Friends,
Lesson 4 : Be transparant with investors
Our policy is: “If in doubt, communicate.” We always want to conduct our business with integrity and forthrightness.—Ron Sugar, chairman and CEO of Northrop Grumman
Most CEOs we interviewed have noticed that the amount of time they spend communicating with investors has risen exponentially of late. Here too they strive to be as open as possible. “If I’ve learned anything in the last 18 months, it’s that transparency in troubled times really matters,” says Travelers’ Jay Fishman.
Yet he believes the crisis has revealed that transparency still goes against the grain for many people. “If asked to describe this or that exposure, the advice from many IR departments is to use some formulation that basically says don’t worry. I’ve tried to resist that. Now is not the time to tell people not to worry. If you’re in the financial-services industry, you ought to be able to quantify. I try to be specific, and we’ve gained credibility as a result.” Pepsi’s Foss too recommends transparency with investors: “we’re facing up to our issues” and in this way “demonstrating that we have a management team that knows what it’s doing.”
Lesson 4 : Be transparant with investors
Our policy is: “If in doubt, communicate.” We always want to conduct our business with integrity and forthrightness.—Ron Sugar, chairman and CEO of Northrop Grumman
Most CEOs we interviewed have noticed that the amount of time they spend communicating with investors has risen exponentially of late. Here too they strive to be as open as possible. “If I’ve learned anything in the last 18 months, it’s that transparency in troubled times really matters,” says Travelers’ Jay Fishman.
Yet he believes the crisis has revealed that transparency still goes against the grain for many people. “If asked to describe this or that exposure, the advice from many IR departments is to use some formulation that basically says don’t worry. I’ve tried to resist that. Now is not the time to tell people not to worry. If you’re in the financial-services industry, you ought to be able to quantify. I try to be specific, and we’ve gained credibility as a result.” Pepsi’s Foss too recommends transparency with investors: “we’re facing up to our issues” and in this way “demonstrating that we have a management team that knows what it’s doing.”
Source: McKinsey August 2009 • Dennis Carey, Michael Patsalos-Fox, and Michael Useem
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