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We’re often asked why corporations establish executive protection (EP) programs for their CEOs and other employees. The question is fair enough, since corporate executive protection is a relatively new phenomenon for many companies, and by its very nature not something that people outside the boardroom, C-suite or our industry discuss much in public.
The more we think about an answer, the more we’re convinced that the question should be turned on its head. A better question is “Why wouldn’t corporations establish executive protection programs for their CEOs and other C-level employees?”
First, let’s try to understand why more Fortune 500 companies are setting up EP programs – and why every corporation really should at least consider these six reasons to write a proactive EP strategy.
1. You already have an EP strategy: Make it proactive rather than reactive.
It is interesting to note that while few corporations would admit to not having a marketing or HR strategy, many of these same corporations have never thought about formulating a corporate EP strategy.
Whether it’s implicit or explicit, however, every corporation already has an EP strategy. The difference is that smart companies base their strategies on a proactive process of risk analysis and mitigation, corporate culture and personal preferences. Others are more laissez-faire and reactive, employing a wait-and-see strategy that only changes when circumstances demand it.
Proactive protection programs are grounded on risk analysis and mitigation of risk to acceptable levels. First, the full spectrum of threats and vulnerabilities needs to be understood. Then, it’s important to assess the impact of the risks, or losses, that the corporation would suffer should these threats actually breach vulnerabilities. Only then can measures be taken to mitigate risks so those rated as unacceptably high are reduced, and those rated as acceptable are tolerated for a reason.
Good corporate EP programs are also grounded in the company culture and the personal preferences of those to be protected. Because without this grounding, the program never really takes root and becomes effective.
A corporate protection program should ideally be for all employees. After all, duty of care applies to everyone in the corporation, high and low, and the risks of doing one’s job can apply at many levels. As we’ll see below, however, there are a number of reasons why more comprehensive versions of this service are usually reserved for members of the C-suite.
2. EP safeguards shareholder investment in C-level personnel
For some CEO positions, board-mandated EP programs come with the territory. Or should.
The CEO’s prominence is one factor that plays into this, as a highly prominent business leader is more at risk from “persons of interest” precisely due to his or her notoriety. CEOs are often in the news nationally and internationally for one reason or another. They might work in an industry that is in the public spotlight or is controversial, or their personal success and details of their wealth might be the stuff of financial and gossip magazines.
As public figures, many people recognize CEOs and are fascinated by them, how they live, and even by their families. Persons of interest might have a grudge, they might be in love, or they might be looking for a hand-out since their own income is considerably lower than the CEO’s. They could also be potential kidnappers. In any case, risk analyses often show that the potential threats to a highly prominent CEO can be equal to or greater than those of other “celebrities” with whom they would never otherwise compare themselves.
Boards also consider the business and investor impact of an accident occurring to the CEO. As has been amply demonstrated by a number of unfortunate incidents, corporate reputations and share prices can be closely linked to an individual CEO’s wellbeing.
When shareholder value can rise or fall dramatically with the safety of a CEO, it’s natural that boards choose to safeguard their investment in the CEO with protection programs that cost a fraction of the overall compensation package.
3. EP enables higher productivity of the highest paid.
There’s a reason the CEO has a personal assistant, travels by company jet or in business class, and doesn’t have to write up the minutes of every meeting he or she participates in: productivity. The CEO is usually the highest-paid person not only in the room, but in the company.
Executive protection, in addition to keeping people safe, also enables higher productivity by making travel and everyday logistics as smooth as possible.
Secure travel eliminates waiting for cabs and waiting at the car rental counter. Unlike a ride with a chatty driver, it also minimizes interruptions, turns travel time into work time, and lets high-paid execs pack more meetings in more places into less time than most other people can even dream of.
4. EP enables more, safer travel.
We want our clients to say, “you make it easier to travel, so we travel more.” It’s really as simple as that.
The CEO is typically the corporation’s best salesman, evangelist and negotiator all rolled into one. EP takes a lot of the friction and hassle out of traveling so the CEO gets more face time with customers, employees, government officials and other key stakeholders worldwide.
5. Duty of care
According to law.com, duty of care is defined as follows:
A requirement that a person act toward others and the public with the watchfulness, attention, caution and prudence that a reasonable person in the circumstances would use. If a person’s actions do not meet this standard of care, then the acts are considered negligent, and any damages resulting may be claimed in a lawsuit for negligence.”
To paraphrase concerning corporate EP:
Given the circumstances (risk analyses, prominence, threat levels, etc.) of their CEOs and other employees, many boards find it prudent and reasonable to meet a certain standard of care (EP in certain situations; comparisons to other similar corporations) in order to do the right thing and not be considered negligent.
6. EP can provide a competitive advantage.
Everything else being equal, if one corporation’s C-level executives are more productive and safer than another’s, that’s a competitive boost.
What board wouldn’t want its CEO to be safer, more productive, and maybe even happier because he or she can enjoy the benefits of a well-conceived executive protection strategy.
