The 4Ps of CEO branding

CEO Branding

Theory and practice

Edited by Marc Fetscherin

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CEO Branding

CEO Branding advances our understanding of the importance and impact that CEOs have on companies. In recent years, there has been a growing body of interdisciplinary literature on this powerful aspect of branding, and Fetscherin has invited a leading panel of international scholars and practitioners to contribute original chapters in their area of expertise.

The book introduces the concept of the CEO as a brand, and outlines the “4Ps” of this branding mix – the CEO (person), personality, prestige (reputation), and performance. It discusses the CEO branding process, and demonstrates the many ways in which this ‘human brand’ affects the company in financial terms (such as performance, profit, and stock returns), as well as non-financial terms (reputation, trust, and firm strategy). The book also includes ‘lessons learned’ and many examples that illustrate how companies can measure and manage the CEO brand.

This comprehensive, authoritative volume will give students, researchers, marketing and communication managers, and CEOs themselves a thorough understanding of all aspects of the CEO brand. A must read for any CEO who is serious about developing, managing and measuring their own brand.

For more information, visit www.ceobranding.org.

Marc Fetscherin is an associate professor of International Business and Marketing at Rollins College, USA. Prior to his academic career, he was a consultant at McKinsey & Company and CEO of Bonfort SA, a small Swiss-based luxury goods company. He has published three edited books, multiple book chapters and numerous journal articles. His most recent book is an edited collection on Consumer Brand Relationships, also published by Routledge. For more information, visit www.fetscherin.com.


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Library of Congress Cataloging in Publication DataCEO branding : theory and practice / edited by Marc Fetscherin.

pages cmIncludes bibliographical references and index.ISBN 978-1-138-01371-1 (hardback)1. Chief executive officers. 2. Branding (Marketing) 3. Corporate image. I. Fetscherin, Marc.HD38.2.C3765 2015658.4′2–dc232014047504

ISBN: 978-1-138-01371-1 (hbk)ISBN: 978-1-138-01372-8 (pbk)ISBN: 978-1-315-79514-0 (ebk)

Typeset in Bembo Stdby Out of House Publishing


COntEnts

List of figures xList of tables xiiNotes on contributors xivForeword by Suzanne Bates xxviForeword by Leslie Gaines-Ross xxviiiAcknowledgments xxx

The 4Ps of CEO branding 1Marc Fetscherin

Part iCEO branding process 19

1 Purpose and power of the CEO brand 21Nick Nanton and J.W. Dicks

2 CEO brand development: the role of executive brand motivation 31Björn Rosenberger

3 CEO branding: how perception defines reality 51Raoul Davis

4 CEO brand ‘disaster avoidance kit’ 68Suzanne Bates


viii Contents

Part iiCEO reputation and firm performance or reputation 79

5 The causes and relations of corporate and CEO reputation 81Antonia Mohedano-Suanes, J. Anastasio Urra-Urbieta and Vicente Safón

6 How does CEO reputation matter? Impact of CEO reputation on corporate reputation and performance 95Juan B. Delgado-García, Esther de Quevedo-Puente and Virginia Blanco-Mazagatos

7 CEO RepTrak®: assessing the reputation of top executives 118Charles J. Fombrun, Fernando Prado and Leonard J. Ponzi

Part iiiCEO personality and firm performance or reputation 135

8 Do personal traits matter? CEOs’ and directors’ risk-taking and environmental firm performance 137Lars G. Hassel, Juha-Pekka Kallunki and Henrik Nilsson

