When running a company, there are many different things that need to be done in order to be successful. One of the most vital of these is managing the general opinion of your company. When potential customers and investors see your company, one of the biggest impacts on decisions they make is your company’s reputation. As the CEO, you are often the face of the company, so many opinions about you and your company are one and the same. In fact, a study done by Weber Shandwick estimates that 44% of a company’s total market value is attributed to the CEO’s reputation alone.

Tesla, Inc is a clear example of a large company in which, for better or for worse, has been massively effected. Run by the multibillionaire behind PayPal, Elon Musk, Tesla has had its fair share of controversy and is no stranger to criticism.

On the 7th of September 2018, Elon Musk appeared on the “Joe Rogan Experience”, an extremely popular podcast frequently watched by millions of people around the world. Over its roughly 3-hour runtime, Musk drunk alcohol and smoked marijuana, whilst discussing a variety of different topics. This caused increasing concerns about Musk’s recreational drug usage, which led to share prices falling over 6% by the end of the day, and 2 major executives resigning. One of those executives being Chief Accounting Officer Dave Morton, who had only been working at Tesla for a month and believed that the level of public attention on the company was more than he was willing to take, stating “Since I joined Tesla on August 6th, the level of public attention placed on the company, as well as the pace within the company, have exceeded my expectations”.

This was not the first time that Musk’s actions had caused major problems for Tesla as barely a month earlier, Elon Musk had announced via twitter his plans to take Tesla private, meaning that Tesla’s shares would no longer be exchanged on NASDAQ, an open stock market. In his tweet, he said: “Am considering taking tesla private at $420. Funding secured.” When a company goes private, they will try to rebuy as many shares as possible, often at more than the share’s original value. Because of this, many people will try to buy as many shares as they can afford, in an attempt to make a large profit. Due to this tweet being posted in the middle of the day, the value of Tesla’s shares skyrocketed 14% up to $387 a share, before the trading of Tesla stocks was halted temporarily in order for information to be verified. Typically, announcing that a company is going private, especially one as high profile as Tesla, is a long process where everything is confirmed before any announcements are made.

Not long after, it was found out that while Elon himself though it was a good idea to take Tesla private, many of his shareholders and top executives did not agree. On top of this, funding was far from secured, which led to the Securities and Exchange Commission, or SEC filing a lawsuit against Elon and Tesla, stating that he made “false and misleading statements” in his tweet. The announcement of this lawsuit led to an 11% drop in share price, which had already been falling since the rush to buy shares had died down. In the end, a settlement was made between the SEC and Tesla. Both Tesla and Elon Musk himself would pay a $20 million fine, and Musk would step down as chairman for at least the next 3 years, although he was still allowed to stay as CEO.

So why be socially active then, if every mistake such as these can have such damaging effects and how is Tesla still doing so well?

A large part of this is due to his charismatic nature allowing many of his mistakes and poorly thought-out ideas to be easily overlooked by many as simply eccentricities, meaning that although they have a large effect in the short term, his reputation can recover in the long term. Combining this with how synonymous he has become with his company; it is clear how Tesla manages to maintain prominence despite the controversies it has gone through, showing how powerful a tool the popular opinion of a CEO can be, if utilized effectively.

However, if you don’t fancy the life of a celebrity, there are still other options for you and your company. Take Walmart for example, despite its first foray into branching out into Europe in 1997 failing miserably, it is still a globally known company. Bringing in $524 Billion in 2020, Walmart is once again at the top of the Fortune 500. However, if someone asked you to name their CEO, would you be able to answer?

Since its founding in 1962, Walmart has grown from a small, family-owned store to one of the largest and most competitive retailers in the world. However, Walmart has struggled to maintain a positive reputation for a long time. One of the biggest changes made to the company since its current CEO, Doug McMillon’s promotion back in 2014 was its changes in gun policies, mainly stopping the sale of assault rifles in 2015 and then stopping the sale of handguns, handgun ammo and assault rifle ammunition in 2018. Before these, Walmart contributed to roughly 20% of the total firearm sales in the US, compared to the roughly 7% now.

Part of the reason this was done was due to public outcry after multiple major mass shootings in the US, some of which occurring in Walmart stores themselves. The general reaction to these changes taking place was positive, even though some people believe that it encroached on their second amendment rights.

Thanks to changes like these Walmart has managed to successfully improve their reputation greatly, although it requires lots of careful planning and investment.

Taking a less socially active role as a CEO can have major benefits, including reducing the chances of you making a badly thought-out decision that could end up harming your company’s reputation, and in addition, your position can one day be filled by someone new, without drastically affecting the public’s perception, which is vital for long term success. Doing this is not without its downsides though, one of which being that the general public are much less inclined to forgive the company when large mistakes are made, as opposed to mistakes made by an individual. This is partially because any decisions or announcements are expected to be rigorously checked for any errors or problems that could be caused. This could lead to the reputation of the company being tarnished permanently, reducing possible growth severely. Whether or not you choose to stay mostly behind the scenes, or to be the public face of your company, it is always important to keep in mind that public opinion can bring your brand to new levels, or drive it into bankruptcy.