Leadership that Drives Profits: Smart Growth

Management teams with two pivotal attributes are linked to 25 percent higher profit margins

What keeps companies competitive in an era of economic volatility? New research based on the “Smart Growth” framework for measuring the overall capacity of a leadership team to drive growth even in times of sluggish GDP reveals that the prevalence of two key leadership characteristics appear to enhance enterprise competitiveness and are associated with significantly higher average profit margins.

James Lewis PhD, Director of Research for Korn/Ferry International, analyzed leadership assessment data from 1,733 vice presidents and C-suite executives at thirty-six multinational companies. He found that organizations with high Smart Growth Capacity (SGC) are not only more likely to sustain success in today’s slow growth and fast-change economic climate, but the top quarter of companies by SGC had 25 percent higher profit margins than the rest in the study.

SGC, a scoring mechanism developed by Indranil Roy, Managing Director, Asia Pacific, Leadership and Talent Consulting, measures a company’s leadership psychology by aggregating the emotional makeup, social behavior, and cognitive tendencies of its senior executives. It points to Learning Agility and Social Flexibility, two characteristics that can be accurately measured using Korn/Ferry’s ViaEdge and Decision Styles tools, as key to effective leadership.

Lewis further describes how executives that are both socially flexible and learning agile are increasingly crucial to the success of companies and teams within them.

Authors

  • James Lewis

    Senior Director, Research, Korn Ferry Institute