CEOs mostly in dark about their firms

New Delhi: What can be the easiest and best way to know a company inside out? Those saying 'befriending the company's Chief Executive Officer' might be in for a shock as a survey has found that most CEOs are in the dark about the overall health of their companies.

The survey conducted by global consultancy major Deloitte and Economist Intelligence Unit found that complex financial jargon has nothing to do with the ignorance of these high-profile executives, and it is the lack of non-financial information that is leaving them unaware of the companies' overall health.

While 87 per cent of CEOs and senior executives surveyed described their ability to track financial performance as excellent or good, only 29 per cent graded their non-financial knowledge up to the mark.

The survey pointed out a huge gap between the rhetoric and reality with the respondents admitting the need for information on non-financial performance indicators.

In the survey, 78 per cent of the CEOs said that financial indicators alone did not adequately capture their company's strengths and weaknesses.

Commenting on the study, Deloitte CEO William G Parrett said: "The attitudes of CEOs towards understanding the value of non-financial indicators and measuring performance against them are more positive now compared to the last survey in 2004, but executives and boards are not yet prepared to act."

Most of the executives admitted being under increasing pressure to measure the non-financial indicators, but said that the quality of the information they received was still inadequate.

"The survey reveals a critical disconnect between rhetoric and reality in the boardrooms and management circles of some of the worlds leading companies," Parrett said.

For the CEOs, most important non-financial drivers of corporate performance are: increasing risk to reputation, customer influence, global competition, regulatory emphasis on non-financial measures, innovation, scrutiny of non-financial performance measures by the media, NGOs, lobbyists.

The study also found the need of significant changes in corporate governance to overcome obstacles to monitoring non-financial performance.