Market perceptions of leaders move share prices - and a new report from Deloitte, entitled The Leadership Premium, reveals just how much.
Based on a survey of leading market analysts globally, the report finds that the quality of senior leadership--including core capabilities as well as personal qualities such as honesty and integrity--has a direct, and measurable, impact on analysts' assessments of whether companies have been successful and will be successful in the future.
"With this research we wanted to put a quantitative metric on the effectiveness of leadership, to help businesses understand the impact that leadership can have on their performance and market value," said Margot Thom, Managing Director, Global Talent and Human Capital Consulting Leader, DTTL. "This report uncovers a tangible metric that has a real impact on the long-term shareholder value of organizations, which hopefully will set out a compelling vision of effective leadership for the future."
According to the report, the analysts who said the quality of leadership affected their valuations awarded, on average, a premium of 15.7% for particularly effective leadership--and a discount of 19.8% for its opposite. To that end, the gap between the value of a company with good leadership and that of a company with weaker leadership could be more than 35.5%.
The report indicates that analysts look for three core components when assessing an organization's leadership strength:
Strategic clarity - a clear vision of what the organization needs to achieve.
Successful execution - proven ability to meet objectives.
A culture of innovation - commitment to enterprise; an environment for ideas.
In addition, analysts look for two attributes that support these components: effective corporate governance and effective leadership characteristics.
Simon Holland, DTTL Strategic Change and Organizational Transformation Leader, commented: "To succeed in the long term, an organization needs a clear and inspiring vision of where it wants to be and the resources, ability, and drive to get there. It also needs a culture that supports new ideas and that fosters a strong sense of belonging and purpose. These conditions aren't developed accidentally: effective leaders design them in, and analysts recognize that."
To read the full The Leadership Premium report, visit http://www.deloitte.com/humancapital.
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About Deloitte:
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and high-quality service to clients, delivering the insights they need to address their most complex business challenges. Deloitte's approximately 182,000 professionals are committed to becoming the standard of excellence. Deloitte's professionals are unified by a collaborative culture that fosters integrity, outstanding value to markets and clients, commitment to each other, and strength from cultural diversity. They enjoy an environment of continuous learning, challenging experiences, and enriching career opportunities. Deloitte's professionals are dedicated to strengthening corporate responsibility, building public trust, and making a positive impact in their communities
About Deloitte & Touche (M.E.):
Deloitte & Touche (M.E.) is a member firm of Deloitte Touche Tohmatsu Limited (DTTL) and is the first Arab professional services firm established in the Middle East region with uninterrupted presence for over 85 years. Deloitte is among the region's leading professional services firms, providing audit, tax, consulting, and financial advisory services through 26 offices in 15 countries with over 2,500 partners, directors and staff. It is a Tier 1 Tax advisor in the GCC region (International Tax Review World Tax 2010, 2011 and 2012 Rankings) and was recognized as the 2010 Best Consulting Firm of the Year in the Complinet GCC Compliance Awards. In 2011, the firm received the Middle East Training & Development Excellence Award by the Institute of Chartered Accountants in England and Wales (ICAEW).
© Press Release 2012
