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NEW YORK, Sept. 23, 2011—CEOs in Corporate America are six times more likely than average workers to believe they work in a company where people are inspired, a new study from LRN finds. In fact, employees say they are primarily coerced (84%) or motivated (12%) by carrots and sticks on the job rather than inspired by values and a commitment to a mission and purpose (4%).
Yet, the study reveals that companies that do self-govern through values significantly outperform those who don’t. These companies experience higher levels of innovation, employee loyalty, and customer satisfaction, and lower levels of misconduct, employee fear of speaking up and retaliation, the study finds. Employees in self-governing companies also report stronger financial performance relative to the competition.
These, and other findings, come from “The HOW Report,” a first-of-its kind study of more than 5,000 full-time employees, commissioned by LRN and independently conducted by the Boston Research Group, in collaboration with Research Data Technology and The Center for Effective Organizations at the University of Southern California. The study compares the business returns of competing models of governance, culture and leadership and the observed behavior of management and employees.
“What you measure is a window into what you value. As institutions, we’ve gotten incredibly good at measuring ‘how much,’ as in ‘how much’ revenue, profit, market share, resource, debt, etc.,” said Dov Seidman, CEO of LRN. “As we continue to lurch frequently from one crisis to another, and generally contend with the dynamics of operating in a globally interdependent world, creating resiliency and forging a path of sustainable growth requires leaders to rethink the very nature of how their organizations operate and how their people conduct business. We have entered a new era where it is possible to measure how we operate, lead and govern our institutions. And this study demonstrates that it is, indeed, practical to be principled.”
Key Findings of the HOW Report:
1. Rare: Self-Governance is rare in corporate America. Only 3% of respondents report they work for organizations whose purpose and values inform decision-making and guide all employee and company behavior.
2. Less misconduct/more speaking up: Organizations that exhibit self-governing behavior experience significantly fewer risks associated with employee misconduct.
3. Advantages: Organizations that exhibit self-governing behavior are significantly more likely to achieve higher levels of innovation, employee loyalty and greater customer satisfaction, particularly when compared to rules-based, coercive organizations.
4. High performance: When viewed systemically, the four primary outcomes of a self-governing organization — less employee misconduct, greater innovation, employee loyalty and customer satisfaction — come together to synergistically deliver superior financial performance.
5. Measurable: Trust, inspiration and significance can be measured and create a distinct competitive advantage.
“A super-system of culture, governance, and leadership as a conscious, deliberate, long-term strategy can be key to differentiation, success and significance for companies in the 21st century,” said Dov Seidman. “Companies and leaders who pioneer and forge ahead on a genuine journey of governance, culture and leadership are the ones who will be around in the 22nd century.”
About the HOW Report
The HOW Report is a study of more than 5,122 full-time employees from all levels and departments – and most from companies with 2,000 or more employees. The study was conducted jointly by the Boston Research Group and Research Data Technology in early 2011. The questions, statements and descriptions used in the survey instrument were carefully designed by a team of academics from The Center for Effective Organizations at the University of Southern California and industry experts in organizational behavior, workplace dynamics, behavioral economics and ethics and compliance. To learn more or obtain a copy of the full report, please visit http://www.lrn.com/how-report.html.
Since 1994, LRN has helped 15 million people at 700 companies worldwide simultaneously navigate complex legal and regulatory environments 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: both are a product of principled performance. In 2008, LRN acquired green strategy firm GreenOrder. LRN works with organizations in more than 100 countries, and has offices in New York, Los Angeles, London and Mumbai. For more information, visit www.lrn.com or follow @LRNinc on Twitter.
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