There was a time when it seemed Google could do no wrong—and then came “the memo.” Penned by a former software engineer critical of the company’s diversity initiatives, the now infamous 2017 document tarnished the tech titan’s reputation. But CEO Sundar Pichai emerged unscathed, thanks in part to the transparent way he managed the crisis.
Two years later, though, troubles ranging from employee protests over the organization’s handling of sexual misconduct allegations to data breaches widespread enough to warrant the shuttering of Google Plus appear to have proved too much for even the Valley’s most trusted leader, and as the business has faltered, so, too, has its CEO.
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“Sundar Pichai, celebrated as the most reputable CEO in the world last year, didn’t make the top ten at all this year,” says Stephen Hahn-Griffiths of the Reputation Institute, a reputation measurement and management services firm. For the second year in a row, RI has published the Global CEO RepTrak, a study of chief executive reputation.
This year’s ranking reveals an average two-point increase in the reputations of the world’s CEOs, a trend that mirrors the one-point increase in the reputations of the world’s companies. The driving force behind both, Hahn-Griffiths says, is corporate responsibility.
“There was a time and a place when it was good enough for leaders to deliver on financial performance, new products and innovative agendas, but that paradigm has changed,” he explains. “Social responsibility, employee responsibility and environmental responsibility—that’s 32% of the weight of reputation of any given CEO.”
With that in mind, it’s no wonder that Pichai, whose identity as a leader is so inextricably linked to that of his company, fell from the top ten, and he’s far from alone: Eight of the CEOs who appeared in the upper echelon of last year’s list—including Kraft Heinz Company CEO Bernardo Hees, Mondelēz International CEO Dirk Van de Put and LinkedIn CEO Jeff Weiner—failed to return this time, their descents making room for the rise of some newcomers, among them Ben van Beurden.
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At first glance, the CEO of Royal Dutch Shell might seem an unlikely candidate to rank high on a list of this nature. After all, not only has the energy sector long been regarded by the general public as one without much of a moral compass, but the business Van Beurden leads isn’t counted among the world’s most reputable.
None of this is news to him, and since rising to the helm in 2014, he’s made rewriting the narrative a priority, and a public one at that. “Doing the right thing is the single biggest driver of reputation,” Hahn-Griffiths says. “His leadership style—lead from the front, not the back—says not only is he a highly ethical CEO, but he has empathy and the desire to make the world a better place to live.”
From spearheading a campaign to reduce Shell’s net carbon footprint50% by 2050 to collaborating with organizations including the Task Force on Climate-Related Financial Disclosures and the World Resources Institute to ensure that his company’s plans become a reality, Van Beurden has acknowledged the elephant in the energy room—climate change—and has demonstrated his commitment to working to protect the planet against the threats his industry has helped create. “Energy is one of the least reputable industries,” Hahn-Griffiths says. “Shell really took a stand as a leader in climate change and alternative energy, and redefined what it means to be a good corporate citizen in the energy sector.”
The attention Van Beurden has paid to developing sustainable energy solutions is surely qualification enough to make him one of the world’s most reputable CEOs, but had he pursued these initiatives behind closed doors, would they have been enough to propel him into the top ten? It’s difficult to say, and the visibility of his leadership certainly didn’t hurt.
In fact, the more familiar the general public is with a CEO, the more likely he or she is to have a strong reputation. “The difference between having a CEO with whom the general public isn’t familiar is 10.3 points,” Hahn-Griffiths says. “Not only is that significant, but it translates into billions of dollars in market capitalization, just because you have a CEO at the helm who is visible.”
Worth noting, however, is that the association between familiarity and perception won’t exist if a CEO is known for all the wrong reasons. As in the case of Pichai, not all press is good press.
For Fabrizio Freda, whose familiarity ensured his spot in the top tenfor the second year in a row, influence has always been a business imperative. Upon becoming the first non-Lauder to serve as CEO of The Estée Lauder Cos., in 2009, Freda was faced with a big branding challenge: convincing the Millennial generation that a 63-year-old cosmetics company might be relevant to them.
In order to successfully make the case, Freda just knew a brand makeover wouldn’t do, so he started on the inside, implementing a global reverse-mentoring program to promote perpetual learning and development for employees and prioritizing the hiring of more Millennials, who now reportedly make up 67% of the Estée Lauder workforce.
Such shifts have enabled the company to make attention-grabbing moves on the global stage, including the acquisitions of Smashbox, Becca and Too Faced, all Millennial-centric beauty brands, the latter of which boasts 12.5 million Instagram followers. “Part of his legacy is really making strides toward winning over the Millennial cohort,” Hahn-Griffiths says. “He’s taken a company that’s been around for generations and has made it relevant to emerging audiences around the world.”
And while not every initiative has gone according to plan—Estée Edit, a Millennial-focused line fronted by Kendall Jenner, was discontinued after just 18 months on Sephora’s shelves—those don’t seem to have hurt Freda’s bottom line; Estée Lauder’s market cap has grown from about $5 billion back in 2009 to more than $60 billion today.
“Without losing our advantages of scale and scope, we are instilling a more entrepreneurial mindset to ensure we stay agile and act decisively,” wrote Freda in a statement to Forbes. “This gives us the best qualities of a well-financed, structured organization with the challenger spirit of a startup.”
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Notably absent from this year’s list are women. That’s unsettling. Last year, The Campbell Soup Co. CEO Denise Morrison, who has since stepped down, was the only woman to make the ranks. RI attributes the lack of representation among female leaders to the fact that, on average, their familiarity with the general public is 12%, whereas that of their male counterparts is 15%.
But Hahn-Griffiths is confident that this trend will soon change, and he says GlaxoSmithKline CEO Emma Walmsley is the one to watch. “She’s the first woman to run a major pharmaceuticals company and has been really disruptive,” he says. “We anticipate the number of women CEOs to increase significantly, and we think Emma, who she is and what she represents, is a role model.”
-Vicky Valet;Forbes Staff