It’s Time to Hear From Those Other CEOs
Opinion
By RON HARTWIG
As somber financial news continues to blanket the U.S., the image of the chief executive has gone from miracle worker to villain. From photos of executives being led away in handcuffs by FBI agents to video footage of drawn faces taking the Fifth in front of Congress, the media is having a field day with the stink.
These images are having a detrimental effect on corporate employees, investors and the entire U.S. economy. Yet now, when contrasting images of honest, forthright executives could do so much to reassure a concerned public, few CEOs seem willing to speak out.
Unfortunately, this reticence reinforces stereotypes about corporate America. A recent Opinion Research Corporation Litigation Survey found that while Americans render harsh judgment and endorse severe penalties for companies that are tight-lipped, they are willing to give forthcoming companies the benefit of the doubt, even when questionable practices are discovered or revealed.
The need for honest dialogue is urgent. The “good” need to provide enough positive images and forthright statements to counterbalance the steady stream of media images of shame and deceit. By “good,” I mean those companies and executives who follow the rules and subscribe to the philosophy that good corporate citizenship includes concern for all stakeholders.
I am not advocating a return to the media’s previous adulation of a few “celebrity CEOs.” But what is required is that CEOs of companies who play by the rules and follow prudent management practices tell their stakeholders that they do so. It’s time for companies who are doing things right to shout it from the rooftops, or at least for chief executives to widely explain and demonstrate how different they are from the Sam Waksals or Bernie Ebbers of the world. There are plenty of top executives heading Los Angeles companies who can speak with pride about the daily contributions their companies make to the Southern California and global economy.
The Bush Administration and Congress’ swift action to enact legislation and improve law enforcement to combat corporate wrongdoing is a quick-fix step in the right direction. However, restoring the public’s collective confidence requires more than new legislation.
Unless more balanced information about the state and direction of our largest companies is put forward, the “crisis of confidence” will continue to worsen. Only by understanding that these latest scandals and lapses in judgment are exceptions, not the norm, will investor and public confidence be restored.
The business community needs to create a renewed sense of confidence in corporations and their leaders. And regaining this confidence demands not just renewed vigilance by regulators, but a new ethic of responsibility among corporate leaders.
Coca-Cola’s leadership in expensing stock options is a powerful example in this arena. The significance of Coca-Cola’s announcement lies not inherently in its value in improving accounting practices, but in its implicit statement that “This is how we work; we’re showing our shareholders and the public that our company is forthcoming and responsible.”
Corporate America can’t afford to rely on the public’s faith that harsh new penalties have been put in place. Investors’ shattered confidence will not be rebuilt until CEOs make a proactive effort to publicly communicate the steps their companies are taking. Once individual companies take assertive measures to restore their own reputations, America’s collective confidence in our nation’s economic future can be restored.
Ron Hartwig is executive vice president and U.S. corporate practice director at Hill and Knowlton Inc.
