Trust makes a leader effective
Written by Anneliese O'Young
Chief executive and author Kathy Bloomgarden says to succeed companies must make it clear they have corporate responsibility
Winston Churchill said, 'The price of greatness is responsibility.' Kathy Bloomgarden, chief executive of Rudder Finn, a worldwide independent public relations firm, believes the simplicity of the quote is something modern day leaders should take to heart.
With more than 25 years of experience in public relations and advising clients including The New York Times, Novartis, BP, Volvo, Microsoft and McKinsey, the New York native has a unique insight into what makes a great leader in the 21st century.
She recently published the book Trust: The Secret Weapon of Effective Business Leaders outlining the importance of trust-based relationships between chief executives and their investors, employees and clients.
Transparency and corporate responsibility to the community are not just catchphrases, but real issues where tough decisions have to be made.
'Leaders need to be viewed as being committed to individuals in the community,' said Dr Bloomgarden, who has a PhD in political science.
'Multinational companies have global problems of uncertainty and unease from the public. In China it has been reported that 79 per cent of people would not buy things from companies that have bad corporate behaviour - 69 per cent would tell friends. China, in particular, is very sensitive to this. No matter what region you are in it is important to build trust in all aspects.'
The word 'globalisation' often makes people uneasy but, according to Dr Bloomgarden, the mistrust stems from fear - people fear globalisation because they don't know what it is.
'In most parts of the world people believe globalisation negatively affects them. In Europe and especially Britain, 53 per cent think it is negative; in the United States, 45 per cent,' she said.
Corporate social responsibility is the latest catchphrase, but what does it mean? 'Companies have to give back to the community and listen to customers, shareholders, NGOs [non-governmental organisations] - people who are active and voicing their opinions,' Dr Bloomgarden said.
'Corporate responsibility should be part of a company's ethics. It is important to create trust as the world becomes more global. Most people used to think of these things as soft management skills; nice to deal with when you have time. The bottom line is that it is not just nice to do; it has to be done to succeed.'
Dr Bloomgarden has watched Hong Kong and China grow for nearly 30 years. As a Putonghua student at the University of Columbia and Stanford University, she was one of a select few who entered China as a language student in the early 1980s.
Her knowledge and interest in China has not waned and now her company boasts one of the strongest China branches in the public relations field.
'Hong Kong people are very engaged and socially alive,' Dr Bloomgarden said. 'I love the tall buildings, the nightlife, the way it looks. I've lost count of the number of times I've passed through Hong Kong and China. Work wise it's very dynamic and it's a wonderful place.'
Dr Bloomgarden was in the thick of things as criticism of greedy chief executives and greedy businesses grew at the turn of the century. Globalisation became a dirty word as the 'fat cat executives' were seen to be licking the cream of their yearly bonuses while the everyday worker suffered cuts to their wages and benefits. This scenario was the impetus for her book.
'The criticism was not a reflection of the reality of the day. From what I saw, executives were doing things that really took courage. They were striving towards transparency, making real and genuine changes,' Dr Bloomgarden said.
'It takes a lot to stand up in companies and make change.'
Dr Bloomgarden used the example of Coca-Cola and Pepsi Cola in India being criticised for having too high levels of pesticides in their soft drinks. What might look like a small problem on one side of the world could grow and become a global problem if not addressed quickly, she said.
'It was not a fact-based criticism.' Dr Bloomgarden believed it was more of a critique of global companies muscling in on local industries.
'Coke and Pepsi admitted they were too reactive and tried to get in front of this. They sat down with the NGOs and said they were no threat to the food industry and their soft drinks were much like other products in the regional soft drink industry.
'In this day and age companies have to step up to the plate really quickly and be clear that they are being transparent and open. You have to have the rapport with the NGOs and be trusted.'
The world is an evolving multinational environment, Dr Bloomgarden said. On a daily basis, individuals can see the amount of equity that is being acquired in the developing and industrialised world.
During mega acquisitions involving multinational companies, investors, employees and the public, there needs to be an understanding of the core basics of the deal. Companies need to be aware of the importance of building trust and should explain why the acquisition would be beneficial to individuals.
'The Dubai Ports World controversy in the United States is a good example of how the public sphere did not have a clear understanding of what the deal would mean to the American public,' Dr Bloomgarden said.
US political figures argued that the takeover of six major ports by the United Arab Emirates-based company would compromise port security.
'There was no face explaining that Dubai has lots of experience handling ports. It would have improved the port situation. There was no media that really spent time explaining the story.'
In the end, the deal fell through.
'The Lenovo-IBM case was exactly the opposite. Leadership was very visible - explaining where the headquarters would be and how this acquisition [the 2005 purchase of IBM's PC division by the Chinese computer maker] would strengthen the company.
'With Lenovo, the American leadership and Chinese leadership were very visible.
'In these two examples - one went well. The other went badly,' she said.
Being transparent, proactive and building relationships based on truth is what Dr Bloomgarden sees as the key to success.
China is the great hope for the younger generation, geared to be mobile, educated and ambitious. Young educated Chinese are riding the coat-tails of the economic boom and are seen as the foundation for a new generation of leaders.
Being a leader today is more than just being the figurehead of a company. There are issues to contend with such as technology, global perspective and mass communication, and every leader should keep these in mind.
'Young leaders should think about redefining their role,' said Dr Bloomgarden who emphasised that her book was not just for chief executives.
'It is a huge role. What are your values as being a leader? What sort of principles do you want to instil in the company. You can not be successful without being monetarily successful.
'More than that, leaders of today have to be willing to quickly engage with employees, shareholders, third parties and critics. What should they expect short term. If it's bad, then they should bite the bullet and tell people what to expect. These factors should be engaged, not ignored.'
Being a leader is a broad term and Dr Bloomgarden sees a great leader as someone who is responsible and someone who uses common sense to make the tough decisions every leader has to make.
'The role of a leader has been redefined. You really need to listen twice as much as you speak. Engage people and draw them in.
'Whether it be a start-up or a global company - you have to chart out who is your customer, who can we get financing from - who can be partners. Proactively define your role and establish trust.
'Leaders have to have the ability to attract and keep talent. Building trust with employees and people who want to work for companies is important. It is not the financial status that is important but the value of the company and giving back to the community. You can see that in many surveys.
'People need to understand who a leader is as a person. Leaders must realise that things can be difficult sometimes. You don't need to over-promise. Just set realistic expectations.'