Want higher profits? Free your employees.

By Deanna Cioppa
Employee autonomy is the key to a successful business, according to a recent report by advisory firm LRN. The report’s author, Caterina Bulgarella, studied over 800 responses from executives and staff at Fortune 1,000 companies to compile a “Freedom Index”—that is, a measure of how free a company’s relationships with its employees, clients, vendors, and even community members are from strict rules and hierarchical restrictions and how those parties apply that freedom to further a company’s mission. 

Examples of limited freedom included micromanagement and excessive approval processes for employees; complexity and rigidity of client contracts; inflexible requirements for vendors; and little transparency with community members, among other things.

What she found was that “high-freedom” companies outperformed “low-freedom” companies financially, creatively, and in long-term success. And, not just slightly outperformed. High-freedom companies were over 10 times more likely to be financially successful and 20 times more likely to innovate and be successful long-term.

Strikingly, only 21 percent of companies studied met the high-freedom criteria, and over 50 percent were indexed as low-freedom. Highly controlled relationships in any of the four groups mentioned above influenced profitability, often with poor relationships in one area preventing healthy relationships in another. In other words, half these companies’ relationships are stunted because they are used to control employees, suppliers, vendors and community members rather than giving them the space to innovate. By controlling the relationship, companies are not utilizing major assets, “the character and creativity of employees, the values and aspirations of customers, and the innovation and flexibility of supply chain partners,” as the report puts it. And as such their financial success is not nearly what it could be. 

The Takeaway: ?Your network of connections is more important now than ever, and how you interact with these contactsfrom employees to suppliersis not just an exercise in HR management or public image. It is critical to reaching maximum success.?

?Deanna Cioppa? is a freelance writer who has written for AARP, ESPN The Magazine and Fodor’s. She is a frequent contributor to this blog.
RelSci is a technology solutions company that helps create competitive advantage for organizations through a crucial yet vastly underutilized asset: relationship capital with influential decision makers. 
Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *