South-Western - Management  
When CEOs are Entangled in Their Own Web of Words
Topic Communication
Key Words CEOs, Regulation FD
News Story

With the current corporate climate of executive distrust, CEOs are being held more accountable than ever for their actions and words. In particular, quarterly calls to investors are expected to convey a clear and articulate vision of the company’s future.

In response to this pressure, as well as Regulation FD (the securities rule that obligates a CEO to make public all material information), the quarterly investor calls have become as scripted as a political speech. CEOs consult with advisers before speaking with the public, and many employ professional consultants to both define and streamline their message.

One consultant says a CEO should be able to state his or her plan in a few succinct sentences. CEOs tend to think investor calls are essentially a test of their knowledge. However, investors need more than statements of fact; they need a business leader with proficient communication skills.

The words of a CEO can have a significant impact on the company beyond conveying a vision. If a CEO hedges his or her words or implies too much information, the stock of the company can rise or fall depending on the inference of listeners. The article uses CEO Raymond A. Mason as an example. Mason was asked about the possible savings stockholders would obtain from a recent acquisition. His response included phrases such as, “God knows, I would hope that’s true,” and “You can’t put a lot of faith in what I’m going to say.” Not surprisingly, the stock quickly sold off.

As businesspeople, CEOs are not trained as professional speakers, and they tend to focus on immediate results conveyed in business jargon instead of communicating a long-term vision. However, since technology has enabled messages to transmit instantaneously, high-ranking executives need to realize their every word will be examined and analyzed for public scrutiny.

The article mentions techniques for improvements, such as creating shorter, more focused opening statements; preparing potential questions; and conducting a comprehensive practice session before the actual investor call. Consultants also say it’s important to be straightforward during questions and answers, and maintain a lucid style when speaking.


As a CEO, what communication skills are effective in delivering a credible vision for your company?


The article mentions the investor call (or web cast) that executives make to stakeholders. What specific information is provided in this communication?

Source “When CEOs are Entangled in Their Own Web of Words,” The New York Times Online. Nov. 9, 2005.
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