Chinese firms prominent on Crowe corporate decision-making index

17 July 2018

Chinese firms have crowded the top of the index in a recent analysis report on effective corporate decision-making released by the international audit, tax, advisory and risk network Crowe.

In its inaugural ‘Art of Smart – Crowe 100 Decision-Making Index and Report’, the recently rebranded Crowe network – the eighth largest accounting and professional services network in the world – has assessed ‘strong, effective decision-making’ in corporate leadership with a comparative analysis of the world’s most profitable businesses (based on 2017 figures) operating in the industries which the consulting firm most frequently serves – manufacturing, healthcare and real estate.

The study methodology looked into four key areas of corporate decision making - Growth, Diversity, Boldness and Innovation – with businesses assessed over a five-year period beginning 2013 and the four components granted equal weighting to arrive at an overall tally. Emerging on top were the joint Swedish leaders Atlas Copco and the Volvo Group – awarded 29 points each out a possible 40 – yet, firms from China managed to command seven of the top 20 placings.

The strong showing of Chinese firms at the top of the list – including household goods and electronics manufacturer Gree Electric Appliances in sixth spot, and the real estate entities China Vanke, Country Garden Holdings (Hong Kong) and Greenland Holdings in equal eighth – compared favourably to the US presence at the pointy end of the index, likewise with seven entries in the top twenty, and eclipsed the showing from a combined Europe with six.

Crowe 100 Decision-Making Index and Report 2018

However, while the top five firms on the Crowe index (with Apple, Medtronic and Cisco following the Swedish duo) all scored particularly strongly in the boldness and innovation categories, with only the one mark below 7.5 between them across the two categories, the Chinese quartet in the top ten returned more middling results – boosted in part by a clean sweep of full marks for market capitalisation in the growth segment: a baseline indicator for strong decision-making.

Here, the report notes that the ten largest companies on the index by 2017 market capitalisation – including Apple, Toyota, Cisco and Boeing among others – scored on average one and half points higher on ‘boldness’ and almost two points more on ‘innovation’ compared to the list’s ten smallest by capitalisation, as well as performing better in the categories on average overall – with the correlation highlighting, according to the report’s authors, an important relationship between size and maneuverability.

“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,” the authors note. For the Chinese firms in the top ten, the highest awarded across the innovation and boldness categories was Country Garden Holdings with a combined 15 points out of 20, while both Gree Electric and Greenland Holdings managed a more middling 12.5 a piece – indicating the need to boost future innovation and boldness if these firms are to continue to capitalise on their growth.

Leadership diversity

Another area where these firms can potentially further enhance their success is through increased diversity, which has been outlined in numerous recent reports as having a direct bearing on business profitability, with one such report earlier this year by McKinsey & Company finding that companies in the top quarter-bracket for gender and cultural diversity at the executive level were 21 percent more likely to outperform competitors with a less diverse profile. Here, the top overall performing Chinese firms on the Crowe index ranked from a high of five points down to just two – indicating a considerable future opportunity.

Beyond the cultural imperative, the business case for increased diversity is reasonably straightforward; as a true reflection of the world-at-large and in providing a more balanced range of perspectives, greater diversity can aid better decision-making. David Mellor, CEO of Crowe Global, says overall; “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… More than any other factor, it remains the key component to determining successful companies and predicting future success.”

Private equity sector in emerging markets massively male-dominated

01 April 2019

China leads the way for gender balance in private equity according to research from global management consultancy Oliver Wyman, but at just fifteen percent of firms it’s a far cry from parity.

Senior private equity and venture capital professionals are by and large all male in both the emerging and developed markets according to a fresh study from global strategy and management consultancy Oliver Wyman, making up nearly 90 percent of the total mix. While China features the highest ratio of female senior decision-makers at 15 percent, that figure drops to 12 percent for the rest of East Asia and just 7 percent in South Asia.

These are just some of the figures revealed in the Oliver Wyman report ‘Moving Toward Gender Balance in Private Equity and Venture Capital’, which in association with the International Finance Corporation and investment firm RockCreek looked into the performance of gender balanced leadership teams – defined as those with at least 30 percent each of men and women – in the private equity and venture capital sector in emerging markets.Percent of Senior Investment Professionals Across Private Equity and Venture Capital who are FemaleAltogether, in respect to both private equity and venture capital firms, only 15 percent were determined to be gender-balanced at the upper-levels – well below the number of all-male-led investment teams which accounted for nearly 70 percent of the cases. As a further breakdown, 16 percent of the teams surveyed were all considered male-dominated, while there were no female-dominated teams noted in the study and just 1 percent found to be all-female-led.

Meanwhile, those receiving investments in emerging markets also tend to be men, with women led-businesses receiving only 8 percent of the deals and less than 10 percent of the investable capital – delivered in median sums which are at around 65 percent of that distributed to male-led businesses. These portfolio companies, also, were found to be mostly imbalanced, with lower than average rates of 20 percent.

“Women are significantly underrepresented as leaders in PE/VC firms, and their lack of representation means that the decision-making teams allocating capital in emerging markets are acutely imbalanced,” state the authors of the Oliver Wyman report. “Our research suggests that this imbalance may not only be reducing the returns of PE/VC firms, but could also be reducing female entrepreneurs’ equal access to capital.Percent of Capital Recipients who are Female by GeographyWomen, of course, remain under-represented in a range of roles across industries, and improving the level of representation has various normative benefits, such as creating stronger role models for future generations. For business, better representation can also have a number of benefits, from additional perspectives to improvements to the bottom line. And such is the case for the private equity sector, with the analysis finding that gender-balanced teams generate as much as 20 percent higher returns.

“Through our research, we have showcased the benefits of making gender balance an organisational priority,” the report concludes. “Moving the PE/VC industry toward gender balance will require action from both general and limited partners, and steps can be taken today by individual organisations interested in changing the male-dominated status quo. Actions taken today can help partners, women-owned and -led businesses, and the PE/VC industry as a whole reap the benefits of gender diversity.”