Capabilities
Governance
The need for high-impact information on non-financial performance aspects of business is a well documented, yet largely unresolved concern. For example, Deloitte & Touche (in conjunction with the Economist Intelligence Unit) conducted a series of surveys of CEOs and Directors to understand their satisfaction with the decision-making information they receive. The title of the resulting report describes their conclusions aptly: In the Dark. The 2005 report first documented that CEOs and Directors had deep concerns about their lack of understanding of the strengths & weaknesses of their enterprises due to the absence of non-financial information. The 2007 report found little had changed.
The Deloitte survey underscores that too many senior executives and Directors remain in the dark about the overall health of their organization but not due to inadequate financial information. Rather, seventy-eight percent of those surveyed say that financial indicators alone do not and cannot adequately capture their company’s strengths and weaknesses. They need non-financial performance information, but their ability to receive and use such metrics is inadequate.
Further, “Directors are increasingly willing to take firm management action to mitigate the downside risks of strategic change” (Drew 2006). Directors need to have access to diagnostic and assessment tools that can determine both the ethical risks inherent in the culture as well as whether the management team has the ability to achieve the stated strategic objectives.
