CEOs in the dark

A story yesterday on the Globe & Mail website underscores one more reason why small businesses can be more efficient and creative than big businesses: Because their key leaders are so much more in touch with the business and its customers.

The Globe’s Tavia Grant reported a global survey by Deloitte Touche that found CEOs are out of touch with the health of their companies because they lack detailed information about the non-financial side of their business.

Eight out of 10 executives complained that financial indicators alone do not fully capture their company's strengths and weaknesses – in part because they reflect only past performance. But the CEOs admit that their ability to monitor non-financial indicators, such as employee commitment, competitive performance and reputation risk, is “inadequate.”

Deloitte CEO William Parrett states that the survey, entitled "In the Dark II", reveals "a critical disconnect between rhetoric and reality in the boardrooms and management circles of some of the world's leading companies.”

Which won’t surprise too many people – customers or employees – who work regularly with big corporations. (It shouldn't surprise Deloitte, either, since they found much the same thing in a similar survey three years ago.)

With 57% of the companies surveyed saying they feel under increasing pressure to measure non-financial indicators, Parrett says the use of non-financial indicators will improve.

“This will help them identify their edge over their competitors, improve performance, and ultimately contribute to an improved bottom line. It is a matter of understanding that a more balanced mix of financial and non-financial objectives can improve performance and even financial results.”

It’s nobody’s fault that big companies are so out of touch – managing big organizations with multiple agendas is hard. Which is why small-business owners should look at surveys such as this as more confirmation that they can succeed and win – because nobody knows their market and their mission like an entrepreneur.

For more information on the survey, or to download the study, click here.