CEOs Are In The Dark When It Comes To Corporate Health

There's some unsettling news on the corporate front when it comes to CEOs' knowledge of the inner workings of their own organizations. According to a Deloitte Touche Tohmatsu survey, "In the Dark: What many boards and executives still don't know about the health of their businesses," revealed "a critical disconnect between rhetoric and reality in the boardrooms and management circles of some of the world's leading companies" (so said Deloitte CEO William Parrett). The survey, which was developed in conjunction with the Economist Intelligence Unit, revealed that:
  • 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.
Each of these points offers communications executives ample opportunity to bring value to their CEOs, especially in the realm of measurement. PR News has covered the growing industry of measuring intangibles, as it is a key way for communications executives to leverage the impact they bring to bottom-line business results.
Communications professionals can (and should) have their hands in the most important non-financial drivers cited by survey respondents, too. After all, who manages reputation (and reputational fallouts) better than a communications team?
Having a more prominent role in conveying these messages to the C-suite, and educating senior executives on the answers PR has to offer, is just a matter of sitting down at the table with tangible solutions. The first step, though, will always be to make sure the communications team is well-versed in technological developments, regulatory changes and the company's financial status before ever entering the room.

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