9 Competent or ethical? Impact of CEO characteristics on corporate reputation 155Y.J. Sohn and Ruthann Weaver Lariscy

10 CEO championing of pricing and firm performance in industrial firms 177Stephan Liozu and Andreas Hinterhuber

11 Sharing the throne: co-CEO and co-chairman leadership structure and firm performance 201João Paulo Torre Vieito

Part iVthe CEO (person) and firm performance or reputation 217

12 CEO facial appearance and firm performance 219Daniel Re and Nicholas Rule

13 The emergence of the social CEO 239Leslie Gaines-Ross


Contents ix

14 CEO turnover and firm performance 257Paul Brockman, Hye Seung (Grace) Lee and Jesus M. Salas

15 CEO networks and the M&A market 275Luc Renneboog and Yang Zhao

Index 295


The 4Ps of Ceo branding

Marc Fetscherin

An individual’s image and reputation may be the most important intangible asset, whether it’s a movie actor, a political candidate who acts as a spokesman for his party or a CEO who represents a company. As Gaines-Ross’s study (2000, p. 366) reports, “CEO reputation can represent a staggering 45 per cent of a company’s reputation.” Kitchen and Laurence (2003, p. 114) show in their eight-country benchmarking study that 83 percent of Italians, 66 percent of Canadians, 54 per-cent of Americans, 48 percent of the Dutch, 42 percent of Germans, 36 percent of the French and 26 percent of Belgians believe that at least half of a com-pany’s reputation is based on the CEO’s reputation. CEO (or executive) branding is similar but not identical to company branding. Over a long period of time, it is assumed that company-level and CEO-level branding will converge and co-evolve as both concepts are increasingly intertwined. However, this process might be disrupted and the two constructs might diverge due to CEO-related aspects (e.g., CEO succession or appointment, accusations against the CEO) or company-related aspects (e.g., product crisis, financial results, hostile takeover). Even if the difference between the constructs becomes more apparent, they con-tinue to be highly interrelated and fused.

The importance of the CEO or top executives to companies has been noted for decades. Well-known CEOs include Henry Ford (Ford), Bill Gates (Microsoft), Mary Barra (GM), Mark Zuckerberg (Facebook), Meg Whitman (HP), Richard Branson (Virgin) and Jeff Bezos (Amazon). Extensive research about product and corporate brands exists but much less is known about executive or CEO branding and how it impacts companies. Like movie stars who serve as a signal about the expected quality of a forthcoming movie, CEOs serve as a signal to stakeholders about expected company performance. The CEO often receives intense public

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attention and may evoke an emotional response from the public as the ‘human face’ of the company. In many cases, CEOs and other top executive are seen as the company’s spokespeople as they are naturally assumed to reflect the views and vision of their company. Anything they say or do in public may impact their company and vice versa.

The aim of this book is to advance our understanding and knowledge about CEO and top executive branding. In this chapter I discuss the four elements of the CEO brand – the 4Ps of the CEO branding mix – and describe their interaction, relationships, impact on company performance and reputation (Fetscherin, 2015). The chapters in this book are arranged into four sections. Part I discusses the CEO branding process. Part II assesses how the reputation of the CEO impacts company performance and company reputation. The chapters in Part III focus on how the personality of the CEO impacts com-pany reputation and performance and Part IV concentrates on the CEO as a person (including physical appearance) and how this impacts companies. The chapters combine theoretical and practical insights on how to develop, meas-ure and manage your executive or CEO brand.

defining the Ceo brand

The literature as well as the popular press often use the terms ‘CEO image,’ ‘CEO reputation’ and ‘CEO brand’ interchangeably and unsystematically. However, these are distinct concepts and the goal of this chapter is to provide some clarification. The terms ‘CEO image’ and ‘CEO reputation’ are two dis-tinct but complementary concepts, although ‘image’ and ‘reputation’ are both in the eye of the beholder. ‘Image’ is the overall mental picture one has about a person (what comes to mind when one sees or hears the name) whereas ‘reputation’ is a comparative judgment and evolves often over time as a result of how the individual performs. I therefore suggest to define the ‘CEO brand’ as a combination of both the CEO image and the CEO reputation, as illustrated in Figure 0.1.

The chapters in Part I discuss the CEO branding process, including the power and purpose of the CEO brand (Chapter 1); the CEO brand development process and the internal (e.g., career planning, narcissism, legacy motivation) and external (e.g., firm or industry representation) motivators to develop a brand (Chapter 2); different CEO brand building tactics such as speaking engagements, book deals, media exposure and social media which help build a brand (Chapter 3). Chapter 4 presents the CEO brand ‘Disaster Avoidance Kit’ which suggests six strategies to follow when the executive or CEO’s image or reputation is threatened, and how to avoid mistakes that lead to this or subsequently negative press and implications of the CEO brand (Chapter 4).

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4Ps of CEO branding 3

impact of the Ceo brand on companies

The importance and impact of executive and CEOs on companies have been dis-cussed in the literature of many different disciplines, such as psychology, econom-ics, finance, accounting, entrepreneurship, management and marketing. During my literature review, I observed that CEO branding is truly interdisciplinary, com-plex and includes many different aspects of CEOs and their companies.

