Creating social value through leadership
The Australian Leadership Index (ALI) is a national survey that provides a comprehensive picture of perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors.
The ALI model of institutional leadership for the greater good delineates three sets of indicators of leadership for the greater good that pertain to the type of value that institutions seek to create, how institutions create value, and for whom institutions create value.
For each of these indicators, we measure public perceptions and expectations. In addition to this, we calculate the relationship between perceptions of each indicator and overall perceptions of leadership for the greater good, yielding insights into the key drivers of public perceptions of leadership in the government, public, private and not-for-profit sectors.
This note is part of a three-part series on the type of value that institutions seek to create. The focus of this note, the first in the series, is on the creation of social value, which the ALI defines as the creation of positive social outcomes (e.g., preventing discrimination and creating equal opportunities for all).
A note on the survey process
The results reported in this research note are the average of the results obtained from quarterly ALI surveys (1,000 people per quarter) between September 2018 and March 2020, which represents seven quarters of data collection.
Respondents are recruited via an online panel by Dynata and recruitment is designed to ensure that the sample is nationally representative in terms of locality (i.e., States and Territories), gender and age.
Results are analysed at the overall national level, as well as at the sector (i.e., government, public, private and not-for-profit sectors) and institution-level. ALI results can be further segmented according to a range of demographic variables. More information about the survey process can be found here and the ALI data portal can be found here.
Social value creation and leadership for the greater good
Recent years have witnessed growing concern about the social value created by organisations, especially but not exclusively in the business sector. Consider, for example, the now voluminous literature on social responsibility, in general, and corporate social responsibility, in particular. The burgeoning literature on ethical and responsible leadership is another manifestation of this widespread concern for the social value created by organisations and institutions.
What role do perceptions of leaders’ focus on creating social value play in public perceptions of leadership for the greater good in the government, public, private and not-for-profit sectors?
Research by the Australian Leadership Index suggests that the answer depends to some degree on the sector under consideration.
Consistent with growing community expectations that businesses should contribute to the well-being of society, ALI finds that business leaders’ apparent focus on creating social value is a strong predictor of leadership for the greater good in the private sector. The more businesses are seen to focus on creating social value, the more they are judged to show leadership for the greater good.
By contrast, leaders’ apparent focus on creating social value is a modest predictor of leadership for the greater good in the government, public and not-for-profit sectors.
In sum, the degree to which leaders and their institutions are seen to care about and focus on creating positive social outcomes, the more they are judged to show leadership for the greater good.
Social value creation at the sector-level
Having established the relationship between social value creation and leadership for the greater good, it’s pertinent to consider what ALI reveals about public perceptions and expectations of social value creation in the government, public and not-for-profit sectors.
The public have high expectations of the degree to which institutions across sectors should focus on creating social value.
Roughly two-thirds of respondents expect that leaders in the government, public and not-for-profit sectors should be focused on the creation of social value to a “fairly large” or “extremely large” extent. Even in the private sector, the majority (54%) expect a strong focus on social value.
However, perceptions of the degree to which the four sectors seem to focus on the creation of social value lag far behind expectations.
The not-for-profit sector is regarded as the strongest performer in terms of focus on social value creation. However, even in this sector, only 36% of respondents perceive that not-for-profit institutions are focused on on the creation of social value to “fairly large” or “extremely large” extent. This represents a 30 percentage point gap between perceptions and expectations.
The private sector is the weakest performer, with only 24% of respondents judging that the private sector focuses on the creation of social value to “fairly large” or “extremely large” extent. However, the public also have the lowest expectations of this sector’s focus on social value creation (54%).
The government sector has the biggest gap between public expectations and public expectations of focus on social value creation. Whereas 67% respondents expect the government sector to focus on the creation of social value to “fairly large” or “extremely large” extent, only 25% perceive this degree of focus on social value creation, yielding a 42 percentage point gap between perceptions and expectations.
Figure 1. Perceived and expected focus on social value creation, sector-level, Sept. 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
Social value creation at the institution-level
Wide differences are found across institutions in both expectations and perceptions of social value creation.
The public expects the most from Charities, who are also regarded as the strongest performer in terms of focus on social value creation, with 51% of respondents judging that charities focus on the creation of social value to “fairly large” or “extremely large” extent.
Large national businesses are the weakest performers, with only 21% of respondents judging that these institutions focus on the creation of social value to “fairly large” or “extremely large” extent. Multinational corporations are seen as the next weakest performer on this metric.
The Federal Government is associated with the biggest gap between public perceptions and expectations, yielding a 44 percentage point gap between perceptions and expectations, followed closely by State Governments, with a 42 percentage point gap.
Small and medium-sized enterprises (SMEs) have the smallest gap between public perceptions and expectations, yielding a 17 percentage point gap between perceptions and expectations. This is largely attributable to low expectations regarding SMEs focus on social value creation – only 47% respondents expect SMEs to focus on the creation of social value to “fairly large” or “extremely large” extent.
Figure 2. Perceived and expected focus on social value creation, institution-level, Sept. 2018-March 2020
Explore this data for yourself via the ALI custom chart builder.
