Anyone who has suffered through a corporate earnings conference call knows the routine: The CEO or CFO (or, if you’re really unlucky, both) reads from a script trumpeting the company’s results in numbing, jargon-laden language. Then, analysts ask questions, in hopes that the executives might reveal something interesting.
If you think the CEO’s prepared statement is a waste of time, you’re probably right.
Quantified Communications, an Austin, Texas, company that helps executives improve how they talk, examined the language used in transcripts of the quarterly calls of the companies in the Standard & Poor’s 500 over the last several years. Using software that evaluates word choices and patterns, it concluded that in three of five areas—clarity, engagement and trust—CEOs score much higher when speaking freely in the Q&A with analysts than in their canned remarks. The biggest gap was in trust, with the language used in the Q&A scoring three times as more trustworthy as in the prepared script.
In two categories—confidence and optimism—the scripts slightly outperformed the Q&A.
Quantified’s language algorithms are based on how real people responded to the words and combinations in actual language, from an analysis of a database of thousands of speeches. The company was founded by Noah Zandan, whose TED talk on how to spot a liar has been viewed almost 4 million times on YouTube.
When executives speak off script, they’re more likely to use relaxed and natural language, which is scored as more trustworthy, said Sarah Weber, the director of marketing for Quantified. The easiest way to understand the difference is through the use of the pronoun “I.” Executives rarely use “I” in the prepared remarks, but will often answer analyst’s questions with “I believe” or “I’ve found.”
If companies insist on giving prepared remarks—and some, like Tesla and Netflix no longer do—they should be short and rely on natural language as much as possible. Weber recommends executives work with their speechwriters to craft a script that doesn’t sound prepared. Those of us listening will thank you.
Image by Lars Ploughman on Flickr, licensed under CC-BY-SA 2.0