Devoted to Managers and those that seek to improve their management skills

Most corporate executives see the Annual Report as an opportunity to aggrandize personal reputation (and hopefully compensation) while shamelessly touting the company stock.

We've probably all read some type of annual report that is nothing much more than a marketing tool, rather than looking at the true measure and condition of a company.

The problem with many executives and managers is when they start to believe their own propaganda. It's bad enough to present only one side of the condition of a company to others, buy when you start to believe that's the only side, you're in trouble.

I don't mean by this that we should even be trying to fool someone, I'm simply saying that when showing forth the best view of the company, without showing failures, challenges and what the near future looks like, it not only does a disservice to those we're telling this to, but it also does a disservice to ourselves. That disservice usually comes in the form of convincing ourselves of the same rhetoric we used to communicate to others. In other words, we can start to believe our own hype.

A lot of this comes from the built-in nature of many of those running businesses to believe in positive outcomes. While there's nothing wrong with being positive, there's something wrong with pretending a business is where it isn't.

There's nothing more important than candor, honesty and integrity in how we communicate concerning where our companies are at; not only with public companies, but with private as well.

I've seen a lot of lives damaged by communicating only what executives believe someone within the company wants to hear. We should be willing to be open and honest with what is really happening, once we are sure what it is, and then let things fall where they may.

To hide what is happening - whether good or bad - is to not trust our people, or in the case of public companies: the shareholders. The great majority of people appreciate a realistic assessment of any situation a company faces.

In the end, whatever is really happening comes out, and if it's not representative of what is true, there's a lot more damage done than would have been if management would had talked with candor in the first place.

One of Buffett's great gifts is his brutal honesty on what has done pretty well with the company and what has underperformed. When people talk with Buffett about Berkshire Hathaway (BRK-A), they know that when they're through, they have a thorough appraisal of where the company is. And Buffett is always one to tell shareholders that past performance is not an indicator of future growth. He's exactly right.

Other Buffett Resources:

Company growth

“Everybody Else is Doing it”

MSU students have special visit with billionaire Warren Buffett

WARREN BUFFETT PHILOSOPHY II

Sticking to what you know  Core businesses

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