Charm Offensive

Why America's CEOs are suddenly so eager to be loved

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It's hard to avoid Lee Scott's tender side these days. In April the Wal-Mart (WMT ) chief executive told a convention of journalists that he plans to build stores in high-crime neighborhoods, in run-down malls, even on contaminated land. Why? Not because these are the best places to put a store. The idea, said Scott, is to "engage the community," reaching out to poor folks and minorities, the kind of "people and neighborhoods that need Wal-Mart most."

While Scott tries to recast the often vilified retailer as a force for good, ExxonMobil's (XOM ) new CEO, Rex W. Tillerson, is putting a friendlier face on the world's largest energy company, drawing loud applause at the company's May annual meeting after an investor thanked him for his "friendliness, humor, and candor." Then there's Anne M. Mulcahy, boosting morale by telling Xerox (XRX ) employees to take their birthdays off. Or General Electric's (GE ) Jeffrey R. Immelt, refusing his last cash bonus in favor of performance-linked shares to show that he's aligned with shareholders.

Feel a sudden urge to hug a CEO? If so, it's likely because of all the thoughtful gestures and warm words coming out of America's corporate suites. In the pageant of business, senior executives seem to be battling for the congeniality prize. Humility, authenticity, and responsive leadership are new buzzwords at the top. Many chief executives talk about being "servant leaders" and team players. They care openly about everything from employees to Mother Earth. In short, they're more likable.

While every generation has its share of both jerks and mensches in key jobs, there has been a discernible shift in the management zeitgeist. Hubris isn't cool. Years of white-collar-crime headlines, as well as grumbling over executive pay, have created an environment that's less tolerant of boorish behavior. "Every CEO has a code of conduct and is eating in the cafeteria," says Leslie Gaines-Ross, chief reputation strategist at public relations firm Weber Shandwick.

Better to be bland, perhaps, than unpopular. Says Jon A. Boscia, chairman and chief executive of Lincoln Financial Group: "When you're asked what you do, you used to puff out your chest and say: 'I'm a CEO of such-and-such."' No more. Only 27% of U.S. respondents in PR giant Edelman's 2006 Edelman Trust Barometer felt that information conveyed by a CEO was very credible. (Business magazines rank higher, at 66%.) At least that's up from 2003, when, according to boss Richard W. Edelman, "CEOs just went into the fetal position and didn't talk much at all."

Now, CEOs have to talk to everyone. With greater transparency in business, there's no place to hide. It's not enough to be popular with employees, board members, or the regulators perched outside your door. In today's wired world, how you treat workers and the planet can quickly come back to haunt you in a blog or I-Hate-Your-Company Web site. Anyone can find out what it's like to work for you, says Libby Sartain, senior vice-president for human resources at Yahoo! (YHOO ), and that "dictates what kind of talent you get" -- especially among younger workers. And a new breed of execs, including Alan G. Lafley of Procter & Gamble (PG ), has started to talk more about the concerns of "stakeholders" who feel the impact of a business, instead of just shareholders.

POSITIVE IS MORE POTENT

That's not to say all CEOs are experiencing a sudden surge of love for their fellow man. As with any management trend, there's an element of faddishness to the recent emphasis on humble, engaging leadership. During the dot-com boom, the instinct was to play hard and strut around like a rock star. CEO popularity revolved around a simple measure: stock price. Nobody had time to hold hands. Even now, affability is not synonymous with morality. Nice guys can promote recycling and still pollute, push ethical boundaries, or pay people too little. Few execs, after all, were more charitable, more revered, and more public-spirited than Enron's Kenneth L. Lay. Nor is likability tightly linked to profitability. Hot-headed, dictatorial leaders often get results. ExxonMobil's former CEO, Lee Raymond, may have shunned investors, but he delivered great earnings.

Yet current thinking has shifted to emphasizing the benefits of model behavior. "Nice is a power tool," asserts Linda Kaplan Thaler, CEO of ad agency Kaplan Thaler Group and co-author of the upcoming book The Power of Nice. "You get sued less often, you live longer, and you make more money." A recent study in the Harvard Business Review found that people tend to choose work partners based on likability. Professor Kim S. Cameron at the University of Michigan's three-year-old Center for Positive Organizational Scholarship also cites studies showing that likable people -- those at the hub of what he calls "positive energy networks" -- are four times more potent on the job than those who have influential jobs but are less popular. "Positive energy is the Holy Grail of business right now," he says.

Rarely has there been more attention paid to personality in getting ahead. Mountains of leadership books and hours of coaching greet most high-potential executives. The recurring themes? Trust, inspiration, teamwork, authenticity. Jerks who deliver results are usually shoved into somebody's hands to learn a little tenderness before rising to the top job. "People are proud to have a coach now," says Judith Glaser, who coaches executive teams. "It shows they're being emotionally cultivated for a better job."

