Most companies benefit when a strong and reliable face can represent their business. In most cases, this is a good thing. However, at other times the face of the company can come under scrutiny that negatively positions the organization in the eyes of the public.
These issues can be amplified when the company face is one of the founders or the sole founder of the company. Since the founder of the company is often tied to the history of the company, potential problems can arise depending on the actions of the said founder.
Following are some of the problems that can arise when an organization’s founder is the face of the company.
Three Issues with Founders Being the Face of an Organization
When the founder is the face of a company, it generally means that the company came about with the founder’s name as the cornerstone. Some examples of such companies would be the Musk Foundation and Papa John’s pizza chain. This does not mean that it is inherently bad to have a founder as the face of a company.
These companies were built in part on the name, history, and charisma of their founders. As such, their names and individual actions are intrinsically tied to the success and failures of the company.
1. Founders Can Cause a Marketing Headache
Having a personable face when dealing with a small company can be useful. For small businesses, having the business tied to a name can help with repeat business because of a more personal relationship. But, if the company gets too large, there can be roadblocks and growing pains that impact this relationship.
One of the biggest issues is when the founder decides to resign or is forced out of the company they helped start. This may go unnoticed for other companies that are managed as a group and headed as such. For instance, if Google were to lay off their CEO, it may be a decent blow to the company, but it wouldn’t put the company in danger because there is no single representative.
For companies that use their founder as a figurehead, there can be significant harm when the founder resigns or is forcibly removed. This is because the public perceives that the person running the show is gone, and the company will be less effective as a result.
Stakeholders wonder how the company can stay afloat without their founder. Even though this isn’t usually true, and almost all large-scale companies have large teams of advisors, management, and other such groups, some don’t see anything except the founder.
In turn, this can hurt the marketing value. People that see a founder step down when they were the face of the company will be less willing to invest in new ideas set forth. They may see it as too much of a risk because they know relatively little about the other members of the teams in the company. It can take substantial time to regain the advertising strength a company had after a founder leaves.
2. Things Get Personal
Statements and actions of a company’s founder reflect on the entire company. Because the market value of the company is reliant on the company front man, the founder is put under a microscope. A simple remark at a holiday party or an exposé of a high school prank could cause significant damage to the company’s financial health.
For instance, Papa John’s recently went through a huge controversy involving the company’s founder and figurehead, John Schnatter. A racially charged remark from Schnatter during a May 2018 media-training conference was leaked to the press.
Although this by no means reflects on the entire company, because of his actions and how Schnatter’s name is at the forefront of the Papa John’s, the entire company experienced a negative impact from the media, and in their stock value. The company was quick to quell this disturbance by publicly rebuking Schnatter’s actions.
Similarly, Tesla share prices took a hit when Elon Musk reportedly smoked marijuana with Joe Rogan during a podcast interview. Musk also had his Twitter privileges taken away and received a $20 million fine and other sanctions from the SEC over a tweet that impacted the market-value of the company’s stock shares.
Because Musk is the sole face of the company, any of his actions can reflect onto his company. These can be personal actions and statements, or company moves that aren’t entirely under his control.
3. The Founder May Not Be the Best for the Job
From production lines to business management or advertising, a company front man will generally be seen as someone that influences all operations. However, sometimes a founder might not be the right person for the job.
According to the team at Emyth, a founder usually has three business personalities. These are the:
In many cases, founders are stronger entrepreneurs and technicians than managers. Having a great idea and having advanced knowledge of a company’s product or service doesn’t always position a founder to lead a team. Allowing them to do so can lead to mismanagement and low company morale that holds the organization back.
MARION is an Austin and Houston marketing agency that can help you create a holistic strategy that won’t leave your company vulnerable. We offer company branding services that can steadily improve the return on your marketing investment.
Contact our team today for a consultation that will identify how we can help your business grow!