The often-used phrase “quality over quantity” has held its ground among enterprises when it comes to business success. According to a new study from Theresa M. Welbourne of eePulse Inc. and the University of Michigan’s Ross School of Business, respondents listed quality as the top driver of business results.
According to the results of the Leadership Pulse – which reveals leadership energy trends, the importance of specific drivers for business success and undervalued drivers in select industries – out of 22 drivers, based on a study of long-term stock price and earnings growth conducted by Welbourne, respondents indicated six “higher order” categories in order of relative importance to their firm’s overall performance: agility and quality, strategy/leadership, technology, human capital, product and costs.
The majority of respondents felt that human capital drivers (e.g. employee-development practices, the manner people are energized, overall culture and rewarding top performers) are perceived as important but are underused and/or underrated business drivers.
This finding is consistent with earlier studies conducted by Welbourne, using large samples of organizations. These results indicated that factors such as technology, production and costs were considered highly important, but it was only the human capital factor that truly differentiated losers versus winners when it came to long-term stock-price growth, growth in earnings per share and even long-term firm survival.
According to Welbourne, eePulse uses a regression analysis and self-reports of overall firm performance. The data show that only the human capital resources differentiate high- from low-performance firms. What employers think might be most important may be contradicting what in reality is important for results, Welbourne said.
In addition to identifying business drivers, the study also took a look at corporate energy levels. Twelve percent of respondents reported being in “danger” zones, or overly energized to the point of potential burnout or not energized, reflecting low productivity. Overall results indicate a downward trend in energy (with a scale of 0 meaning “not energized” to 10 meaning “overly energized”).
From October 2004 to July 2006, the energy average dropped from 6.71 to 6.04. Respondents in high-energy zones went from 62 percent to 53 percent, and those in low-energy zones increased from 10 percent to 19 percent.
More than 4,000 executives worldwide have joined the Leadership Pulse Dialogue since it began in June 2003. Participants receive Pulse Dialogues (or surveys), online reports and executive summaries every two months.
In the July 2006 study, 256 participants engaged in the dialogue, and 17 industries were represented, ranging from manufacturing (19.1 percent) to information technology (9 percent). Organization sizes included “less than 100” (38.3 percent), “between 501-5000” (12.9 percent) and “more than 25,000” (8.6 percent) employees.