DAX Leadership Openly Discusses Straightforward Topics
In a recent study conducted by the University of Hohenheim, the comprehensibility of CEO speeches from the DAX-40 companies has been analysed. The findings reveal a trend towards more straightforward communication, with some CEOs demonstrating significant improvements in understandability.
The study, which examines elements such as speech clarity, structure, and transparency, shows that eight speeches scored over 18 points, while six scored significantly lower with less than ten points. The biggest improvements were shown by Armin Papperger of Rheinmetall with a 6.1-point increase and Nikolai Setzer of Continental with a 4.1-point improvement from last year.
Timotheus Höttges of Telekom has the most understandable speech, scoring the highest of 20.0. However, Helen Giza, the new CEO of Fresenius Medical Care, came in last with 5.3 points. The average score this year was 14.3 out of 20 points.
The study also highlights the use of English terms and technical jargon as factors that can reduce understandability. CEOs often use Anglicisms and English expressions without translating or explaining them. English terms such as "FME25 transformation program" (Fresenius MC), "antibody-drug conjugates" (Merck), or "Sustainable Future Solutions" (BASF) are used less frequently nowadays.
The trend towards concise communication has reached the CEOs. CEOs are increasingly relying less on complex technical jargon that only specialists in the audience can understand. The average length of speeches by DAX-40 CEOs has fallen below 3,000 words for the first time, to exactly 2,879 words.
The software "TextLab" was used to analyse various readability formulas and textual features that affect understandability. The "Hohenheim Understandability Index" is a software used to calculate the readability of texts. The index reflects the readability of texts on a scale of 0 (difficult to understand) to 20 (easy to understand).
The positive trend is that speakers are increasingly explaining difficult terms. For instance, Dr. Bernd Montag of Siemens Healthineers explained the term "PET" as "Positron Emission Tomography". Carsten Knobel, CEO of Henkel, explained what "recycled material" means. Ola Källenius (Mercedes-Benz Group) used the term "capital allocation framework".
However, long-winded sentences, abstract terms, compound words, and unexplained jargon still significantly reduce the understandability of some speeches. It would be better to completely avoid such terms, explain them more clearly, or replace them with simpler words.
The understandability of a speech depends not only on the CEO but also on other factors like speechwriters and the state of the company. The study does not contain specific information about the factors contributing to the improvement in the comprehensibility of CEO speeches in the DAX-40 companies.
In conclusion, the study by the University of Hohenheim shows a positive trend towards more understandable CEO speeches in the DAX-40 companies. However, there is still room for improvement, particularly in the use of complex terms and jargon. It is hoped that this trend will continue, making CEO speeches more accessible to a wider audience.
- The study highlights the use of English terms and technical jargon as factors that can reduce the understandability of CEO speeches, with CEOs often using Anglicisms and English expressions without translating or explaining them.
- The trend towards concise communication has reached the CEOs, with CEOs increasingly relying less on complex technical jargon that only specialists can understand.
- The positive trend is that speakers are increasingly explaining difficult terms, such as Dr. Bernd Montag of Siemens Healthineers explaining the term "PET" as "Positron Emission Tomography".
- However, long-winded sentences, abstract terms, compound words, and unexplained jargon still significantly reduce the understandability of some speeches, suggesting a need for better clarity and simplicity in CEO communication.
