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04/18/2012

The Leadership Issue: Investment Reports Must Ask 'Who's in Charge Here?'


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When you are researching a company, be sure to tackle the leadership issue. Your clients will see true added value in your recommendations if you go beyond a company's bottom-line numbers and carefully look at the powerful but intangible factors that can make or break a company.

Say you are researching a company that is "white hot" right now, for example. If the person at the helm is clueless when it comes to leadership skills, the company will not be around for long.

Here are tips for researching a company's leadership:

  • OBSERVE LEADERS IN ACTION
    Thanks to conference calls, analysts' conference calls, annual shareholders meetings, email blasts, and YouTube, it is easier than ever to watch a leader communicate the vision and the strategy and inspire others to execute that strategy. Even though most public statements by top executives tend to be meticulously scripted, executives have the final say on what they will, or will not, say to the company's various stakeholders. Examine the CEO's communication style. Is it confident and conversational, or is it dictatorial and speechy? If the executive demonstrates confidence, not arrogance; empathy not aloofness; calm focus, not frenzied energy; chances are he or she is the real deal. Also, pay attention to the people he or she hires to support them on a daily basis. Are they intelligent, thoughtful people with opinions, or are they obedient yes-people afraid to speak truth to power?

  • INVESTIGATE THE COMPANY'S CULTURE
    What is life like on a daily basis for people working for the company you are researching? If possible, speak with employees willing to give you the inside story. Also read publications, blogs, newsletters, and reports targeting the company's employees. Do you detect a culture that encourages candid exchange of ideas and innovative solutions? Or do you sense that employees are passive onlookers as the organization lurches from one crisis to the next? Such companies are not smart investments.

  • SEARCH FOR EVIDENCE OF A SUCCESSION PLAN
    The smartest companies have a succession plan. They know who will take charge when the current head of the business leaves his or her position. If they have not identified a specific individual to be the next top leader, smart companies at least have "bench strength," i.e., they have a number of people with the potential to take over. Of course, if the current boss encourages, or tolerates, petty in-house fighting and feuds played out in public, be wary. Instead of focusing on customers, these business heads are focusing on turf issues, a sure sign of weak leadership.

Your clients are sure to appreciate your digging into the leadership issue in your investment research reports. They know that smart analysts are keen observers of a company's management. They can tell the difference between true leaders and empty suits.


Mach Creative


–Susan Mach

Susan Mach, PhD, is a communication trainer, coach, and strategist. She also teaches communication to MBAs from all over the world at NYU Stern and Rutgers Business School. She will teach "Top Tips for Great Research Reports, Part 2: Writing for Impact" at NYSSA on Monday, July 16 at 1:30 p.m.

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