Contact: Madonna Jarrett
Deloitte Touche Tohmatsu
Global Corporate Communications
+852 9686 1660

Davos, Switzerland, January 27, 2005 — Corporate and community culture is one of the greatest considerations for CEOs and Boards when making tough business decisions, Deloitte CEO William G. Parrett today reported from the World Economic Forum in Davos. Today's business environment with increased regulation, greater accountability and added security risk is also changing the way CEOs and their boards are leading companies. Recognition of having both the best and the right people was cited as critical to the successful globalization of businesses (Related thought leadership: "The CEO and Managing Risk in the 21st Century").  

A  panelist discussing tough choices in business, Mr. Parrett recalled his experience as a corporate adviser, to suggest CEOs are clearly seeing the benefit in focusing as much on people as they are strategy and risk management, as they change their approach to complex decision making.

"For example, if we look at the complexities involved in off-shoring and outsourcing there are more than bottom line considerations, including community impact both domestically and abroad, and blending local and corporate culture," Mr. Parrett said.

In addition, Mr. Parrett today made the point that CEO are changing, as they focus on building consensus, assuring accountability and demonstrating some old-fashioned values. He also suggested that the pace of change and globalization are enhancing the risk to CEOs and their boards — leading to the emergence of a new CEO.

Mr. Parrett said, "Those at the top of the corporate ladder are becoming more inclusive in the decision making process and their temperament is changing. It is becoming increasingly important for CEOs to demonstrate due process and accountability to their boards, and to be seen to be ethical by their stakeholders — employees, boards, communities and the like.

"It is a little too early to suggest the demise of the imperial CEO, but CEOs are certainly becoming more inclusive. Given the greater risks facing businesses today, a sensible CEO may be well advised to have a rational fear of imminent harm, plan accordingly and keep some elements of boldness in the decision making process.  However as greater accountability is demanded, it appears a 'Caesar's wife' standard will be essential.”

Mr. Parrett proposed that the new CEO will be more demanding of timely information that consistently measures the company's performance on financial and non-financial indicators such as customer satisfaction, product/service quality, operational performance employee commitment and governance. He also proposed that this information will help reduce systemic risk to boards, an important step in luring talented people to board positions.

He said, "In the past some CEOs have tended to focus more on financial data and then more recently on compliance. However this is changing. Reviewing financial data is necessary but in some respects it is like looking backward through a rear view mirror to see what you ran over. The information I am taking about is found looking through the front window to see what lies ahead. Only this way can the CEO and boards understand their business and identify problems before they become major issues."

Recent data from a Deloitte and Economic Intelligence Unit report suggests there are glimpses of this emerging. A recent survey of some 250 executives and board members looked at how well they are monitoring financial and non-financial information, how they use this information, and what informational challenges they face.

Seventy-three percent of respondents believe that they are under increasing pressure to measure such metrics, and ninety percent said such metrics are critical to running the business. However only one third of the respondents believe their non-financial information is good or excellent.

Concluding Mr. Parrett said he sees CEOs working harder to set the tone at the top and create a culture that emphasizes corporate values, ethical behavior, quality control, and risk management. He said, CEOs must demonstrate by their own behavior the importance of integrity and must constantly promote this in communications with their people.

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