In an interview with L.J. Rittenhouse, founder of Rittenhouse Rankings in New York, Charles Green explored the relationship between Candor and bottom line performance. The Rittenhouse Rankings directly correlates measures of CEO candor with stock price performance. Her proprietary model allows her to sort, evaluate and quantify content as well as measure degrees of candor. L.J. is the author of Buffett’s Bites published recently by McGraw-Hill as well as Do Business with People You Can Tru$t: Balancing Profits and Principles which came out in 2002. In the interview, she reveals how rarely CEOs communicate with candor. Those that do, tend to lead organizations that are more productive through their trustworthy leadership. This fits well with the model I offered in my book, The Golden Flame. Like her, I have found that by and large, the best visionary leaders are the ones that are most comfortable in their skin, willing and able to reveal their foibles as well as strengths. Although I have ample evidence of others, she was making a powerful point in the interview when she said that Warren Buffet is the only CEO she knows who publicly reveals big bloopers. She pointed out that not only does he confess and take the blame for what went wrong, he typically reveals how much it cost investors. For example, he reports on his biggest blunder in his 2008 shareholder letter:

I told you in an earlier part of this report that last year I made a major mistake of commission (and maybe more; this one sticks out). Without urging from Charlie or anyone else, I bought a large amount of ConocoPhillips stock when oil and gas prices were near their peak. I in no way anticipated the dramatic fall in energy prices that occurred in the last half of the year. I still believe the odds are good that oil sells far higher in the future than the current $40-$50 price. But so far I have been dead wrong. Even if prices should rise, moreover, the terrible timing of my purchase has cost Berkshire several billion dollars. (Emphasis added.)

This ability or perhaps predilection to tell the truth, no matter what, is what differentiates great leaders from the rest of the pack. It is easy to speak the truth when things are going well. Candor is in short supply when things are on the line. And yet that is when candor is most needed, most welcome, and produces the greatest degree of trust.

The big question is: since we all know this well, why would we not be 100% honest. The simple answer is that we are protecting something. The sad truth is what we protect in the short run with our lack of candor takes something far more precious away in the long run—trust.