Business Leadership Roundtable: Mary Kay Haben
By Kim Lange
By Kim Lange
Mary Kay Haben has an especially strong connection to UIUC. She is past chair of the Illiinois alumni association; her husband is also an alumnus of UIUC; and their son is currently a UIUC student in the
Throughout her years in business, Haben has seen a large shift that affects all of us today. In the 1970s and 80s, companies basically stuck to manufacturing and selling goods, and consumers purchased these items without much concern about the company itself. We as consumers didn't know, and didn't care about, who the CEO was of the business. "The product was the star of the company," notes Haben, "more than the company that made the product, and certainly more than the CEO."
This condition contrasts sharply with today, when consumers are buying – or not buying – much more than the product. As Haben points out, "We are also buying the CEO and his or leadership team, too." This makes it imperative for companies to focus on not only their products, but the "soft side" of business as well, such as social and environmental issues.
This shift started when manufacturers became pressured by citizens – initially college students – to account for poor labor conditions in their factories and to choose more environmentally friendly packaging for their products. This has led to today's standards, which place great importance on not just the items sold, but also how they are made and, more recently, who is selling these goods. It is rare to tune in to television news, talk shows and even commercials and not see a CEO discussing his/her company's business practices.
The fact that the spotlight is now focused so much on CEOs means their reputations are also spotlighted, which can make or break the reputations of their companies. Haben cites a 2003 Burson-Marsteller study, which reports that 50 percent of a company's reputation, be it good or bad, can be attributed to the CEO's reputation. Therefore, today's equation for success in business is this: Strong leadership + high ethical standards = stellar reputation. And it is this stellar reputation that generates large monetary returns for one's business.
A business can take a few crucial steps to gain a larger return on investment for its reputation. The first is to think beyond profit. Profit is only one necessary consideration. According to Andy Savitz in his book The Triple Bottom Line, Planet and People are also important elements. Shareholders still matter, but so do stakeholders, such as the 24-hour media, watchdog groups, the government and consumer advocate groups. They all have the power to influence the success of companies' brands. Using a good reputation to positively influence these stakeholders can only increase the value of the "triple bottom line."
Haben uses General Electric (GE) as an example of a company that is carrying out the above in a successful manner. GE's Ecomagination campaign, launched in 2005, blends financial and environmental performance to grow the company. It includes low-emission locomotives, wind turbines and environmentally friendly engines and demonstates how to GE "green = green." These initiatives, along with including stakeholder perspectives in making further decisions and having buy-in from senior executives, have really worked for GE. Add to these good intentions the stock options and bonuses tied to meeting triple bottom line commitments (i.e., leadership) as well as the good behavior of delivering products that do what they are supposed to (i.e., ethics), you get a strong reputation and a high return on investment.
The second step in getting a high ROI is to be impeccable – to be flawless beyond criticism. This is especially difficult in today's digital, post-Enron age and terrible banking environment. SOx requires businesses to be more transparent, but leaders must still monitor their behavior, as they are constantly being watched. One mistake will be broadcast throughout the Internet and other media by critics and competitors.
Haben illustrates this with the example of the clothing retailer GAP, which made a commitment to not have its products made in substandard factories. However, with over 2,000 factories worldwide, one of them slipped through the cracks of inspection: an Indian subcontractor was using children as young as ten as factory employees. Hours after this was discovered, photos of the offending factory were spread around the world, creating the potential for boycotts, lawsuits and even Congressional investigations. GAP's CEO was put on the spot, to say the least.
And this leads to the third step in ROI: be accountable in times of crisis and accept responsibility. This is exactly what GAP's CEO did. "The company met with its contractors and subcontractors to emphasize its position, and refused to sell the products made by children," notes Haben. "This is one of the reasons GAP was named in 2007 as one of the world's most ethical companies by a magazine that evaluated 5,000 companies across 30 countries."
Leaders are human and will make mistakes, but how they accept responsibility for these mistakes and work to make things right that is an extremely important factor in corporate reputation. Haben says, "Like I tell my kids, if you make a mess, clean it up. If you break something, don't try to cover it up, fix it." Doing so will show your transparency, which is increasingly expected of leaders by skeptical consumers.
Haben has seen up close how these steps align for others during her stints at Kraft and Wrigley, and continually keeps them in mind for her own leadership as well. After all, stresses Haben, "The reality is that the most important asset you will ever own or manage is your reputation."