Investors doubt CEO ethic.NO MATTER HOW aboveboard CEOs operate, when it comes to investor trust, they can't seem to get no respect.
Less than half of all retail investors Retail Investor
Individual investors who buy and sell securities for their personal account, and not for another company or organization.
Retail investors buy in much smaller quantities than larger institutional investors. have confidence that CEOs of public companies are engaged in ethical business practices, per a new survey by Opinion Research Corp. (OPC (1) (OpenGL Performance Characterization) A project group within GPC that manages OpenGL benchmarks. OPC endorses the Viewperf and GLperf benchmarks. Viewperf was created by IBM and OPC provides viewsets for it, which are combinations of tests using specific ). About four in 10 have very little or no confidence in the ethical standards of top execs. "That's not a good number," muses Jeffrey T. Resnick Resnick is a surname, and may refer to:
True, the numbers have improved from a low in June 2002, but there's still a long way to go, says Resnick, who also runs OPC's corporate reputation management practice. "There is a trust chasm between where executives probably believe they are and where the public believes they are," he says. Nearly half of investors surveyed said CEOs do not care as much as they should about the reputation of their companies.
But assuming CEOs do care, and if most are acting ethically, why is it not translating to the masses? Paul Argenti, professor of corporate communication at Dartmouth's Tuck School of Business The Amos Tuck School of Business Administration is the business school of Dartmouth College in Hanover, New Hampshire. Founded in 1900, Tuck is the oldest graduate school of business in the world. , says that ethical behavior, along with corporate reputation and communication in general, have been seen as too intangible to value or invest in. "But some 80 percent of the value of a corporation is based on intangibles," Argenti says. CEOs must get creative about quantifying the impact of ethical behavior and reputation on future profits, he adds, just as they measure the impact of an ad campaign on sales or other "squishy squish·y
adj. squish·i·er, squish·i·est
1. Soft and wet; spongy.
2. Sloppily sentimental.
Adj. 1. " numbers.
The other thing CEOs can do, Argenti suggests, is to consistently go beyond just the letter of the law. "There was nothing written down that said that [Boeing CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Harry] Stonecipher couldn't have a relationship with a female executive of the company, but if he'd asked, someone else in the company could have told him that," he says. All CEOs would benefit from being more proactive about analyzing their company's reputational risk, he adds.
That said, analysts and investors, who helped create this problem, will have to do their part to solve it. "By putting this much pressure on people to perform, perform, perform or we'll whack whack - According to arch-hacker James Gosling, to "...modify a program with no idea whatsoever how it works." (See whacker.) It is actually possible to do this in nontrivial circumstances if the change is small and well-defined and you are very good at glarking things from context. you, they force people to act in ways that cut corners," says Argenti. "They want ethical behavior, but they're not willing to wait for it."
Retail investors' perception of the ethical business practices of corporate executives June 2002 March 2005 Very or somewhat confident 35% 46% Neither confident nor not confident 16% 14% Not very or not at all confident 44% 38% Confidence in CEO ethics by industry Retail banking 59% Automobile manufacturers 54% Insurance 36% Oil & gas 25% Note: Table made from bar graph.