Have you ever wondered how communication impacts organizational performance?
Well if you haven’t, you should, because recent studies by Rittenhouse Rankings indicates there is a direct connection. For over 10 years, Rittenhouse has evaluated approximately 100 CEO shareholder letters of Fortune 500 companies. And the research reveals there is a direct correlation between stock performance and communication clarity. For instance:
Companies with CEOs ranked low in candor tend to articulate less coherent strategies and therefore, undermine execution in producing desired results. Given the value-building benefits of authentic and clear CEO communication, boards of directors have a duty to select new candidates that set an example for candor throughout the corporation. Rittenhouse Rankings President, L. J. Rittenhouse
Rittenhouse Rankings Inc. released results of its 2008 survey of CEO Candor (www.RittenhouseRankings.com) and confirmed today that only 16 percent of CEOs offered reasoned and balanced outlook disclosure in their letters to shareholders. In addition, the researchers reported that points deducted for corporate Fog, including jargon, clichés, spin and confusion, increased 17 percent from 2007. The toxic component of this Fog, a measure of highly confusing statements, increased to 80 percent of the total, up from 68 percent in 2007. L.J. Rittenhouse, President of Rittenhouse Rankings, said, “These findings reveal that CEOs are less able or willing to credibly communicate an understanding of their businesses.” Rittenhouse Press Release
Although Rittenhouse’s research is focused on Fortune 500 companies, I believe her findings in general apply to every organization, big and small. For instance I was recently asked to write an article for another web site, I titled it, “Your Toughest Race.” In business, the toughest race too often ties back to communication.Consequently, it should be of little surprise that “communication” is one of the five areas where silent problems reside. And therefore, one of the biggest and most effective means of moving your organization forward as this economy rebounds is to work diligently on making your communication more candid and effective. This means:
- Candid communication is better than communication that has been candied over.
- Be clear, concise and get to the point.
- Avoid generalizations and fog where the communication message can be easilty lost or misunderstood
- Speak in plain English (or whatever language is communicated). Avoid jargon and other words and phrases that diminish the clarity of the message.
Clarity of communication is a leadership and management tool that must be embraced. Each of us understands this, yet I’m constantly challenged by how ineffective communication can become - even from the leader of the pack.
Bottom Line: Communication is the cornerstone of organizational performance and effectiveness. If your organization is a little weak on the performance scale, communication is always a good place to start your undercover work.
