10/31/2016. Performance Excellence. Senior Leadership Excellence: The Foundation for Social Responsibility and Transformational Change

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1 10/31/ Senior Leadership Excellence: The Foundation for Social Responsibility and Transformational Change Organizational Excellence Senior Leadership Excellence Ethics and Trust World Class Sustainability Organizational Change & Senior Leaders Getting Started Harry S. Hertz Charting the Path to Excellence Conference November 3, Have Any of You Ever Worked for an Excellent Organization? What Made it Excellent? Performance Excellence An integrated approach to organizational performance management that results in delivery of ever-improving value to customers and stakeholders, contributing to ongoing organizational success improvement of overall organizational effectiveness and capabilities organizational and personal learning 1

2 10/31/ Why Excellence Challenges Leaders Because Excellence Can t Be Delegated Because Excellence Starts with Leadership Vision, Leadership Responsibilities, and Ethical Governance Because Excellence Challenges the Complexity of the Enterprise and Its Environment Because Excellence Is Strategic Because Excellence Is about Results Tied to Process Baldrige Visionary Leadership Set a Vision for the Organization Create a Customer Focus Demonstrate Clear Ethics and Values Set High Performance Expectations Balance the Needs of All Stakeholders Stimulate Innovation Require Accountability Baldrige Visionary Leadership (continued) Build Organizational Knowledge and Capabilities Communicate, Coach, Motivate, and Recognize the Entire Workforce Develop Future Leaders Review Organizational Performance Ensure Ongoing Organizational Success 2

3 10/31/ 1. Leadership (120 pts.) Senior leaders actions, organizational governance, and societal responsibilities 1.1 Senior Leadership (70 pts.) 1.2 Governance and Societal Responsibilities (50 pts.) 3

4 10/31/ Trust Matters Percent who engage in each behavior based on trust General Population Behaviors for Distrusted Companies Behaviors for Trusted Companies 48 Refused to buy products/services Chose to buy products/services Criticized companies Recommended them to a friend/colleague Shared negative opinions Shared positive opinions online 41 most trusted #1 content creators: 35 Disagreed with others Defended company 38 Friends and Family 20 Paid more than wanted Paid more 37 most trusted #1 media source: Online Search Engines 12 Sold shares Bought shares 18 Source: Edelman Trust Barometer Q Thinking back over the past 12 months, have you taken any of the following actions in relation to companies that you trust? Please answer yes or no to each action. General Population, 28-country global total, questions asked of half the sample. Q Still thinking about the past 12 months, have you taken any of the following actions in relation to companies that you do not trust? Please answer yes or no to each action. General Population, 28-country global total, question asked of half the sample. 10 Business Must Lead to Solve Problems General Population 80% agree up from 74% in 2015 A company can take specific actions that both increase profits and improve the economic and social conditions in the community where it operates. Source: Edelman Trust Barometer Q249. Please indicate how much you agree or disagree with the following statement? (Top 4 Box, Agree). General Population, 27-country global total, question asked of half the sample.. 11 Leaders Seen As Underperforming Importance vs. performance of 16 trust-building leadership attributes % % Importance Performance Gap General Population Integrity Exhibits highly ethical behaviors Takes responsible actions to address an issue or crisis Behaves in a way that is transparent and open Engagement Treats employees well Listens to customer needs and feedback Places customer ahead of profits Communicates frequently and honestly on the state of their company Products Places a premium on offering high-quality products or services Is focused on driving innovation and introducing new products/services/ideas Purpose Is dedicated to protecting and improving the environment Ensures that the company creates programs that positively impact the local community in which it operates Ensures that the company addresses society's needs in its everyday business Ensures that the company partners with NGOs, government and third parties to address societal issues Operations Attracts and retains a highly regarded and widely admired top leadership team Is ranked on a global list of top CEOs, such as "The Best Performing CEOs in The World" Manages the company in a way that delivers consistent financial returns Source: Edelman Trust Barometer. Q How important is each of the following attributes to building your trust in CEOs? (Top 2 Box, Important) Q Please rate CEOs on how well you think they are performing on each of the following attributes. Use a nine-point scale where one means they are performing extremely poorly and nine means they are performing extremely well. CEO questions use the same scales as the business questions. (Top 2 Box, Performance) General Population, 28- country global total. 12 4

5 10/31/ Personal Values and History Matter Percent who agree that each type of information is important in building trust in a CEO General Population CEOs must engage both directly (86%) and via media (75%) 79% 70% 65% 62% Their personal values The obstacles they have overcome Their personal success story Their education and how it shaped them Source: Edelman Trust Barometer Q Thinking about how a CEO communicates with a variety of groups and individuals, how important are each of the following activities a CEO could engage in? Please use a nine-point scale where one means that attribute is not at all important to building your trust and nine means it is extremely important to building your trust. [Media Engagement net = Q507 Interviews with the media, and Q512 Sharing their views on a blog or on social media. Direct Engagement net = Q508 Communications with employees, and Participation in industry conferences. ] Q For you to trust a CEO, how important is it that you have information on each of the following aspects of the CEO s personal life outside of their business? Please use a nine-point scale where one means that attribute is not at all important to building your trust and nine means it is extremely important to building your trust. (Top 4 Box, Important) General Population, 28-country global total, question asked of half the sample. 13 What Are His Personal Values? What s the message? Employee Advocacy Increases With Societal Issue Engagement Percent who agree with each statement, comparing those who work at companies involved in addressing broader societal issues vs. those who do not Employees of companies NOT engaged in societal issues General Population Employees of companies engaged in societal issues Level of Employee Advocacy/Commitment Impact of Company Engagement Do the best possible job for the customer Recommend products and services to others Committed to achieving our strategy Motivated to perform Confidence in the future of the company Stay working for the company Recommend company as an employer Source: Edelman Trust Barometer Q Does your company get involved in addressing broader societal issues beyond the core business, through programs or relationships with other companies? Q Thinking about your current company, please indicate how much you agree with each of the following statements using a nine-point scale where one means that you strongly disagree and nine means that you strongly agree. (Top 4 Box, Agree) General Population, 28-country global total, question was asked of half the sample. 15 5

