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FINANCIAL TIMES TUESDAY JANUARY 27 2009
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Business Life
You can forget about popularity at a time like this Stefan Stern ON MANAGEMENT Leadership teams are facing up to the ghastly trading conditions of 2009. It is horrible out there. To ensure survival, unpopular measures may be required. Do you have the stomach for them? Tough decisions on headcount can provoke the traditional cry: “The bastards have gone and sacked me!” Sometimes the abusive language is justified. Often it is not. The fact that cuts are necessary will be little consolation. Getting canned feels deeply personal to the victim of the decision. But the chances are it will have been made on an impersonal and indeed almost arbitrary basis. I would not expect readers of this column to waste an ounce of sympathy on the fate of a few journalists. But listen to the words of Peter Williams, finance director of the Daily Mail and General Trust, a leading British newspaper group, describing the recent sale of its famous London title, the
Evening Standard. “To be honest, we don’t see this as a hugely significant event,” he told my colleague Ben Fenton last week. Maybe he doesn’t. But you can bet that, while their future remains unclear, it seems huge to the hundreds of people who work for him. There is little room for sentiment in the world of mergers, acquisitions and divestments. Rightly so. DMGT may well be doing a sensible thing in offloading its lossmaking asset. But you would understand if Evening Standard employees had been startled to read the finance director’s words in the Financial Times that day. And you would not be surprised if one or two vulgar epithets had been hurled in his direction. So is the C-suite filled with bastards? To answer that question, we need to turn to the objective, all-seeing eye of academia, where award-winning insights are available. Last autumn David Sims, professor of organisational behaviour at Cass business school in London, won an Ig Nobel (pronounced “ignoble”) award for his paper, “You Bastard: a narrative exploration of the experience of indignation within organisations”, originally published in the Organisation Studies journal in 2005. (The Ig Nobels are a light-hearted but at the
same time serious set of awards given to academics for research that “makes you laugh and then makes you think”.) Prof Sims argues that it is not necessarily tough behaviour in itself that leads to managers being seen as bastards. Rather it is inconsistent, slippery and unpredictable people who end up being so labelled. But there is more to it than that. A
‘There is a warm glow to be had in knowing that [a manager] can be looked down on as a bastard’ symbiotic process is at work here. We actually quite like being able to demonise someone, perhaps because it is one way of making sense of their behaviour. Clever, sophisticated people resort to calling someone a bastard partly out of irritation, the professor argues. They will do this because they can find no other explanation for the contradictory actions and changing moods they see in a colleague. Sometimes, we reject the considered, generous interpretation of
someone’s bad behaviour by declaring: “Let’s face it, he’s just a bastard.” This simple verdict usually goes down well with our peers. Defining our terms here is tricky. Was Robert Maxwell, the media baron, a bastard? Most of his victims – Mirror Group pensioners – will tell you he was. But others, remarkably, still defend him. Lord (Denis) Healey, a former Labour cabinet minister, has said there may be times when you have to be a bastard, but “you must never be a shit”. It can be satisfying to label someone a bastard. “It is clear that a discourse of moral indignation is sought by many people, and they will put themselves in the way of experiences which fuel that indignation,” Prof Sims writes. “There is a warm glow to be had in knowing that someone can be looked down on as a bastard.” Bastards are useful to us as we climb the career ladder. You can boost your reputation by confronting, combating and slaying them. “Saint George is utterly dependent on the dragon for his narrative power, and indeed for being remembered,” Prof Sims writes. “This means that there may be a need for demons.” I said we needed objective, academic help
to understand this subject. But Prof Sims’s conclusion is that bastardy is often in the eye of the beholder. The response of colleagues to a management decision can vary enormously. “Reactions from different people working in the same organisation may range from being beside oneself with anger to moderate indignation, to amused admiration, to approval,” he writes. Only rarely do you meet colleagues to whom the “b” word can be applied without any doubt or hesitation. These are the sort of people the Swiss astronomer Fritz Zwicky referred to as “spherical bastards”: it is clear what they are whichever way you look at them. Hard times are here. Tough decisions are being made. Doing what is necessary doesn’t make you a callous thug, whatever disgruntled colleagues may think. Shakespeare’s Edmund has a point when he declares, in King Lear: “Now, gods, stand up for bastards!” stefan.stern@ft.com Read and post comments online at www.ft.com/stern. For the latest thinking on management and strategy, go to www.ft.com/managementblog
Macho monikers are name of the game in finance Business or Pleasure NICKNAMES
The bearers of such sobriquets as ‘the Gorilla’ and ‘Mr 20%’ have a lot to live up to, says Rhymer Rigby
T
