never recovered having been forced to close most of its stores as its value fell by £500 million.
Still worse is when the CEO becomes so powerful that no one will stop them engaging in destructive or deceitful behavior.
No amount of celebrity status can make up for the damage caused by a spectacular fall from grace. Recent examples include Elizabeth Holmes, who defrauded investors with false claims about a new blood-testing technology, driving the company into liquidation.
How to minimize the risks and protect your reputation
Avoid a cult of personality
However bright your CEO shines, don't be blinded by the light. Maintain strong internal governance controls and oversight to prevent too much power concentrating in one person's hands.
Build a broad, diverse team
Make sure your board and executive team has a broad mix of people from different backgrounds. They will be more likely to question and challenge poor CEO behavior, helping to create a stronger, more rounded organization.
Apologize with humility and sincerity
People are drawn to authentic leaders who can admit mistakes and ask for forgiveness when they make a mistake. But they hate fake mea culpas, so make sure it's genuine and backed by action.
"People are drawn to authentic leaders who can admit mistakes and ask for forgiveness when they make a mistake.."
David Bennett | Global Head of Sales, Direct and Facultative
Create a strong social media presence
Encourage your CEO to engage regularly on social media. This can help them build credibility with customers and stakeholders, so they get a fair hearing should things go wrong.
Monitor what's being said in real time
Track everything that's being said about your CEO and company on social and news media in real time. It could help you pick up on signs that something is going wrong before it turns into a crisis.
How we can help
WTW has partnered with some of the global leaders in this field to develop a holistic solution that can help prevent a reputational crisis happening and help you recover if an incident does occur.
Prevention: to get ahead of events and prevent potential reputational issues escalating into a crisis, the powerful Polecat platform offers real-time horizon scanning. AI-powered algorithms synthesize data from online and social media channels into dashboards and risk alerts for relevant media.
Planning: our Reputational Risk Readiness Review can help organizations define and quantify their reputational risks, identify the potential impacts and map any gaps that need mitigation.
Risk transfer: our reputational risk insurance solution offers up to $50 million cover for loss of gross profit as a result of significant adverse publicity event. Perils covered include allegations of employee or customer abuse and disgrace of a celebrity endorser. Immediate interim payments are available to get through the crisis with support spread over up to 12 months to help you stay afloat in the aftermath.
Response: WTW offers access to experienced crisis communications experts who have managed crisis situations of all types around the world, from advice on media handling and strategy to leadership statements and speeches.
Rehabilitation: our specialists will work with you over the longer term to develop campaigns and communications to help you turn the tide of public opinion back in your favor.
For specialist help discovering smarter ways to managing CEO reputational risks, please get in touch.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.