CEOs in the dark about overall health of their companies : Deloitte survey

03 April 2007

Mumbai: Many board members and senior executives are still in the dark about the overall health of their organisations because they lack high-quality non-financial information.

According to the second edition of the Deloitte Touche Tohmatsu survey, In the Dark: What many boards and executives still don't know about the health of their businesses, developed in conjunction with the Economist Intelligence Unit and released today, 78 per cent of the CEOs surveyed say that financial indicators alone do not adequately capture their company's strengths and weaknesses.

Those surveyed admit that they need information on non-financial performance indicators, but the ability of executives to monitor their performance against them remains inadequate.

"The survey reveals a critical disconnect between rhetoric and reality in the boardrooms and management circles of some of the world's leading companies," said Deloitte CEO, William G. Parrett. "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 (2004), but it seems executives and boards are not yet prepared to take the next step and act.

"The majority of companies said they are under increasing pressure to measure these indicators, but the quality of non-financial performance information they receive is inadequate to meet their needs," he said.

The results of the second survey indicate that 57 per cent of the companies surveyed are under increasing pressure to measure non-financial indicators, and that a growing number of companies are indeed creating significant value for their organizations by understanding their underlying performance drivers through the use of non-financial measurements.