In contrast, those who don't make an effort to win friends stand out. Robert L. Nardelli of Home Depot (HD ) was widely regarded as an operational genius during his time at GE. But insiders say Jeff Immelt performed equally well -- and also had an exceptional ability with people. Since coming to the top job five years ago, Immelt has helped establish GE as a leader in eco-friendly products, innovation, and even diversity. Over at Home Depot, Nardelli has been accused of focusing on costs over customers, chipping away at morale, and ignoring shareholders. At the May annual meeting, he stayed 30 minutes and refused to take questions. "How could anyone not know that doesn't play in today's world?" asks one peer.

Surely, Nardelli couldn't have expected that his actions would go unnoticed. Now that everything from retirement perks to personal e-mails are circulated on the Web, being a CEO can feel like running naked. When Raytheon (RTN ) Chief Executive William H. Swanson plagiarized parts of his feel-good Swanson's Unwritten Rules of Management from a 1944 book by W.J. King, it was only a matter of time before a blogger exposed him. Harry C. Stonecipher of Boeing (BA ) was forced to step down after an underling tipped off the board that the married CEO was having an affair with someone on staff. "It used to be that the turnaround guys were the bad ones," says Brian M. Sullivan, chairman and CEO of executive search firm Christian & Timbers, "but now even CEOs running profitable businesses are getting vilified."

A NOD TO OUTRAGEOUS PAY

This is hardly the first time corporate leaders have put a benevolent face before the public. In the 1960s and '70s, as industry struggled to adapt to tumultuous times and the end of a booming postwar economy, business leaders adopted more statesmanlike roles. Their message to politicians and the public: We're all in this together. Earlier in the century, industrialists such as Andrew Carnegie and John D. Rockefeller made a show of spreading their largesse after amassing huge fortunes under controversial circumstances. More than a few critics accused them of trying to buy back their reputations.

With the fortunes being accumulated by the executive class today, it's not surprising that leaders feel a need to reach out. Median CEO compensation at 200 of the largest U.S. companies last year hovered around $8.4 million. That's a 10% jump over 2004, according to Pearl Meyer & Partners. John P. Mackey of Whole Foods (WFMI ), who caps his own cash compensation at 14 times the average of what all his employees make, argues that "when you have executives gouging their companies, it undermines trust. Frankly, they aren't worth that much."

Outrageous pay is hardly the hallmark of a servant leader. The speech on "sacrifice" doesn't resonate when it comes from someone whose bonus is in the millions. No wonder a small but growing number of execs, from former Circuit City (CC ) CEO W. Alan McCollough to Susan Lyne of Martha Stewart Living Omnimedia (MSG ), are giving back cash. Says Lyne, who gave a third of her $625,500 bonus to employees: "You can send a signal that your focus is on compensation, or you can show that your focus is on creating a better, stronger company."

Playing to a wide audience and cultivating positive publicity often does help the company. John Browne, group chief executive at BP (BP ), has spent millions trying to make his company the nicest, greenest oil giant on the block. While ExxonMobil is pulling in bigger profits, BP has posted stronger growth and better stock performance since 2001. In that time, BP has delivered a total shareholder return of 62%, compared with ExxonMobil's 49%. "We have to be responsible as a company and attract the best people of every background," says Browne, who won BP the prestigious Catalyst Award this year for advancing women in the organization. Such good vibes helped the company emerge with its reputation largely intact after a devastating refinery explosion in Texas last year that killed 15 people and led to a $21.3 million fine.

ExxonMobil's Raymond, in contrast, made money for investors but never did much to warm the public's heart. Greenpeace research director Kert Davies says "shareholders -- really nice people like priests and nuns -- tell me they have never dealt with anyone as stubborn, self-important, and rude." An ExxonMobil spokesman said Raymond doesn't comment on such observations. But it's notable that his successor makes a point of cracking jokes with journalists and listening politely to investors. To executive leadership consultant Granville Toogood, Tillerson comes "across as a humble, concerned citizen of the world." The business strategy hasn't changed. The CEO is just nicer.

Even energy industry bosses know that friendly gestures get you noticed in the press -- and by your peers. In fact, James O'Toole, a professor at the University of Southern California's Center for Effective Organizations, thinks many execs are just jealous of all the attention being heaped on nice guys. He believes the charm offensive comes down to a basic instinct: "What do I have to say to get the spotlight back on me?" Moreover, he notes: "Who wants a reputation for not caring about employees or your own country?"

No one who wants to make it in business. Increasingly, the most important fan base is the one within your own company. Younger staffers simply won't stick around to work for idiot bosses. They grew up accustomed to a freelance "open source" world, and their boomer parents raised them to demand respect, independence, and engaging work. Their reaction to a command-and- control leader who blasts off mean missives or ridicules customers? Post the comments on a blog.

Treating people well makes you feel good. It makes others feel good. It can even cast a glow around your company. But the biggest incentive to woo the masses is a growing belief that it benefits the bottom line. As consultant Tim Sanders, author of The Likeability Factor, puts it: "If the average employee has a pit in his stomach instead of a song in his heart, your profits will go down."

By Diane Brady

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