For example, the CEO influences financial aspects of companies, from overall financial performance (Gaines-Ross, 2000) to company profits ( Jian and Lee, 2011), stock returns (Johnson et al., 1993), costs of capital investments ( Jian and Lee, 2011), and price premiums of products (Rindova et al., 2006). CEOs influence non-financial aspects of companies as well, including overall company reputation (Burson-Marsteller, 2003), governance reputation (Karuna, 2009), corporate social performance (Agle et al., 1999), uncertainty among stake-holders (Rindova et al., 2006), the trust of analysts and the financial industry (Gaines-Ross, 2000), firm strategy and risk-taking (Nadkarni and Herrmann, 2010), financial fraud activities (Rijsenbilt and Commandeur, 2013), perform-ance of the top management team (Rule and Ambady, 2008) and employee job retention (Gibbons and Murphy, 1992). In sum, the CEO affects all aspects of the value chain from finance to marketing, to human resource management. Figure 0.2 summarizes some of the most widely discussed relationships and effects CEOs have on companies.

Parts II, III and IV examine the relationships between the CEO brand and financial and non-financial aspects of companies, as outlined in Figure 0.2. For example, Chapters 5 and 6 discuss the relationship between CEO reputation and company performance; Chapter 7 discusses CEO reputation and firm reputation while Chapter 8 reviews CEO personality and risk-taking and their impact on environmental firm performance. Chapter 9 investigates CEO personality and corporate reputation; CEO personality and price premiums and company finan-cial performance are discussed in Chapter 10 while Chapter 11 focuses on CEO duality and firm performance. Chapter 12 discusses CEO facial appearances and firm performance, and CEO sociability and company reputation are described in Chapter 13. Finally, in Chapter 14 the authors look at CEO turnover and firm performance while Chapter 15 assesses CEO networks and the outcome of M&As.

CEObrand

CEOimage

CEOreputation

figure 0.1 The CEO brand

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The Ceo branding mix

Through my extensive literature review, I identified four main elements of the CEO brand that affect financial and non-financial aspects of companies. I sug-gest the mnemonic of the ‘4Ps of the CEO branding mix,’ which serves as a neat and memorable grouping system of key elements of the CEO brand. These four elements are the most important manageable ones that CEOs and companies can also directly or indirectly measure, therefore control and manage. Two of these elements are related to CEO image (the CEO person and the CEO personal-ity) while the other two elements relate to CEO reputation (CEO prestige and CEO performance). Figure 0.3 illustrates the ‘4Ps of the CEO branding mix’ and their impact on company performance (or other financial aspects) and reputation (or other non-financial aspects). They are interrelated, cyclical and intertwined although they affect company performance and reputation individually and col-lectively. For example Jeff Bezos’ personality influences his reputation as a CEO. His past CEO performance influences the trust the financial industry has in him as well as the ability to attract and retain top talent, all leading, among others, to a positive financial performance. Bezos’ financial performance then reinforces his positive reputation as CEO.

Extensive research over the last few decades has assessed the positive inter-relationship between company reputation and company performance and I will not discuss this further. The focus of this book is the relationships among the 4Ps of the CEO branding mix and their impact on company performance and reputation (cf. Figure 0.5). The 4Ps constitute the key elements of the CEO brand and they help to systematically measure and manage the CEO and subsequently company reputation and performance. The framework helps

Company performance, but also . . .• Firm profits• Stock returns• Capital investments• Price premiums

Company reputation, but also . . .• Company social performance• Uncertainty of stakeholders• Trust of analysts/financial industry• Firm strategy and competitive advantage• Decision-making and risk-taking• Performance of top management team• Job retention

Non-financialaspects

Financialaspects

CEO brand

figure 0.2 Impact of CEOs on companies

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to develop a consistent and thorough CEO and firm communication and branding strategy. What follows is a short discussion of each of the four Ps and their interrelationship as well as how they relate to company performance and reputation.

CEO prestige

On one hand, the efficient contracting hypothesis argues that reputable CEOs are more likely to take actions that are in the best interest of their companies. On the other hand, the rent extraction hypothesis argues that reputable CEOs over-emphasize their personal career enhancement and take actions that may not be in the best interest of their companies but are in their own best interests. Most studies focus on the positive relationship between CEO reputation and companies, concentrat-ing on firm performance, post-investment operation performance ( Jian and Lee, 2011), employee job retention and overall corporate reputation. The study by Gaines-Ross (2000) shows that CEO reputation represents almost 50 percent of a company’s reputation. There are many examples where the reputation of the CEO impacted positively on companies, such as Bill Gates, Jeff Bezos or Steve Jobs. How much, one wonders. The importance and impact CEO reputation has on corporate reputation is illustrated, for example, by Steve Jobs and Apple. When he announced his resignation as CEO on August 24, 2011, Apple stock dropped almost 3 percent that day, equal to about $10 billion of company value. This short-term selloff of Apple’s stock immediately after Jobs’ announcement was driven among others by lack of confidence that Apple would continue to per-form as it did under Jobs’ leadership.