he 2,000-odd business luminaries, political leaders, campaigners and members of the media descending on the Swiss mountain resort of Davos this week are, according to the World Economic Forum’s motto, dedicated to improving the state of the world. This year, by common consent, they have a fuller and more urgent agenda than ever. Yet they have never been less trusted to provide the answer to the financial and social troubles they are supposed to be addressing. That is the stark conclusion of the 10th edition of the Edelman Trust Barometer, a survey of almost 4,500 “opinion leaders” across 20 countries that aims to measure the credibility of groups ranging from non-governmental organisations to stock market analysts. Each of these groups has taken its reputational hits in the recent past, notes Richard Edelman, chief executive of the communications consultancy that has commissioned the survey since the start of the decade. Enron, WorldCom and Parmalat tarnished business on both sides of the Atlantic; challenges to the reporting of Dan Rather at CBS and Jayson Blair at the New York Times eroded further the media’s reputation, while government’s standing was hit by the British government’s “dodgy dossier” about the case for war in Iraq and the Bush administration’s handling of Hurricane Katrina. According to Neal Flieger, Edelman’s general manager of public affairs, who oversees the Trust Barometer, however: “In previous years, when one category went up, another went down. Here, everybody’s down.” This is most startlingly visible in the view of business expressed by the “informed publics” of well-educated, highly paid and engaged 25 to 64-year-olds polled for Edelman’s report, which will be presented tomorrow morning in Davos at a heavily oversubscribed breakfast session. Almost two-thirds – 62 per cent – said they trusted companies less this year than last. In the US and Japan, two of the world’s most important economies, more than 75 per cent had lost faith in business in the past 12 months. In the US, just 38 per cent now say they trust business – down 20 percentage points on the 2008 result to its lowest level since the poll began. “After six or seven years of hard work to rebuild trust after Enron, to have this reversal is almost like Sisyphus,” Mr Edelman says. Pushing the rock back up the hill will be hard, he adds: “It took a good two years for trust in business to recover after 2002-2003 but some things never recovered.” Drill down into the data and you find that, unsurprisingly, the erosion of trust in western business has been led by banks and automakers. In the US, just 36 per cent now say they trust the banking sector, down from 69 per cent a year earlier. In the three biggest western European economies, the figure dropped from 41 per cent to 27 per cent. China was the exception, with banks now trusted by 84 per cent of the “informed public” domestically, up from 72 per cent a year ago. Other industries show noticeable regional differences. US automak-
JANUARY 27 2009
Opinion formers and trust busters
Polls apart: just 36 per cent of ‘wellinformed’ people questioned in the US still trust its banks
AFP
Davos confronted by peak of distrust As the forum opens, polls reveal a massive loss of faith in those who will be addressing the world’s troubles, writes Andrew EdgecliffeJohnson ers have fallen steeply in the public’s estimation after a year that saw them flying (and then driving) to Washington to ask for a bail-out. In the UK, the loss of trust has been just a few percentage points. But for any global business so in need of urgent public support, these are alarming findings. “Right now, business is not trusted to do the right thing,” Mr Flieger warns. Most of those polled called for
Trust
Trust in US business (%) 70
2008 2009
business to work in partnership with government to solve the economic crisis and other issues ranging from climate change to access to affordable healthcare. Here, Mr Flieger sees a glimmer of hope. “The road to rebuilding trust is recognising the responsibility to be an actor on issues facing the planet,” he says. Mr Edelman predicts that this “mutual social responsibility”, shared sacrifice by chief execu-
tives, and “private sector diplomacy” will be key themes in Davos: “Companies that walk away from big social issues or say they can’t afford to be sustainable are making a big mistake,” he argues. As members of business, government and non-governmental organisations come face to face this week, Mr Flieger says the survey carries a particular warning for western companies. The few countries where the poll shows trust in
Trust in business (%)
CEO credibility (%)
60
50
2008 2009
US
60
40
50
50
40 30 40
20
30 20 10
10 0 Banks Media Entertainment Automotive Insurance Health care Source: Edelman Trust Barometer
Section:Features
UK, France, Germany 30 2001 02 03 04 05 06 07 08 09
Time: 27/1/2009 - 00:11
0 Global* Italy UK Germany Spain France US * 18 countries
User: contractora
The Trust Barometer shows strong connections between trust in a brand and its sales. Where once a few activists might boycott a mistrusted company’s products, 77 per cent now say they have criticised the products or services of a business they did not trust to friends or colleagues. Once, companies polished their reputation by talking to regulators, investors and the mainstream media. “Today, you’d better talk to employees, NGOs and your most activist consumers. There’s a new set of influencers,” says Richard Edelman, chief executive of Edelman, the communications consultancy. With no single source of information carrying the weight it once did, 60 per cent of those polled said they now needed to hear information three to five times before they believed it. The most authoritative voices on business are now academics, trusted by 61 per cent of the Americans polled, compared with just 16 per cent who would take the word of a company’s CEO. But people also lend great weight to anecdotal information from a company’s employees and their circle of friends. Staff bloggers are three times more credible than chief executive bloggers. Similar arguments have been made by proponents of advertising on social networks such as MySpace and Facebook, but these were trusted sources for only 8 per cent, down from 14 per cent a year earlier. “Companies are going to have to find ways around this. They will have to be much more open and diffuse,” Mr Edelman says. “In 20032005, CEOs went underground. That’s exactly the wrong thing to do now. If you hide, you’re never going to make it back.”
