Power_ Why Some People Have Itand Others Don't - Jeffrey Pfeffer [64]
Social ties and how you present yourself through language and demeanor are components of creating a reputation and an image. We will examine other aspects of creating a reputation, an important source of power, in the next chapter.
8
Building a Reputation: Perception Is Reality
TWO HIGHLY SUCCESSFUL, almost iconic American football coaches, who coached about the same number of games: one had an overall winning percentage of 76 percent; the other, 61 percent. Both won National Football League titles. One quit coaching while still in his early forties before the team’s owner could fire him, while the other never left a coaching position, in either the professional or college ranks, involuntarily or under pressure. The coach who left, John Madden, had the higher winning percentage. The coach who was never forced out of any job, Bill Walsh, was nicknamed “The Genius.” Few people or organizations are going to fire a “genius” and be known for doing so. The lesson? Accomplishment matters, but so, too, does your reputation. Therefore, one important strategy for not only creating a successful path to power but also maintaining your position once you have achieved it is to build your image and your reputation.1
Reputations matter, not just in professional football, but in all domains, including business. In an experimental study of the performance appraisals people received, those who were able to create a favorable impression received higher ratings than did people who actually performed better but did not do as good a job in managing the impressions they made on others.2 Or take senior corporate leaders. In a world where outside CEO successions are increasingly common and boards of directors seek people who will be well received on Wall Street and by the business media, being perceived as a superstar can change the negotiating dynamic. Instead of competing for a job and selling yourself to the board and senior executives, if you have a stellar reputation, companies will be fighting to hire you. If you have a reputation that can move the stock price up by the very announcement of your hiring, companies will pay outrageous sums of money in their quest to obtain a “corporate savior.”3 The companies will do this even though the evidence shows that these outside hires frequently fail and even if your reputation for executive brilliance is more myth than reality.
Sometimes reputation adheres to individuals, but sometimes individuals get a good reputation by their association with high-status institutions. General Electric is considered to be a great training ground for senior leaders. Consequently, senior executives can leave General Electric for CEO jobs at other firms with big salaries and enormous financial market expectations. Harvard Business School professor Boris Groysberg and some colleagues studied 20 former GE executives who left the company for the top job at another firm between 1989 and 2001. In 17 of the 20 cases, the stock market’s reaction to the hiring announcement was positive, with an average gain of $1.1 billion in market capitalization for the hiring firm on the day the move was announced. In some instances, the gains from the hiring announcement were enormous—when Home Depot hired Robert Nardelli, shareholder value jumped almost $10 billion.4 Groysberg’s research shows that leaders are not particularly portable and this outside hiring often does not work. But for the leader with the great reputation, no problem—when Nardelli left Home Depot under duress, he departed with a total package valued at a quarter of a billion dollars. His reputation apparently still intact, Nardelli moved on to run Chrysler even though he had no auto industry experience. Chrysler subsequently went into bankruptcy.
The fundamental principles for building the sort of reputation that will get you a high-power position are straightforward: make a good impression early, carefully delineate the elements of the image you want to create,