Person Prestige

PerformancePersonality

CEObrand

CEO image CEO reputation

CompanyCEO branding mix

Company performance(financial aspects)

Company reputation(non-financial aspects)

figure 0.3 The 4Ps of CEO branding mix

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Few studies assess the negative impact CEO reputation has on companies. For example, one study (Malmendier and Tate, 2009, p. 1593) finds that:

award-winning CEOs subsequently underperform, both relative to their prior performance and relative to a matched sample of non-winning CEOs. At the same time, they extract more compensation following the award, both in absolute amounts and relative to other top executives in their firms. They also spend more time on public and private activities outside their companies, such as assuming board seats or writing books.

Many business magazines or organizations give out awards such as Chief Executive’s ‘CEO of the year award.’ One explanation is that those CEOs often use their pos-ition to build their personal reputation in the short term rather than long-term shareholder value or corporate reputation. This is a typical ‘principle-agent prob-lem’ or ‘agency dilemma’ where the CEO (‘agent’) is motivated to act in his or her best interest rather than in the best interest of the company (‘principle’). A notable example of a CEO with a negative reputation is Mike Jeffries from Abercrombie & Fitch. How did he end up with a negative reputation? First, employees of the retailer earn low salaries compared to industry average and Jeffries made several statements which impacted employee morale. Second, he also made some racial comments and was accused of discriminating against plus-sized shoppers. Those actions, among others, affected his image and specifically reputation by gaining negative press citations. The result was that Jeffries was removed as chairman of the board and some major shareholders wanted him gone as the CEO. Finally he stepped down in December 2014.

A special subgroup of reputable CEOs are those who also get significant media coverage and become ‘celebrity CEOs.’ In fact, they have either been “singled out by the media because of some idiosyncratic behavior or management practice” (Barnett and Pollock, 2012, p. 225) or sought out media exposure due perhaps to their narcissistic personality. The impact of these celebrity CEOs on companies is mixed. There is a positive relationship between winning awards or getting ranked as top CEO and CEO compensation. One study (Wade et al., 2006) finds that award-winning CEOs receive about 10 percent greater pay increases compared to non-award-winning CEOs. There may be two explanations for this phenomenon. One is that media attention reinforces that these CEOs are valuable assets to com-panies and deserve higher compensation or, second, that companies are almost forced to increase their pay to ensure that highly reputable CEOs remain with the company. There is also evidence that top management team members who work with celebrity CEOs receive greater compensation (i.e., ‘share the fame’) and are more likely to become CEOs themselves as a result of this relationship (Graffin et al., 2008).

However, celebrity CEOs bring both benefits and burdens when it comes to firm performance. It appears that the benefits are short term and include

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positive abnormal stock returns in the days following an announcement that the CEO has won an award, but most studies (Malmendier and Tate, 2009) find that both market-based and accounting-based performance metrics declined in the three years after the CEO wins an award. This is especially the case for CEOs who won multiple awards over time but less the case for first-time award-winners. One explanation is that the financial analysts have heightened performance expectation for celebrity CEOs and over time these CEOs can-not meet expectations, which is known as the ‘burden of celebrity effect.’ When the CEO can’t stand up to expectations, negative press may result, followed by a short-term drop in stock price and decreased trust in the executive. Another explanation for the negative impact of celebrity CEOs and firm performance is due to a narcissistic personality trait of the CEO also known as ‘CEO hubris effect’ which is due to exaggerated self-confidence. The latter one will be dis-cussed in more detail in the next section.

In sum, there are many different ways to assess CEO reputation, including awards won, positive and negative press citations, rankings by the popular business press such as ‘best performing CEOs in the world’ by Harvard Business Review, number of Facebook or Twitter followers, LinkedIn connections, and number of hits on Google. Chapters 5, 6 and 7 discuss the importance and impact of CEO reputation (prestige) on company performance and company reputation.

CEO personality

The normative stakeholder theory, the leadership trait theory and the behavioral con-sistency theory all explore how the CEO personality impacts firm performance, corporate social performance, firm strategy, financial fraud or risk-taking. For example, the behavioral consistency theory argues that people behave consistently across situations and if a CEO exhibits risky behavior in connection with his per-sonal investments, he is likely to do the same for corporate investments.

