At least you can count on one thing if you're the post-Kozlowski CEO of Tyco or the post-Galvin head of Motorola or the post-meltdown chief of a financial services giant these days: You've got a big opportunity to improve things. But there's no guarantee that you will, because restoring the reputation of a badly tarnished company requires decisiveness, determination--and putting your own career and reputation on the line.
Once your fallen predecessor is gone and the crisis PR managers have departed, as CEO of a damaged vessel, the board is expecting you to lead the corporation (on a successful new course), and to do it quickly and confidently. Time is of the essence, but so are sure steps. The goal is nothing less than for you to right the ship, change its course and return it to full-speed ahead.
Slideshows:
12 steps to rebuilding your corporate reputation
World's most reputable companies
Every move you make will be examined with a microscope. For every change you institute, the stakes will be high because of the pre-existing fragility of employee morale, customer relations, brand image and investor confidence. And as difficult as things might get, leadership in a turnaround situation is something you can't delegate.
Look before you leap
Before you even commit to taking the job, you must take the time and patience to understand what you're getting yourself into. Whether you're being asked to come on board as the CEO or a division president or a functional head to fix the reputation of an operation, don't simply rush in, mistakenly believing that there is nowhere to go but up. This is an error that too many executives make.
Ensure that you understand the expectations of the board, or your other potential superiors. The value of multiple insights in a restoration initiative can't be overstated. Are directors or your bosses really going to give you free rein to operate? Or are there certain things they aren't going to allow you to address? You must insist on honest discussions about your mandate, parameters, expected timing, what kind of flexibility you have--and what you're supposed to do about the sacred cows. Before you sign on, gaining this alignment with your bosses is critical if you're to enjoy success.
Set the tone
Once you've sized up the situation and decided to move forward, the next order of business is to communicate. Interested and invested constituents ranging from employees to customers to investors will want to hear from the new person in charge. They won't expect a plan on day one, but they will be immediately curious about you and your approach, hoping to glean some sense of future direction. Set the tone at the top for ethics, behavior, sense of urgency, culture and commitment, and be clear about the mission at hand.
In pictures:
Highest-performing global companies
Five top corporate kool-aids
In your initial dialogues with all these eager parties, it's important for you not to overcommit to anything in particular. They'll expect you to go through a period of discovery and investigation and, honestly, would be disappointed if you came in as someone who already possesses all the answers.
At the same time, it is crucial that you articulate what you can tell everyone from the start: that your mission is to investigate and understand, and then to resolve, whatever festering problems remain--and then restore or bring the company to the next level of greatness. As part of setting the tone, you have every right to expect the full engagement of your leadership team and their willingness to embrace the necessary changes.
Your approach should be values-based--simply put, that you will do the right thing. This means that values will be the rudder in everything that you and the company do going forward. Everyone concerned will be looking to these communications for the authenticity of your message and to be persuaded that you are committed to do the right thing, and to act with dispatch. Certainly, your subsequent actions will speak louder than these words, but it is important to begin with this message.
Get to the bottom of things
While the first two steps will buy you some time initially, it is important to move quickly to the third step: getting to the bottom of the issues. Don't stop until you've exhausted every means of doing so and answered every one of your own questions.
Do your homework. Perform a root-cause analysis of the underlying problem. This is easy if the source of the pain was, say, only a lousy sense of ethics by your predecessor. But sometimes, corporate reputations are tattered by long-term drift, such as IBM before Lou Gerstner took over; or by poor decisions by a group of overzealous operators, such as at Citicorp and Countrywide; or by a few bad apples who indulge in bribery or stock-option backdating. So you must adopt a hands-on approach, performing a penetrating dive into the business and its challenges.
Slideshows:
Outperforming CEOs
Australia's 40 largest companies
Arranging one-on-ones with each of your key leaders is a must. Then go even deeper, and meet with some of the troops in what are often known as 'skip-level' sessions. New leaders must drill down and listen to what people have to say. You will be encouraged by the passion employees have to do their part in making things better.
In most negative situations like the one you're trying to reverse, you've got about 90 days to finish this phase.
If you're the new CEO, glean all you can from board members--and keep them posted as well. Directors don't like surprises, especially if the reason you're there in the first place is because they were dealt unpleasant ones by your predecessor. Don't hide in your office, mustering a grand plan for several weeks, and then pronounce it to them. Make your discovery phase an iterative one, including conversations with directors along the way. They can be very helpful.
At the same time, you'll quickly have to figure out whom you can trust to serve as a sounding board for you, both inside and outside the company. Often, of course, this will include some of the directors or superior executives who commissioned you for the job. But it's also good for you to develop your own kitchen cabinet of confidants within the company who can help you connect the dots. They will play an important role in helping you execute your plan and give you progress reports.
Start calling the shots
Only once you've completed these three steps can you really get to the point of your presence: implementing an action plan to restore the company's reputation and move beyond the problems. Be prepared to make many difficult decisions. Remember: You have been brought in to direct change, and that is one of the most difficult responsibilities.
Your challenge now is to lead the organization, setting new core values by which to behave, enabling the organization to learn from past mistakes, correcting bad practices and habits, establishing clear objectives, communicating them and ensuring alignment with the new order throughout the company. Decide what must remain the same, but have the courage to deliver change.
With a sensible script in hand, carry it out decisively. Deal with the people who were part of the problem--erring on the side of conservatism in removing those associated with the problems. You don't have to clean house, but you must set a very high bar for whom you keep, sticking to the values you set for yourself and others both in how you treat people--and in your determination to right the ship. Promote from within, but go outside if necessary: Either way, you will be sending a strong message regarding your expectations and standards.
It's also crucial that you establish and share your follow-up plan broadly in the organization. Gaining buy-in requires transparency. Implement tools and metrics to monitor and control the new processes and expectations. Demand accountability from those who are on your team. Make sure your people are performing their new roles without rubber-stamping them--be actively engaged as the plan unfolds, and the turnaround takes shape. Remain hands-on, visible and accessible.
Be deliberate in sharing your progress
Ensure that there is ongoing two-way communications within the organization. And stay in front of your employees to let them know about the progress that is underway. Share setbacks as well as successes.
Visit as many customers and suppliers as you can, sharing as candidly as possible with them your findings about what caused the problems in the first place and exactly how you're going about fixing the reality and the reputation of the company. Demonstrate authenticity and energy around the new corporate values while sharing your plan and progress. Be ready to provide meaningful examples of change as you're implementing them. If you do that, overall corporate perceptions will fix themselves.
At the same time, if you're the new CEO of a publicly held company, deal with outsiders such as the press and Wall Street analysts in a straightforward manner. If you take the right actions internally to correct the problems and serve customers, while valuing employees, outside recognition will come in time.
Focus on business results
There is no one-size-fits-all when it comes to restoring corporate reputation in the wake of a crisis at the top. The best leaders make complicated plans simple and help people focus on executing them. Remember to operate from an unassailable set of corporate values and a clear mission. Then follow your plan and make sure that its success is reflected first and foremost in your company's new results.
In conclusion: It's so important to do this process well. Reputation is at once the most valuable and yet the most intangible asset that your corporation has. Over time, great reputations in business are the inevitable result of sustainable and predictable performance, transparency of operations, ongoing innovation, execution and global citizenship--all of which requires a committed team.
Dennis Zeleny is a regular contributor to Forbes.com and a veteran HR consultant. He has headed human resources for some of the world's largest companies, including Honeywell and DuPont, and most recently served as executive vice president of administration and services for Caremark Rx, until its merger with CVS.