New Global Study from LRN Underscores Imperative for New Ways of Doing Business
New York – April 27, 2016 – Organizations that deliberately focus on purpose, values, trust and behavior outperform those that adhere to more conventional ways of doing business, according to a global research study released today by LRN. A great performance disparity was shown to exist across a wide range of indicators, including market share, customer satisfaction, innovation, employee engagement, sustainability and misconduct. The results also demonstrate that the number of companies changing the way they operate to emphasize purpose, values, trust and behavior is on the rise.
The 2016 HOW Report, conducted by LRN and validated by the Center for Effective Organizations at the University of Southern California, is one of the most ambitious, long-term research projects in organizational effectiveness, behavior and leadership. It offers a statistical analysis of data sets that capture the responses of more than 16,000 full-time employees in 17 countries, across all major industries and occupations.
“At a time when the world is not just rapidly changing, but being dramatically reshaped – it operates differently – these findings have profound implications for organizations and those who lead them,” said Dov Seidman, founder and CEO of LRN. “The 2016 HOW Report proves that in order to achieve both resiliency and growth, organizations will need to embrace new frameworks, models and practices that put humanity at their center. In doing so, they will need to move beyond measuring only how much business gets done, and bring equal rigor to how business gets done.”
Key Findings of the 2106 HOW Report:
- More companies are adopting new standard for business: The percentage of “Self-Governing Organizations” – those that deliberately focus on values, purpose and fostering moral authority – has nearly tripled to 8 percent, up from 3 percent in 2012, when the HOW Report was last conducted.
- Organizations focused on values – not rules – perform better: 97 percent of employees at purpose-inspired, values-based organizations report high performance, compared with 80 percent of employees at rules-based, process-driven organizations and 30 percent of employees at organizations driven by power and tasks.
- Employee engagement is insufficient: Attracting and developing employees who are “inspired” is crucial to a company’s overall performance, with inspiration being 27 percent more predictive of high performance than engagement.
- Strong leaders focus on character and freedom: When managers emphasize shaping character and fostering freedom across an organization, not only do a greater share of employees rate them as effective leaders (96 percent, compared with 52 percent), but they are more than three times as likely to deliver high performance.
- Disconnect between C-Suite experience and that of other employees remains profound: A deep divide exists between the experience of working in the C-Suite and elsewhere in an organization, with senior managers and executives reporting 20 percent higher levels of trust, collaboration and information-sharing than employees at other levels.
- Trust is the most important enabler of innovation: At organizations where employees extend the greatest levels of trust to one another, innovation is 11 times greater than at organizations where trust is rated as low.
“These findings clearly demonstrate that we need to break the mold for how companies organize and assess themselves,” said Michael Eichenwald of LRN’s Advisory Services practice. “Companies that reshape their governance, culture and leadership to put purpose and values at their core are at a distinct, and growing, competitive advantage.”
Download the 2016 HOW Report at www.lrn.com/howmetrics.
About LRN: Inspiring Principled Performance
Since 1994, LRN has helped over 20 million people at more than 700 companies worldwide simultaneously navigate complex legal and regulatory environments, meet their compliance obligations and foster ethical cultures. LRN’s combination of practical tools, education and strategic advice helps companies translate their values into concrete corporate practices and leadership behaviors that create sustainable competitive advantage. In partnership with LRN, companies need not choose between living principles and maximizing profits, or between enhancing reputation and growing revenue: all are a product of principled performance. As a global company, LRN works with organizations in more than 100 countries. For more information, visit www.LRN.com, find us on Twitter @LRN.