Certain personality traits negatively affect companies. Researchers identified Machiavellianism and narcissism as two personality ‘disorders’ that are part of the ‘dark triad’ of personality traits often associated with negative effects on either inter-personal relationships or company outcomes. Machiavellianism is characterized by mismanagement and misusing people due to self-interest or lack of morality. Narcissism, however, has many different facets, and some, such as pride and grandi-osity, can have a positive effect on companies while most other facets, such as arro-gance, lack of empathy, egoism and amorality, can have negative effects on com-panies (Rijsenbilt and Commandeur, 2013). Another study finds that exaggerated self-confidence and ‘CEO hubris’ are associated with premiums paid for acquisi-tions and subsequent losses in shareholder wealth (Hayward and Hambrick, 1997).

Certain personality traits positively affect companies. For example, honesty and humility are usually positively associated with interpersonal relationships and

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company outcomes. A great example of a humble and honest CEO is Carl Elsener from Victorinox Honesty-humility is one of the six dimensions of the HEXACO personality model. Traits related to honesty-humility include sincerity, loyalty, faithfulness and modesty. Some argue that honesty-humility is the opposite of the ‘dark triad’ personality traits, meaning a high level of honesty-humility corres-ponds to a low level of Machiavellianism–narcissism and Machiavellianism–nar-cissism and vice versa. For example, Ou (2012, p. 1) states:

CEO humility was found to be positively associated with their empow-ering leadership behaviors, which was correlated with top management team integration. Top management team integration in turn had a positive impact on middle managers’ perception of empowering organizational cli-mate, which was associated with their work engagement, affective commit-ment and job performance.

Like narcissism, humility is not an absolute but a continuum (Quiros, 2006), with different degrees from ‘too little’ on one end (e.g., arrogance, egoism, self-centered) to ‘too much’ on the other end (e.g., lowliness, low self-esteem). The challenge is to find the right balance for an optimal outcome. For example, studies show that modestly humble CEOs who are open to learn, seek advice when making decisions and acknowledge when they have made mistakes are more successful than less humble CEOs. Chapters 8, 9, 10 and 11 in this book discuss how CEO personality influences company performance and reputation.

The CEO (person)

Evolutionary psychology theory, the theory of social perception and status characteristics theory all argue that people form judgments about others based on objective phys-ical characteristics such as gender and age or more subjective characteristics such as social status, appearance and facial expressions. A study in Psychology Science Journal (Rule and Ambady, 2008, p. 109) finds that “first impressions are powerful and rich sources of information about other people, and studies have demon-strated that they predict performance in numerous domains, such as teaching and electoral success.” The authors shows that CEOs’ facial attractiveness relates to firm performance. Later, Wong et al. (2011) confirm that leaders’ facial structure is a specific physical characteristic that correlates with company performance. Status characteristics theory posits that perceptions and expectations of other people are based on observable characteristics, which reflect status in society, and include race, age, gender and attractiveness.

Founder CEOs often get comparatively more media attention than non-founder CEOs of similar-sized companies. Notable examples are Donald

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Trump, Bill Gates, Richard Branson, Mark Zuckerberg and Jeff Bezos. For non-founders, ‘CEO duality,’ where the CEO is also the chairman of the board of directors, and ‘CEO tenure’ or the number of years in the CEO position, both positively or negatively affect companies. One study shows that CEOs at the beginning of their tenure tend to do more in the best interests of their company and consequently there is a positive relationship but, over time, CEOs begin to do what is best for them such as increase their compensation and reputation in order to plan their next career step. This relationship then becomes U-shaped (Luo et al., 2014). Chapters 12, 13, 14 and 15 discuss how the CEO as a person, including appearance, influences company performance and reputation.

CEO performance

The last element of the CEO branding mix relates to CEO performance, which has direct and indirect relationships and interactions with the other three Ps. It, too, affects firm performance and firm reputation. Therefore, CEO per-formance depends on controllable factors of the CEO such as the CEO brand, company performance, the top management team, firm strategy or product portfolio as well as uncontrollable factors for the CEO such as industry com-petitiveness and industry life cycle, business environment and the overall global economy. In that respect, some researchers argue that, because many forces outside the company are uncontrollable, the CEO has limited power to influ-ence firm performance. Others, however, argue that the CEO can influence firm strategy and firm outcomes, including firm reputation and firm perform-ance, over longer periods.

