Seat at the Table

The Business Roundtable released a study that “sets the record straight” by showing how highly paid CEOs are not overpaid. The study, the organization, and some of the CEOs connected to it were summarily ripped apart Gretchen Morgenstern in last weekend’s New York Times Business Section.

This is perfect example of why public relations needs to first properly evaluate a business move (in this case, releasing a study with very faulty methodology-yes PR pros should understand statistics) , then evaluate what, if anything needs to be fixed in order to avoid potential reputation damage, and then move ahead with a tactical plan to fix it.

Public relations and reputation management is about first identifying a problem, doing an honest assessment of the situation, and then recommending a course of action (that should include, when appropriate, business action - not just a PR program), and then communication around that course of action.

So what should the Bushman Roundtable be doing?

1. Identify the problem - the public sees top CEOs as being grossly overpaid.
2. Evaluate - Are CEOs overcompensation. If you use a fair, total compensation approach and compare to stock returns and best practice companies, the answer may be a yes.
3. Identify a course of action - Offer CEO compensation guidelines and formulas that can be defended (as per the article, leaving out nor-salary type of compensation is not going to be accepted) and show that the business organizations are trying to honestly address the problem. Of course, this means some CEOs can no longer walk away with ridiculous salaries. But as I mentioned above, this is about real business fixes to fix a reputation, not cosmetic changes.
4. Communicate the course of action to show real change is happening. This is what repairs a reputation.

However, I would assume that many CEOs would rather live with a reputation problem than give up some salary. This would just be one example of how many companies would rather sacrifice reputation to save short term buck.

technorati tags:CEO, compensation, business, roundtable