Great article in the January edition of Industry Week, “Why Candor is Good Business,” by Steve Minter.
Steve references Laura Rittenhouse’s CEO Candor Survey, an annual ranking of candor in the letters to shareholders of CEOs from 100 Fortune 500 companies.
Following are six reasons every CEO should speak with candor and transparency:
- CEO’s who discuss their companies’ operations, triumphs and challenges in an open and honest manner provide a financial benefit to their shareholders.
- The share prices of companies in the top quartile of CEO candor outperform companies in the bottom quartile by 31%.
- Comprehensive reporting by a CEO is an indication that a company is going to be reliable in reporting its financial results.
- In a culture where candor and transparency is valued and expected, business decisions are more likely to be prudent, conservative and reliable.
- Companies that demonstrate candor are likely to execute their strategy better. There is less fear in the culture and employees are more likely to be empowered. We know from previous posts that empowered employees are more productive. They spend less time second-guessing others, being second-guessed and more time solving problems.
- Reliable numbers are indicative of a disciplined corporate culture that executes on its plans and is thus likely to achieve better financial results. Or, as I like to say, “do what you say you’ll do when you say you’ll do it.”
These findings also harken back to the premise of The Integrity Chain where integrity begets trust, trust begets repeat business and repeat business begets greater profitability.
Do you have examples of CEOs that do a good job of speaking with candor and transparency?