The HOW Report, developed by LRN, gives a global-scale analysis of how companies work and found that less than one in 30 companies are self-governing, but those that are have an extreme marketplace advantage. The study also found that CEOs are distressingly disconnected from their employees regarding the operation of their companies, especially in the U.S.
Specifically, The HOW Report examines the influence of corporate governance, culture, and leadership and the impact they have on performance. The three general archetypes used to describe companies within the survey are: Blind Obedience, Informed Acquiescence, and Self-Governance. A company identified as self-governing demonstrates a high level of trust at all levels of the organization, makes decisions based on a well-defined set of core values, roots its efforts in a larger purpose, inspires its employees, and maintains a transparent system of company-wide collaboration.
Key findings from the report include:
- Just 3 percent of companies are classified as self-governing.
- There is a significant disconnect between executives and employees at the vast majority of companies, worldwide.
- The companies composing the 3 percent of self-governing entities maintain a significant advantage over their competitors experiencing higher levels of innovation, extremely strong employee loyalty, significantly higher customer satisfaction levels, stronger financial performance, and lower employee misconduct.
“These findings have significant implications for CEOs and other business leaders,” said Dov Seidman, CEO of LRN. “Companies that take their corporate character seriously are the ones that will thrive in the 21st century and be around in the 22nd century. It is our hope that the HOW Report will create a better understanding of how governance, culture and leadership combine to impact an organization’s success and significance.”