The brand value of a company is important because valuable brands lead to sustainable business success.
How do brands develop this value? There are many factors that contribute, although one of the most important is the behavior of its leaders.
In fact, I believe leaders are essentially brand ambassadors for the companies they lead. And when leaders forget this, bad things happen. This was made abundantly clear last week.
In one of the biggest deals ever in the executive search industry, New York-based CTPartners has been forced to sell off “selected assets” to competitors in the face of a nearly unprecedented drop in share value brought on by a series of allegations of sexual impropriety.
Former CTPartners CEO Brian Sullivan was accused of stripping naked with a group of male executives at a company party in May 2012. Female employees at the party subsequently filed a discrimination complaint with the US Equal Employment Opportunity Committee.
Just six months ago, CTPartners was sitting atop the executive recruitment world. Its share price was soaring and it was considered one of the go-to firms for Wall Street banks and investment houses.
Then, just before Christmas, CTPartners was hit by a series of devastating revelations about sexual impropriety and mistreatment of female employees. According to the discrimination complaint, female employees were removed from profitable accounts and subjected to a constant barrage of “lewd” behavior.
Today, CTPartners’ share price is down more than 80 per cent, and has been forced to sell of parts of its business to meet the demands of lenders. As it stands now, it is unclear the firm can survive past June 30.
This has been a boon for competitor DHR International, a firm of nearly equal size and reputation that is in the processing of acquiring most of CTPartners core business, a move that is expected to be worth $75 million in annual revenue.
What conclusions can we draw from a deal like this? Obviously, CEOs can, on their own, make or break the brand of a company.
I know a lot of people who are unsure about the true value and impact of any single CEO. Some people argue that no one person can determine the fate of an organization; others believe CEOs are so important that, given the right circumstances, their behavior can bring down an otherwise successful organization.
It’s clear that the problem with CTPartners, the thing forcing them into a fire sale to fend off creditors, had little to do with the core of the business. The firm is still stocked with talented employees and lucrative client relationships.
The real problem here is that, in the wake of the allegations against Sullivan and other executives, the CTPartners brand became toxic. And that may ultimately ruin the company.
Here we have once again another story of business leaders losing their way. Just two weeks ago I wrote about the need for leaders to understand what may tempt them to engage in bad behavior. Now here’s another story of bad leadership. Unfortunately this time, the fall out didn’t just include personal embarrassment, but rather the end of an entire company.
When are business leaders going to start learning the lesson that leadership is an obligation and it’s time to step up! Ruining your personal reputation is one thing. Ruining the brand value of a company, and the reputations of all the employees is something completely different.
This week’s Gut Check question asks: are you protecting the brand value of your company?
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About the Author
Vince Molinaro is the Global Managing Director of Strategic Solutions at Lee Hecht Harrison. He is also the author of The Leadership Contract – a New York Times and USA Today bestseller. Vince has spent more than 20 years as an adviser to boards and senior executives looking to improve leadership in their organizations.Follow on Twitter More Content by Vince Molinaro