‘The Art of Smart’: new report ranks global corporate decision-making
Source： Date : 2018-06-20
• Sweden’s Atlas Copco and Volvo Group tied for first position
• Gender and nationality diversity strengthen decision-making
• Top scores for Boldness and Innovation at the largest companies by market capitalization
June 2018: Atlas Copco and Volvo Group are the world’s best corporate decision-makers, according to the Crowe 100 Decision-Making Index and Report 2018.
The new research from international accounting network Crowe is the first of its kind to assess strong, effective decision-making in corporate leadership. By using objective indicators and subjective analysis, it ranks decision-making at the 100 most profitable companies globally according to four components, Growth, Diversity, Boldness and Innovation, over a five-year period (2013 to 2017).
Volvo Group, which manufactures heavy equipment including trucks, buses and construction vehicles, tied for highest overall place. Volvo’s score is attributable to high scores across all four decision-making categories, with increased market capitalization and diversity in all but one of the five years. Atlas Copco, which produces industrial equipment, and is also based in Sweden, similarly scored highly in all categories.
David Mellor, CEO of Crowe Global, comments:“ One of the top challenges of corporate leadership is strong and effective decision-making. More than any other factor, it remains the key component to determining successful companies and predicting future success. In making any significant decision, all companies face a range of variables and carry a host of unforeseen biases. By learning more about the process of decision-making, companies can make smarter decisions and create lasting value. This report is an attempt to quantify the traits of quality decision-making in the context of corporate success.”
Gender and nationality diversity strengthens decision-making
The report’s analysis of governing boards and C-suite executives highlights the powerful decision-making advantages of a diverse corporate team.
French real estate investment trust and Europe’s second-biggest publicly traded mall operator Klepierre (ranked No. 8) was found to be the most diverse company, with female executives and non-French nationals occupying more than 36% and 80%, respectively, of the board and C-suite in 2017.
French automaker Peugeot (15) also scored in the top range for Diversity and Growth. Having increased the gender and general diversity of its board each year, it also had the largest growth in market capitalization over the five-year period among all consumer automakers in the index.
High-ranking General Motors (39), BMW Group (52), UnitedHealth Group (36) and Johnson & Johnson (39) were also found to have high diversity percentages owing to a large presence of female members on their boards.
Overall, the Crowe 100 found that many companies increased the diversity of their boards and C-suites over the five-year period studied. Diversity initiatives aimed at increasing female representation in corporate boards and C-suites may have been successful in instituting boardroom representation but have not balanced the scales, as women comprised an average of 17% of these positions at the end of 2017.
Top scores for Boldness and Innovation at the largest companies by market capitalization
The 10 largest companies on the Crowe 100 by 2017 market capitalization, Apple (3), Toyota Motor (52), Johnson & Johnson (39), UnitedHealth Group (36), Cisco Systems (5), Boeing (39), Medtronic (3), Lockheed Martin (15), Daimler (45) and Airbus (77), averaged one and a half points higher in Boldness and almost two points higher in Innovation than the smallest 10 companies by market capitalization in the index. These largest companies also scored higher on average than the top 100 as a whole.
This correlation highlights the important relationship between size and maneuverability, as the largest companies often benefit from economies of scale and their roles as trendsetters but must also maintain increasingly bold and innovative actions to sustain their places in the pack. In many industries, this has resulted in a flurry of acquisitions or the purchase of leading properties.
33 of the Crowe 100 companies headquartered in the US
The Crowe 100 has a wide geographic distribution, with 33 of the top 100 companies headquartered in the United States, 16 in Japan and 13 in China. Other locations home to strong decision-makers were Hong Kong, France and Germany, with 8, 7 and 4, respectively.
Geographic trends in the Crowe 100 highlighted regional variances, with Chinese companies scoring higher on average for market capitalization growth compared to American or Japanese companies.
For further information the full report can be found at: www.crowe.com/artofsmart.
For 100 years, Crowe has been making smart decisions for multinational clients working across borders. Ranked the eighth largest accounting network in the world, Crowe has over 221 independent accounting and advisory firms in 130 countries. The network has a total global workforce of 36,540 professionals and global revenues in 2017 reached USD 3.8 billion.
Member firms are recognized as leaders in their markets, with awards and accolades including: Fortune 100 Best Companies to Work For 2017 and 2018; top five leader for Strategic Risk Consulting by ALM Intelligence; Le Fonti Award for 2018 International Tax Firm of the Year; Consultancy Advisory Firm of the Year 2017 at the Finance Monthly Global Awards; Best Audit Firm by The Accounting and Corporate Regulatory Authority of the Singapore Government.
About the Crowe 100
The Crowe 100 endeavors to unravel the minds of top companies using the objective results of good decisions and with analysis of a company’s actions, keeping in mind the characteristics of a strong decision-making process.
Using the 100 most profitable companies in 2017 from the Forbes Global 2000 report as our base data set, we created our index by breaking decision-making into four components, which we analyzed and weighted equally, using data from the five-year period from 2013 to 2017:
• Growth — an analysis of companies using financial performance measurements, since companies that make better decisions are apt to perform above their peers in the long term. Recognizing that investment markets provide a gauge of relative performance, we scored companies’ market capitalization growth over the period.
• Diversity — an analysis of governing boards and C-suite executives that recognizes the powerful advantages of a diverse corporate team. We scrutinized annual reports to measure gender and nationality diversity over the five-year period and the growth of diversity over time.
• Boldness — an analysis of the critical yet eventful steps that set companies apart. We conducted a media audit of major business news during the period, collecting and scoring relevant news on industry-relevant parameters of bold action.
• Innovation — a study of the companies’ unique advances in management and technology. As with Boldness, our researchers audited major business news for the period to collect and score relevant stories, in this case using industry-relevant parameters of innovative action.
By combining scores across the four components, we arrived at our ranking of decision-making at these 100 companies. While inevitably imperfect, the Crowe 100 Decision-Making Index 2018 explores the quantifiable aspects of decision-making using a combination of related objective data and subjective analysis. Our goal is to understand better the measurable aspects of decision-making in order to contribute to conversations on this crucial art. A full methodology description can be found at www.crowe.com/methodology.