Here is what Henry Kissinger, former US Secretary of State once said; “The nice thing about being a celebrity is that when you bore people, they think it’s their fault.” Many a time when we hear the term celebrity, thoughts of actors, sports stars, and musicians conjure up in our minds.
Now let’s explore the term “Celebrity” in the context of a Chief Executive Officer of an organisation. Here we would like to understand the benefits and costs of CEO celebrity status to the organisation. Further, we will also attempt to define some types of CEOs based on differences in fame and reputation.
In the world today, we have some CEOs, such as Bill Gates, Oprah Winfrey, Martha Stewart, and Donald Trump, who have achieved celebrity status. Therefore, Celebrity CEOs are not a new phenomenon. In the early 20th century, industrial barons such as Henry Ford, John D Rockefeller and Cornelius Vanderbilt were household names. However, in the current digital era of mass and instant media, celebrity CEOs have become more prevalent and visible.
Benefits and costs of CEO celebrity
There are both benefits and costs associated with being a CEO celebrity. As the quote from Kissinger suggests, celebrity confers a mystique and reverence that can be leveraged in a variety of ways. CEO celebrity can serve as an intangible asset for the CEO’s firm and may increase opportunities available to the firm. Hiring or developing a celebrity CEO may increase stock price, enhance a firm’s image and improve the morale of employees and other stakeholders.
Risks associated with celebrity CEO
However, employing a celebrity CEO also entails risks for an organisation. Here is the catch; increased attention to the firm via the celebrity CEO means any gaps between actual and expected firm performance are magnified. Further, if a celebrity CEO acts in an unethical or illegal manner, chances are that the CEO’s firm will receive much more media attention than will other firms with similar problems.
Personal risks and benefits
There are also personal benefits and risks associated with celebrity for the CEO. Celebrity CEOs tend to receive higher compensation and job perks than their colleagues. Celebrity CEOs are likely to enjoy increased prestige and power, which facilitates invitations to serve on the boards of directors of other firms and creates opportunities to network with other “managerial elites.” Celebrity also can provide CEOs with a “benefit of the doubt” effect that protects against quick sanctions for downturns in firm performance and stock price.
Inversely, celebrity also creates potential costs for individuals. Celebrity CEOs face larger and more lasting reputation erosion if their job performance and behaviour is inconsistent with their celebrity image. Celebrity CEOs face increased personal media scrutiny, and their friends and family must often endure increased attention into their personal and public lives. Accordingly, wise CEOs will attempt to understand and manage their celebrity status.
Icons are CEOs possessing both fame and strong reputations. The icon CEO combines style and substance in the execution of his or her job responsibilities. Mary Kay Ash, Richard Branson, Bill Gates and Warren Buffett are good examples of icons. The late Mary Kay Ash founded Mary Kay Cosmetics Corporation. The firm’s great success and Ash’s unconventional motivational methods, such as rewarding sales, brought success. Partly because she emphasised helping other women succeed and ethical business practices, Ash also had a very positive reputation. Bill Gates, founder and former CEO of Microsoft, also has fame and a largely positive reputation. Gates is a proverbial “household name” in the tradition of Ford, Rockefeller and Vanderbilt. He also is routinely listed among Time magazine’s “100 Most Influential People” and has received “rock star” receptions in India and Vietnam in recent years.
Another type of CEOs are those who display high levels of relative fame but low levels of reputation and these are in the group called scoundrels. These CEOs are well known but vilified. The late Leona Helmsley was a prototypical scoundrel. Leona Helmsley’s life was a classic rags-to-riches story. Born to immigrant parents, Helmsley became a billionaire through her work as the head of an extensive hotel and real estate empire. While certainly famous, her reputation was anything but positive, as reflected by her nickname: the Queen of Mean. During Helmsley’s trial for tax fraud, her housekeeper quoted her as proclaiming, “We don’t pay taxes. Only the little people pay taxes.” Helmsley’s apparent arrogance, combined with her cruelty to employees and her reputation as the ultimate workplace bully, cemented her position as a scoundrel.
In Zimbabwe, the corporate governance scandals of the late 2010 to date revealed several CEOs as scoundrels. We have men and women who rose to prominence as their firms’ success and stock prices soared but were undone by dubious activities. Further afield, Lay was once revered as the son of a poor minister who founded Enron and built it into a giant in the energy business. In 2001, however, he became the face of corporate abuses in the United States after Enron’s collapse led to scenes, captured on television, of employees left jobless and with retirement accounts full of worthless Enron stock. Lay was convicted of fraud in 2006 but died before sentencing.
Hidden gems CEOs
Then we have the Hidden gems type of CEOs who lack fame but possess positive reputations. These CEOs toil in relative obscurity while leading their firms to success. Their skill as executives is known mainly by those in their own firm and by their competitors. In many cases, the firm has some renown due to its success, but the CEO stays unknown. For example, consider the case of Anne Mulcahy. Mulcahy, CEO of Xerox, started her career at Xerox as a copier salesperson. Despite building an excellent reputation by rescuing Xerox from near bankruptcy, Mulcahy eschews fame and publicity. While being known for successfully leading Xerox by example and being willing to fly anywhere to meet a customer, she avoids stock analysts and reporters.
Mandeya is a certified executive leadership coach, corporate education trainer and management consultant and founder of Leadership Institute of Research and Development (LiRD). — email@example.com/ or firstname.lastname@example.org, Facebook: @lirdzim and Mobile/WhatsApp: +263 719 466 925.