CEO performance and firm performance could be the same if one looks only at financial indicators such as profits, net operating cash flow, return on investments (ROI), return on assets (ROA), return on equity (ROE) and market figures such as industry-adjusted stock price performance during CEO tenure and market share. However, CEO performance can also include other measures, as Kaufman’s (2008) Harvard Business Review article, “Evaluating the CEO,” out-lines, including how well the CEO motivates and energizes the organization; how effectively the CEO executes firm strategy; whether the CEO hires the right people and establishes a succession pipeline; how well the CEO improves key metrics such as sales, quality and customer satisfaction; and finally how well the CEO engages with customers, suppliers, employees and shareholders. Most chapters in this book discuss how CEO personality, CEO prestige and the CEO (person) relate to CEO performance as well as firm performance and reputation.

Figure 0.4 summarizes the various elements of the CEO in the current literature.

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book overview

Figure 0.5 provides an overview of the chapters in this book and outlines the primary and secondary focus of each chapter relating to the 4Ps of the CEO branding mix.

Part I: the CEO branding process

Chapter 1, “Purpose and power of the CEO brand,” by Nick Nanton and J.W. Dicks, explores the competitive edge CEO branding brings in today’s busi-ness climate. Using examples ranging from Lee Iacocca of Chrysler to former Pennsylvania governor Ed Rendell, the authors discuss the role of CEO and executive branding in the marketplace and why it is a growing trend. The chap-ter discusses critical questions such as: What constitutes a CEO brand? What is the added value of CEO branding? What is B2B CEO branding? The chapter discusses the ‘five C strategies’ (candor, communication, consultation, contrast, control) of CEO branding and presents empirical evidence to demonstrate the

• Machiavellianism and narcissism • Pride, grandiosity • Arrogance, lack of empathy, amorality, hubris,• Honesty and humility• Risk aversion• Competence, maturity• Warmth, likability

• Firm • Profit, cash flow • ROI, ROA, ROE• Market • Stock price and performance • Market share• Board of directors • Energize and motivate • Executive strategy, hiring TMT • Other metrics (e.g., loyalty) • Engage with stakeholders

CEObrand

CEO Personality CEO Performance

CEO PrestigeCEO Person

• Awards won• Positive and negative press citations• Rankings• Facebook and Twitter followers• LinkedIn connections• Google ‘hits’

• Age• Gender• Education• Attractiveness• Founder versus manager• CEO tenure• CEO duality• Compensation

figure 0.4 Aspects of CEO brand studied

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importance of CEO branding to a company’s success, and how to effectively craft the proper image of a leader and the face of a company.

Björn Rosenberger examines in Chapter 2, “CEO brand development: the role of executive brand Motivation,” the dynamics of CEO brand development process and the role personal motivation has in CEO brand development activ-ities. Rosenberger argues that CEO brand development is motivated by external drivers (firm representation, industry representation) and internal drivers (car-eer planning, narcissism, and legacy motivation) and is executed by the CEO through personal and firm brand actions. The author analyzes the development patterns of three CEO brand actions (media exposure, presence in annual reports, and self-representation in interviews) of 30 CEOs from the United States and Germany. He finds that, to achieve maximum financial and non-financial benefits, it is in the best interest of firms and shareholders for the CEO to establish a strong brand early on in his tenure. Having the CEO establish a strong personal brand later in the tenure can have a negative impact on the organization since it may extend the career of the CEO with the firm beyond what is best for the company. Further, a strong CEO brand may negatively impact leadership transition.

Chapter 3 by Raoul Davis, entitled “CEO branding: how perception defines reality,” argues that CEO branding is the process of aligning the CEO’s appear-ance (including his face), values and personality with the company’s vision and mission. Creating a positive personal brand may include tactics such as speaking engagements, public relations, media interviews, strategic sponsorship or partner-ships, book deals and social media. Once a positive personal brand is established, it is important to protect and maintain the image and reputation. Industry awards and corporate philanthropy are two ways to achieve this goal. Davis argues that a strong positive personal (CEO) brand is an effective path to increase top-line revenues. This chapter offers a practice-based approach to CEO branding and outlines tactics for getting executives in front of stakeholders. It also discusses the importance of CEO confidence, humility and positive thinking.

In the last chapter in Part I (Chapter 4), “CEO brand ‘disaster avoidance kit’,” Suzanne Bates discusses six strategic actions on how to either avoid or deal with disasters when the CEO’s image or reputation is at risk or gets negative press. Bates suggests the CEO first apologizes quickly and demonstrates that he means what he says. Second, being arrogant does not help to establish a humble CEO image but in fact hurts the CEO. Third, imagine how this situation would look on the front page of the Wall Street Journal. Fourth, sometimes it’s better to move on or ‘let it go.’ Fifth, always tell the truth as it will come out anyway one day. And six, humility or ‘eat humble pie’ is always a good thing.

