THE HUMAN FACTOR

THE HUMAN FACTOR - Carly Fiorina's message for the CBI was that boardrooms need to be generating a culture that they'd wish to see operating on the shop floor.

by PATIENCE WHEATCROFT, business and City editor of The Times
Last Updated: 31 Aug 2010

Carly Fiorina's message for the CBI was that boardrooms need to be generating a culture that they'd wish to see operating on the shop floor.

Cried Cassio in Shakespeare's Othello: 'Reputation, reputation reputation! Oh, I have lost my reputation.' Similar sentiments have recently been expressed in boardrooms around the world. It may be the case, as Iago observed, that 'Reputation is an idle and most false impostion; oft got without merit, and lost without deserving.' But a good reputation is an asset that no business or executive can afford to lose.

Sir John Egan, the CBI president, made reputation a theme of the confederation's annual conference in November. With the Enron affair and its subsequent fall-out still reverberating around the world, he judged it a crucial issue for his members.

Egan, an engineer who led Jaguar to renewed greatness before spending almost a decade as CEO of the British Airports Authority, is not one to indulge in pointless sentiment. His interest in reputation is based on its commercial value. Not only because a positive reputation makes it easier to recruit the best staff, win customers and investors. 'But (reputation) matters also because, if business is badly thought of, it makes it easier for government to ignore our legitimate concerns,' he warned his audience in Manchester. 'And it becomes easier, too, for government to punish business with extra taxes.'

Tony Blair's administration came to power after a concerted effort to woo business. But what has become increasingly apparent since he took office is the Government's distrust of the corporate world. 'They thought we supported big business, but what we support is enterprise,' a senior Cabinet member told me. Misreading this, business has been taken by surprise.

Even now, as the new Enterprise Act is about to hit the statute books, many in business seem unaware of the new regime that is to govern their activities. Cartels are not merely outlawed; for the first time in this country those found guilty of operating them risk going to prison. A reputation for not playing fair could mean search raids on corporate offices in the hunt for incriminating evidence.

The public largely shares the Government's wariness of business. After a succession of damaging revelations over crooked accounting and boardroom greed, the term 'chief executive' is deemed an insult rather than an accolade.

Sir John is well aware of the need to have the public, as well as the Government, onside. As BAA has battled for a fifth terminal at Heathrow airport, it has had to win not just the legal argument but the emotional one. Opponents tried to characterise the company as an ogre out to trample on all in its path. The BAA reply was to insist that it was a responsible organisation with honourable motives. 'It was only by coming to terms with our neighbours and sharing their concerns that we won for the company - but also for the nation - permission for T5 at Heathrow and expansion at Gatwick and Stansted,' he told the conference.

It was not what might be termed an overnight triumph. The struggle for the new terminal lasted longer than Egan's reign at BAA. But planning inquiries, like good reputations, are not won speedily. For Egan, a man who has fervently campaigned to see the construction industry made more efficient as an important boost to Britain's productivity, the long Heathrow battle was frustrating. Yet had he shown his anger in public, BAA's case could have been jeopardised.

The individual who heads up a business inevitably comes to encapsulate its reputation. Thus it will take the US company Tyco a long time to shrug off the unsavoury image resulting from accusations against former chief executive Denis Kozlowski. The basic business is still sound, but Tyco's reputation is tarnished by such gaudy images of corporate excess as the dollars 6,000 shower curtain that graced Kozlowski's flat and was paid for by the firm.

Carly Fiorina, chairman and CEO of Hewlett-Packard, said in her address to the CBI: 'Business leaders have a unique responsibility to restore faith in the shared system of free enterprise.' After her victory in the battle to take over Compaq, Fiorina was in upbeat mood in Manchester.

But she too chose to major on the importance of reputation to businesses.

Her message was that business practices reflect corporate culture and that boardrooms need to be generating a culture that they'd wish to see operating on the shop floor. 'Managing risk across a global network involves managing reputation, and the partnerships, friendships and associations that contribute to it.'

There is no doubt that the reputation of even the most respectable business now looks just a little less solid than it did before the Enron affair erupted.

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