Firms struggle to deliver shareholder promises

by 19 Mar 2009

CEOs in the UK are failing to engage their most senior leaders behind the promises they make to shareholders.

Recent research has revealed how FTSE CEOs are struggling to communicate their strategies to their top executives, and failing to put in place the structures and incentives to enable them to deliver their firms’ strategic goals.

As a result, their most senior business leaders lack a clear understanding of the objectives they are being set, have little faith in the promises their CEOs make to the market, and doubt their firms’ ability to deliver them.

The research, which was conducted by Hay Group, found that 88 per cent of the most senior executives do not believe their company will fully achieve its strategic objectives.

Close to half (46 per cent) fear their company will not deliver on their CEO’s commitments to the stock market. As many as a third (32 per cent) lack a clear enough understanding of the CEO’s strategy to implement it.

“As the economic tide goes out, companies are under intense pressure to live up to their promises to shareholders,” said Russell Hobby, associate director at Hay Group, which conducted the research among 100 of the most senior managers below board level among FTSE 350 companies.

“To achieve this, CEOs must rely on their most senior managers to turn their strategies into reality. Yet FTSE CEOs are struggling to effectively communicate the thinking behind their strategic vision, provide the right structures to enable it and shape the right incentives to reinforce it.”

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