By: Sharda Prashad, Toronto Star

May 29, 2005, The Toronto Star

Getting caught on camera moving boxes out of the back door of Hollinger Inc.'s Toronto St. office probably wasn't the best thing for Conrad Black's image.

Hollinger and one of its shareholders are asking an Ontario court to find Black in contempt for allegedly violating an order that no one remove anything from the offices without permission.

The boxes have been returned and Black's lawyer says they contained only personal effects.

But it wouldn't have mattered whether the boxes contained Black's toy soldiers, as one editorial cartoonist put it this week. From an image standpoint, there's a certain something about those pictures.

"Reputation is all about the beliefs others have about you," says Daniel Diermeier, management professor at the Kellogg School of Management at Northwestern University. "It's not about whether you're right, but it's about what is believed and understood about you."

From Martha Stewart's prison term to the controversy swirling now around American International Group Inc. in the United States, executives are in the spotlight like never before. And if your reputation's at stake - or that of your company - you've got to act quickly, public relations experts say.

Boyd Neil, senior vice-president of public relations firm Hill & Knowlton Canada, says any executive should think about the impact of a given action on their reputation. He calls it the newspaper test.

"If you're doing something and you don't want it to appear on the front (of a newspaper), don't do it."

Wayne Hartrick, chief executive of Vancouver-based Reputations Corp., says an executive caught up in a controversy needs to address the issue as soon as possible.

"You don't want to let others speak and speculate for you," he says.

The public forms an opinion or initial perception about a situation within 24 to 48 hours of its occurrence, says Diermeier.

"Attorneys tell their clients not to say anything because it may compromise their legal position," he says.

"But a negative opinion will be formed even if the (executives) say 'no comment.' The public will think the (executives) don't care and will form their own opinions."

Executives should respond with a message that is designed to increase trust, Diermeier says.

It should be honest, transparent and be delivered with an air of competence, he says. If people were hurt by the incident, the executive needs to commiserate and provide assurance that a repeat situation will not occur.

You don't want to show you don't care, (that) you don't know what you're talking about or there's something you're trying to hide," says Diermeier.

And sometimes, executives may have done nothing wrong, but they still need to respond if a situation appears compromising to their stakeholders.

When Daimler-Benz AG introduced the A-Class car to its European customers in 1997, both the reputations of the executives in charge of the project and the company were questioned, Diermeier says.

To Swedish journalists conducted an unofficial road test of the A-Class by trying to avoid moose that might cross the road. In the "moose test" the A-Class flipped over. The public wanted to know why a car, advertised four years in advance of its launch, was unsafe. The public questioned the competence of those in charge.

Initially, the head of Mercedes-Benz passenger cars responded poorly, Diermeier says. The executive doubted the validity of the moose test. Potential customers wanted to know why the car flipped over and whether it was safe and they didn't get answers.

What resulted was increased negative media attention about the car and the executives involved with the project.

But two weeks later, Daimler's CEO took actions that Diermeier says were exemplary. A global recall was declared, at a cost $150 million (U.S.).

The cars were retrofitted with an electronic stability program and re-launched in February 1998.

Tennis star Boris Becker was used in the relaunch campaign. The slogan was "Strong is the one who does not make (a) mistake. Stronger is the one who learns from his mistakes."

Diermeier says the executives and Mercedes were able to maintain their reputation despite a precarious situation because they recognized the issue. It wasn't about whether the A-Class could pass a moose test or not, but the customer's belief that safety should be the number one concern of the car company and those leading it.

Diermeier concedes it's considerably easier for a company to redeem its reputation than an executive.

"Once (reputation) is damaged in a sector, individuals have less means than a company to re-build their reputation," Diermeier explains.

"Companies can throw out their management team and start over."

Individuals aren't as lucky, but that doesn't mean they can't try to salvage their reputations. Martha Stewart has been promoted as a type of comeback kid since she was released from jail earlier this year.

With a reality show set to debut in September, Stewart has made inroads in rebuilding her reputation, Diermeier says, partly because she has used her website to explain her side of the story.

The positive press should not be underrated, because she was convicted of lying to the U.S. Securities and Exchange Commission, reminds Neil.

It's still not clear what long-term impact Stewart's indiscretion will have on her reputation.

But rather than dealing with the aftermath of a reputation- damaging situation, experts agree executives should be proactive about developing and maintaining their reputation.

Because executives face more scrutiny than non-executives, Hartrick says, they should consider what type of reputation they need to be successful.

"The desired reputation should be boiled down into three or four key words, because in a busy world you can't expect anybody to have more than a few thoughts about you," says Hartrick.

Executives have to understand where their reputation is now and where they want it to be and develop a plan for filling the gap.

The reputation strategy shouldn't be a secret, Hartrick says.

The executive should share this information with the board and the executive management team.

"I need to make sure they understand where I'm trying to go with my executive reputation and how they can support me," says Hartrick.