CEOs Are In The Dark When It Comes To Corporate Health

April 21, 2008

• 78% of surveyed CEOs said that financial indicators alone do not adequately capture their company's strengths and weaknesses;
• 57% of surveyed companies are under increasing pressure to measure non-financial indicators, including customer satisfaction, innovation and employees' commitment to the company;
• 87% of CEOs/senior executives described their ability to track financial performance as excellent or good, but only 29% defined their ability to track their non-financial record the same way;
• Respondents ranked (from highest to lowest) the most important non-financial drivers as: increasing risk to reputation, increasing customer influence, increasing global competition, increasing regulatory emphasis on non-financial measures, accelerating innovation, greater scrutiny of non-financial performance by the media, and increasing power of non-government organizations/lobbyists/civic organizations;
• 80% of CEOs said the board and management should share responsibility in terms of monitoring financial results, but monitoring of non-financial indicators should be done by senior management (except in the case of innovation);
• 37% of respondents said that their company's performance is determined more by intangible assets than by hard assets;
• 54% said forward-looking information is of greater value to management and board members than historical information; and,
• 54% of CEOs said that a greater understanding of how to measure non-financial drivers of performance was the trigger most likely to spur their organization to reassess how it measures and monitors performance.