business or other institutions increasing are all in emerging economies such as Brazil, Russia, Indonesia, China and Mexico. “Think of the multinational forums coming up that will reshape the world – Davos, Doha, the G20, the UN food summit, Copenhagen. The presumptive western orthodoxy going into these events has been that those of us that traditionally set the agenda in the world will continue to set the agenda in the world,” he says. Now, however, “the west has no money, a tradition of business and government being in opposition, and a situation where both those sides lack trust. The eastern economies, broadly, have more money; they have a tradition of government and business being more symbiotically linked; and both those groups are more trusted.” Western business can ill-afford to be so little trusted at precisely the time when it matters most that its voice be heard. Restoring the trust it has lost will not be easy or quick, Mr Edelman says: “It’s like a male/female relationship where one side has done something a little off. It feels like someone’s had an affair. It’s always on your mind.”
J
ohn Thain, ousted last week as head of Merrill Lynch, was nicknamed “Mr Fix-it” for his fabled turnround abilities. The legendary cost-cutter Al Dunlap was known as “Chainsaw Al” for obvious reasons. Lehman’s Dick Fuld was known as “the Gorilla” for his weightlifting, tough guy persona and minimal verbal communication. And John Mack, former chief executive of Morgan Stanley, earned the sobriquet “Mack the Knife” after slashing costs while at investment bank CSFB. Nicknames abound in the business world. And most, even complimentary ones, such as former Rentokil chairman Clive Thompson’s “Mr 20 per cent” or Craig Barrett of Intel’s “Ironman”, have a macho, locker-room ring to them. Indeed, nicknames are particularly prevalent in male-dominated, testosterone-rich places like trading floors, while monikers for the best-known women CEOs rarely stick. Rob Goffee, a professor at London Business School and co-author of Why Should Anyone be Led by You? believes that nicknames can be problematic in that they pigeonhole their holders. Good leaders, he suggests, should be slightly enigmatic and have some distance: “Obama is a perfect example . . . He refuses to be stereotyped . . . The moment you become stereotyped, your ability to be flexible is compromised.” An obvious instance of this is “Mr 20 per cent” – a great name unless you fail to deliver 20 per cent, in which case it becomes a burden. Jordan Belfort, the bad-boy financier, was known as “the Wolf of Wall Street” during his trading years, a reference to both his business practices (which landed him in jail) and his extracurricular behaviour (which included flying helicopters on drugs). “I guess when I think about it now,” he says, “it makes me chuckle. It’s so ridiculous – and it’s kind
‘Chainsaw Al’ Dunlap
Page Name: BusinessLife-LON-03,
of sad that I was that hedonistic person. Still, being ‘the Wolf of Wall Street’ wasn’t all bad. Some of what I did was exciting and glamorous.” The phrase, he explains, originates from the 1960s sitcom Gilligan’s Island, where it was the shipwrecked millionaire’s nickname. “Someone I knew started calling me that and it stuck. I had others too – ‘Gecko’ and ‘the King’; it’s actually pretty obnoxious when people call you ‘King’. And I was stupid enough to believe it: when you’re 26 you get caught up in your own rhetoric.” His sobriquet may have been gained through youthful excess, but Mr Belfort believes he is stuck with it for life. “People still call me ‘Wolfie’ all the time . . . My girlfriend finds it pretty annoying, but I’ll be known as ‘the Wolf’ till the day I die.” Michael Low, business development manager for Moneycorp, the foreign exchange specialist, and a former trader, says that nicknames are particularly prevalent in finance. He says he is known as Mickey “1974” Low as 1974 was the year he started trading, back when £1 bought Y750. “One of the joys of working later in life is that you work with younger people who appreciate your experience – particularly at the moment as history seems to be repeating itself. Because I keep referring back to 1974, especially now, I’m known as Mickey ‘1974’. I’ve got no problem with it – in fact I’m delighted to have a nickname.” He has, he says, had a number of other nicknames over the years: he has been “Mickey London” and “Fingers” from having a finger in every pie. “In the ’70s everyone had a nickname in trading,” he says. Personal branding consultant Louise Mowbray says that what is interesting about nicknames is how little control over them their owners usually have. “When I was managing director of Quintessentially [the concierge service] in the Middle East there was a man known as ‘Mr 10 per cent’ because he skimmed that much off every deal and put it in his back pocket. So perceptions are reality and one doesn’t have very much control over them.” In fact, she says, the only way you can change a disliked nickname is to modify your behaviour so that it no longer rings true. Some, however, revel in their less than complimentary nicknames. Literary agent Andrew “the Jackal” Wylie has said of his: “What’s a jackal? A ravenous dog . . . I’m a ravenous dog. I have fleas.” Others have a more sober take on the subject. US investor Warren Buffett, whose nicknames – the “Oracle of Omaha” and the “Sage of Omaha” – are perhaps the most complimentary in business, says simply: “I am amused by it.”
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