These latest results in the annual CEO Candor benchmark survey of 100 Fortune 500 companies by Rittenhouse Rankings Inc. reveal that CEOs are increasingly less able or willing to articulate a clear understanding of their businesses.
President, L. J. Rittenhouse (see p. 2, #34 for bio sketch) said, “Not only is the overall measure of CEO candor declining, but the quality of candor is deteriorating. Since clear communication is essential for effective and ethical behavior, this growth in dangerous fog is particularly disturbing.”
Candor sank to a new low with the measure of unclear statements or “fog” increasing by 21 percent over 2006 and up 85 percent from five years ago.
The survey shows that confusing and misleading statements or “dangerous fog,” increased 66 percent up from 39 percent five years ago.
In contrast, statements that require simple clarification or add useless clutter, or “benign fog,” declined to 34 percent, down from 61 percent.
Dangerous fog in the 2007 survey included 1,500 points for Orwellian language up from
only 190 points a year ago.
“Orwellian language,” explained Rittenhouse, “is named for author George Orwell, who championed straight talk and exposed “doublethink” a concept updated by Stephen Colbert as “truthiness” – using words to describe ‘the truth we want to exist,’ rather than facts.”
In the 2007 survey, 70 percent of the companies had examples of Orwellian language up from only 17 percent in the 2006 survey.
The Rittenhouse RankingsTM ethics based model demonstrates the correlation between candid clear CEO communication and superior financial performance. It challenges traditional investment paradigms by showing that the quality of the leadership and the cohesiveness of the underlying corporate culture and values determine the reliability of financial accounting.
Her model systematically analyses the presence of facts and opinions, that yield candour (more for its absence), gleaned from CEOs’ shareholder letters.
The most important corporate value in the model is Stewardship, central to the The Rittenhouse ModelSM of a Stewardship-Based Business which shows the importance of balance in creating a sustainable businesses
Warren Buffett, CEO of Berkshire Hathaway calls stewardship the financial golden rule: to treat investors as you would want to be treated.
I wonder if anyone offers a school learning candor index for public review? Various academic progress reports approximate it. How would school superintendent, principle, and other school newsletters and reports score on a school learning candor index? How much fog, truthiness, etc.?
Hmm. Let me know if anyone knows of one or is interested in building and applying a stewardship model index and reports to school learning? Seems interesting to me. Seems like a natural software program for a Tablet PC or other Ink (mobile) PC
L.J. RITTENHOUSE has advised CEOs as an investment banker and investor relations consultant for over 20 years. She publishes yearly the Rittenhouse RankingsTM which demonstrates the correlation between candid clear CEO communication and superior financial performance. She is the author of Do Business with People You Can Tru$t.