Data Questions * Drucker Institute

Data ?

What causes a company to move up or down significantly when there seems to be little change in their T-Scores?

Corporate effectiveness T-scores are designed to be normally distributed. This means companies cluster around the middle of the t-score range (approximately 50, with a little variation year-to-year). When companies are near the top or bottom of the distribution, small changes in their score likely won’t correspond with noticeable changes in their rank because there aren’t many companies with similar scores for them to move past. When companies are near the middle of the distribution, however, many companies with similar scores can move past in either direction, which means that small changes in their t-score can result in bigger changes in their corresponding rank.

If a company has not been ranked in the top 25 since the rankings were first shared in 2017, how difficult is it for them to reach the top tier for overall effectiveness or within one of the five categories ranked?

Because corporate effectiveness T-Scores are normally distributed, higher scores become increasingly rare as companies reach the top end of the effectiveness range. This can make it challenging to reach the top of the corporate effectiveness ranking, as it represents being in an elite company among some of the best-run institutions in the world. The process of making the strides necessary to reach this upper echelon is further complicated by the multitude of factors involved in assessing a company’s overall corporate effectiveness. For some, climbing the rankings may take a great deal of patience, requiring incremental improvement across multiple effectiveness dimensions over many years. For others, it may be as simple as identifying one area of weakness to improve on and a single year of focused effort. Some companies may need to take industry benchmarks into account, whereas others may need to focus on improving relative to their past performance. Developing strategies to climb the rankings requires a highly personalized approach involving several factors related to the unique contexts in which a company operates.

How should a mid-ranked company that has invested heavily in innovation but does not see an increase in its rankings best understand the methodology?

Rankings are based on a holistic evaluation of a company’s performance with respect to Customer Satisfaction, Employee Engagement & Development, Social Responsibility, Innovation, and Financial Strength. While Innovation is a key component underlying corporate effectiveness, over-investment in any one area can come at the cost of improvement in others. Strategic investments focus on developing synergies among the five dimensions rather than trying to maximize one area for its own sake.

To better understand your company’s unique context and develop personalized strategies for climbing our corporate effectiveness rankings, please contact michael.kelly@cgu.edu