Part II: CEO prestige or reputation

Chapter 5, “The causes and relations of corporate and CEO reputation,” by Antonia Mohedano-Suanes, J. Anastasio Urra-Urbieta and Vicente Safón, discusses

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the interdependence between firm and CEO reputation. The authors test a set of hypotheses and find that CEO reputation is a reliable antecedent and predictor of firm reputation and that the relation between firm and CEO reputation is recip-rocal. They also show that CEO ‘renownedness’ and CEO reputation are strongly related to each other as well as firm size is an antecedent of firm reputation. It is therefore reasonable to assume that firm size may be essential in obtaining a min-imum level of brand awareness.

Chapter 6 also discusses the connection between CEO reputation and cor-porate reputation. Juan Delgado-García, Esther de Quevedo-Puente and Virginia Blanco-Mazagatos, in “How does CEO reputation matter? Impact of CEO Reputation on Corporate Reputation,” analyze the possible mediation effect of corporate reputation on the relationship between CEO reputation and firm per-formance. Based on a sample of 83 Spanish firms for the period 2000–2012, their results show that CEO reputation is positively related to corporate reputa-tion in both cases, in periods of economic growth as well as in economic decline. However, CEO reputation favors firm performance only in the period of eco-nomic decline. Their chapter points out that the economic context affects the influence of CEO reputation on firm performance.

Charles Fombrun, Fernando Prado and Leonard J. Ponzi, in “CEO RepTrak®: assessing the reputations of top executives,” examine the underlying factors in CEO reputation. They develop the CEO RepTrak® model, a tool that measures the impact of CEO reputation on stakeholder support and company reputation. The authors report Spanish managers’ perception of CEOs of the 40 largest Spanish companies between 2010 and 2011. The results show that CEO reputation can be derived from the perceptions of 17 attributes clustered around four dimensions: leadership, responsibility, management and influence. They find a strong relationship among CEO reputation, corporate reputation and stakeholder support. The CEO RepTrak® model provides a useful tool for measuring the CEO brand along various attributes and it allows to manage the CEO brand over time as well as to perform benchmarking studies of CEOs by industry.

Part III: CEO personality

Chapter 8, “Do personal traits matter? CEOs and directors’ risk-taking and envir-onmental firm performance,” by Lars Hassel, Juha-Pekka Kallunki and Henrik Nilsson, investigates whether CEOs’ risk-taking behavior relates to the company’s environmental performance. By using CEOs’ and directors’ past criminal convic-tions and suspected crimes, the authors measure the risk-taking of these execu-tives and find a negative relation between CEO risk-taking behavior and envir-onmental, social and financial firm performance.

Chapter 9, by Y.J. Sohn and Ruthann Weaver Lariscy, “Competent or ethical? Impact of CEO characteristics on corporate reputation,” assesses the impact CEO reputation has on company reputation. The authors examine the interaction effects

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14 M. Fetscherin

between CEO characteristics (competent vs. ethical) and their long-term impact on firm reputation and relationship with stakeholders. Their study employs a 2 (competent vs. ethical CEO) × 3 (time points of exposure) experimental design. The results show that stakeholders use CEO reputational information to make inferences about firm reputation and that stakeholder attitudes toward a CEO are transferred to their perceived relationship with the firm.

Chapter 10, “CEO championing of pricing and firm performance in industrial firms,” by Stephan Liozu and Andreas Hinterhuber, discusses CEO branding in the business-to-business context. In what may be one of the first quantitative studies in industrial marketing, the authors examine the extent to which CEO personality and championing of pricing behavior influences firm performance. Based on “a sample of 358 CEOs of industrial firms, the authors’ results suggest that the level of championing of pricing by the CEO positively influences decision-making rationality, pricing capabilities and collective mindfulness, thereby leading to sig-nificantly higher firm performance” (Liozu and Hinterhuber, 2013).

João Paulo Torre Vieito, in “Sharing the throne: co-CEO and co-Chairman leadership structure and firm performance,” compares various leadership structures such as companies with two or more CEOs at the same time, two or more chair-men of the board, or, even more unusual, two or more CEOs and chairmen of the board. His study is based on data from the Execucomp database, which collects information from 1,500 US public companies. Torre Vieito finds that companies with co-CEOs have a higher return to shareholders than companies with a single CEO. This appears to be one of the most important reasons why shareholders of these companies agree to maintain the co-leadership structure over several years despite its additional costs. This chapter is one of the first to analyse the impact of co-leadership structures on the return to shareholders and firm performance.

The latter chapter fits well into the wider discussion of CEO duality (where a single CEO is also the chairman of the board) and firm performance. Note the relationship between CEO duality and firm performance yields mixed results. Agency theorists argue that there is a negative impact of CEO duality on firms as a CEO can act freely in his personal best interests. Promoters of the stewardship the-ory argue there is a positive impact of CEO duality on firm performance as it can improve organizational efficiency in leadership and maximize shareholder value.

Part IV: the CEO as a person

The last part of this book assesses the impact of the CEO and his or her appear-ance on firm performance and reputation. Chapter 12, by Daniel Re and Nicholas Rule, “CEO facial appearance and firm performance,” provides an overview of the current state of research on the topic. Previous studies demonstrate how phys-ical appearance affects leadership selection and this chapter reviews a sub-sample of studies focusing solely on facial appearance, finding that facial appearance can be indicative of leadership quality. Re and Rule discuss the seminal studies validating

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the link between facial appearance and financial performance and subsequent research on how this relationship varies by gender, culture and economic climate. The authors present a model for how facial appearance serves as a clue for the personality trait ‘leadership quality.’ The model describes which method to use to assess face appearance (facial width-to-height ratio vs. mouth width), which traits to include (warmth-related traits vs. power-related traits) and how they impact leadership ability and success in terms of CEO financial performance.

Chapter 13, “The emergence of the social CEO,” by Leslie Gaines-Ross, pro-vides insights on the evolving importance of CEOs communicating through social media and describes the online communication habits of the most social CEOs based on a global study by Weber Shandwick and KRC Research. Their study sur-veyed 630 business executives in ten markets across the globe on what they think of CEOs using social media and what they believe are the business and reputational upsides and downsides. Leslie Gaines-Ross finds that executives want their CEOs to use social media because it has many internal and external benefits, including but not limited to helping CEOs improve the company’s reputation as well as their image. Social CEOs are seen as better leaders in the eyes of executives.

Chapter 14, by Paul Brockman, Hye Seung (Grace) Lee and Jesus M. Salas, examines “CEO turnover and firm performance.” The authors show that the relationship between CEO origin appointment (insider vs. outsider) and post-turnover performance is contingent on the firm’s pre-turnover performance. When pre-turnover performance is strong, an insider (or specialist) CEO outper-forms outsider (or generalist) CEOs. In contrast, when pre-turnover performance is weak, outsider CEOs outperform insider CEOs. These findings highlight a sig-nificant aspect of the complex relation between CEO appointment strategy and firm performance. The evidence shows that insiders have an advantage when the firm has been performing well in previous years, while outsiders have an advan-tage when the firm has been performing poorly.

The last chapter, by Luc Renneboog and Yang Zhao, “CEO networks and the M&A market,” examines the impact of corporate and executive networks on the takeover process. Renneboog and Zhao analyze 743 M&A transactions in the UK from 1995 to 2012 and find that companies with better connected executives are more active bidders. When a bidder and a target have one or more executives in common, the probability of a successful takeover increases. Their results suggest that better connected CEOs or executives have more successful M&As in terms of completion and shorter negotiations. Moreover, CEOs or executives of target companies are more likely to be invited to the boards of the combined firm.

Conclusion

In closing, the CEO brand consists of two main dimensions, the CEO image and the CEO reputation, with four underlying elements which make up the CEO branding mix, as Figure 0.6 shows.

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16 M. Fetscherin

CEO image consists of the elements the CEO and his or her personality while CEO reputation consists of CEO’s performance and CEO’s prestige (reputation). These four elements make up the CEO branding mix which helps the CEO and the company to measure and manage the CEO brand and to successfully pos-ition the CEO and the company. This is useful when planning for a PR event, an M&A announcement, launching a new product, an IPO, or an annual shareholder meeting, just to mention a few examples. The mnemonic of the 4Ps provides a hands-on, useful framework to assess the gap between what the CEO thinks and feels he or she has as an image and reputation compared to what different stakeholder groups feel and think about the CEO. Once the discrepancies have been identified, actions can be taken by the CEO and his PR or communications department. Moreover, the mnemonic of the 4Ps also allows a systematic assess-ment over time by various stakeholder groups, or benchmarking by industry.

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4Ps of CEO branding mix

Person Personality

CEO image

CEO brand

CEO reputation+

Prestige + Performance+

figure 0.6 CEO brand construct

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The 4Ps of CEO branding