|P E T E R S. C O H A N & A S S O C I A T E S|
|CONSTITUENT VALUE ANALYSIS
Why do some CEOs -- like John Chambers of Cisco and Lee Scott of Wal-Mart -- survive big stock price drops and others like Phillip Purcell of Morgan Stanley and Carly Fiorina of Hewlett Packard do not? While strong financial performance can help, it is no substitute for creating value for a firm's constituents.
CEOs buy themselves some career insurance by identifying and exceeding the varying expectations of their key constituents. The first step for CEOs is to use objective analysts to collect data on how these constituents perceive the firm's performance through a process of Constituent Value Analysis (CVA). CVA can provide insight into where a CEO enjoys support and where there are opportunities for improvement for the following areas:
Shareholders care about factors such as stock market appreciation, return on capital, risk management, and succession planning..
Customers are concerned about product attributes such as quality, reliability, variety, and price. Of course, the key for CEOs is to identify specifically how such criteria vary for different segments of customers; how the criteria rank in importance to customers in choosing the winning vendor; and how the CEO's firm stacks up relative to competitors in meeting customer purchase criteria.
Employees care about working with peers whom they respect; making a difference to society; and earning competitive compensation that gives them a chance to profit from their innovation. Of course these general observations will not pertain to all employees and the CVA can help the CEO identify how well the firm does at satisfying the varying expectations of all different employee groups,
Communities want the company to follow its laws and standards, to respect local leaders; and to give back to its citizens who may be employees and customers.
The CVA creates the kind of insight that CEOs can use to improve their standing before it is too late.
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