Return on Leadership (ROL)
Return on Leadership (ROL)
PURPOSE AND LEADERSHIP OPTIMIZE COMPANY RESULTS OR IS THIS HR TALK?
INTRODUCTION
The HR professional's typical answer to this question is a firm yes, based on our intuition, our experience, and some generic data from reputable sources.
Our gospel has been relatively successful but there is still a crowd in the business world that devotes formal attention, if any, to "this HR talk about purpose, culture, leadership."
A recent edition of Fortune magazine, which we review below, addresses this issue and, I hope, will shake the conviction of the most skeptical.
The theme itself is not new, but the approach and the vehicle that presents it justify a reflection; for the already converted leaders, that it strengthens them on the chosen path, and, for those who still resist, that it influences them to adhere to an essential concept for personal and organizational success.
ROL, A NEW INDEX OF BUSINESS PERFORMANCE
The consultancy Indiggo (https://indiggo.ai ) built a metric to calculate the ROL (Return on Leadership).
This index measures the company's leadership performance from the perspective of "Capitalism for Stakeholders", through assessments in 4 categories (including 17 indicators):
• Connection to Purpose
• Strategic Clarity
• Leadership Alignment
• Focus on actions to support the Purpose
FORTUNE 500 - THE FORTUNE ANNUAL SURVEY
The results of the 2021 edition of this traditional survey were released in early June.
Along with the results, Fortune released the NOR ratios calculated by Indiggo for the top 100 US companies on the list. This was the first time ROL results have been released with the survey.
These are the first five placed in the ROL criterion:
1. Facebook
2. Goldman Sachs Group
3. Microsoft
4. Johnson & Johnson
5. HP
FINANCIAL INDICATORS OF THE BEST REVIEWED IN THE NOR
Financial return to shareholders over a 3-year period
The NOR of the 25 companies with the best result on the list is THREE times higher than that of the last 25 companies.
Revenue growth over a 3-year period
The NOR of the 25 companies with the best result on the list is SEVEN times higher than that of the last 25 companies.
Comparison between EBTIDAs (per employee)
The NOR of the 25 companies with the best result on the list is FIVE times higher than that of the last 25 companies.
As Fortune points out, successful companies are able to connect work and strategy to a higher purpose, to something that makes employees happier and therefore more productive.
DMS PARTNERS PRODUCTS THAT CAN HELP YOUR COMPANY ON THIS JOURNEY
Organizational Identity , which defines a direction for the company; one of its main components is precisely the creation of a purpose for the organization.
Leadership Development Program , which highlights the role of leaders in institutionalizing the purpose and values defined in the Organizational Identity.
Executive Mentoring , which has a lot to contribute for executives motivated to disseminate the benefits of defining a purpose for the organization.
Corporate Governance , which, by establishing relationships between partners and management agents, can be the source of principles and practices that value purpose, leadership and culture.
These concepts, when properly used, can lead companies to extraordinary results, whatever the considered indicator, including NOR.
For those interested in the details of the story at Fortune:
https://indiggo.ai/rol-100/methodology/?tpcc=nlceodaily