6 10/31/ VA Cooperative Studies Program Clinical Research Pharmacy Coordinating Center: Leadership 10 timeless principles Cowboy Ethics: What Wall Street Can Learn from the Code of the West by James P. Owen, 2004 VA Cooperative Studies Program Clinical Research Pharmacy Coordinating Center: Leadership VA CSP Core Values Leadership Customer Service Continuous Learning Teamwork Safety Cowboy Ethics: Code of the West Live each day with courage. Always finish what you start. Do what has to be done. When you make a promise, keep it. Remember that some things aren t for sale. Take pride in your work. Be tough, but fair. Talk less, say more. Ride for the brand. Know where to draw the line Engage. Contribute. Inspire. These are the guiding principles of our social and environmental responsibility program, Community Footprints, which aligns us around the issues that are important to the communities where we operate. By mobilizing our resources and skill-based volunteer efforts, we strive to make a difference through child well-being; hunger and poverty relief; and environmental responsibility. The Ritz-Carlton was the first Founding Partner of IMPACT 2030, a private-sector led initiative in collaboration with the United Nations and other global stakeholders, that will marshal corporate volunteering action to advance the achievement of the Sustainable Development Goals. 6

7 10/31/ ABOUT COMMUNITY FOOTPRINTS Our Community Footprints social and environmental responsibility strategy is embedded into our service values, long range plan and business operations. It is defined by the distinctive Community Footprints logo of a heart formed by footprints, symbolizing the genuine commitment to our local communities by all ladies and gentlemen of The Ritz-Carlton. This commitment is focused in three important areas and integrated into a series of Signature Programs. CHILD WELL-BEING ENVIRONMENTAL RESPONSIBILITY HUNGER AND POVERTY RELIEF CHILD WELL-BEING Skills-based volunteer efforts to mentor young students in life and career skills ENVIRONMENTAL RESPONSIBILITY Reduce environmental footprint Protect endangered native species Native plant restoration in our communities HUNGER AND POVERTY RELIEF Providing training Building homes Cooking and serving food at shelters Environmental Responsibility Further reduce energy and water consumption by 20% by 2020 Reduce energy requirements for laundry operations, reducing CO₂ emissions by 20% Collaborate with Clean the World, a nonprofit that collects partially used soaps and hygiene materials Collaborated with Cousteau s Ocean Futures Society to create a Ritz Kids program Partner with local farmers, etc. to increase local and organic dining options 7

8 10/31/ Helping Locally and Globally Active Local Outreach Efforts We are actively involved in the following: Keep Austin Beautiful, MS150, Emma Long Park Restoration Project, Baptist Community Center Restoration Project, Rudy s Charity Golf Tournament, Homers for Hunger benefiting the Capital Area Food Bank, Classic Car Show benefiting the Make-A-Wish Foundation, Rudy s I-35 Cup Golf Tournament, Coats for Kids, Foundation for the Homeless. Africa New Life Africa New Life s mission is to break the cycle of poverty in Rwanda by providing education, spiritual insight and basic necessities to poor children and families. For just $39.00 a month we can provide a child school fees, scholastic materials, a uniform, shoes and basic medical insurance. Environmental Responsibility Recycling 130,000 lbs. of glass annually 500,000 lbs. of cardboard 75,000 gallons of oil and rendered fat Plastic cups are reusable and guests get a $1.00 refill when they bring cups back 160,000 guests use this option each year Employee Engagement* Recent World-wide Gallup Poll 13% Fully engaged 25% Actively disengaged Unilever 170,000+ Employees 80% Fully engaged * KNOWLEDGE@WHARTON, September 29, 8

9 10/31/ A Sense of Purpose A Business Model that Combines Social Responsibility and Growth/Profits The higher sense of purpose employees yearn for Unilever: make sustainable living commonplace How Does Social Responsibility Become Sustainable? A Sense of Purpose* Define the Organization s Long-term Purpose Spell Out the Economic Case for Social Responsibility Create Social Responsibility Knowledge and Competence Make Every Employee a Social Responsibility Champion Co-create Practices with Employees Encourage Healthy Competition among Employees Make Social Responsibility Visible Inside and Outside the Organization Showcase the Higher Purpose by Creating Transformational Change Together with Competitors Organizational Change Transformational Change that Leadership Controls Strategy-Driven and Stems from the Top Requires Active Engagement of the Whole Organization 9

10 10/31/ Organizational Change 66 to 75% of Change Initiatives Fall Short of the Objectives (Center for Creative Leadership) 65% of Workers Have Change Fatigue (Booz & Company) ~50% Felt Their Organization Could Deliver on Change (Booz & Company) CEO Challenges and Opportunities - Based on Five Studies and CEO Conversations Exploring the inner circle the final chapter (IBM, 2014) PwC 17 th and 18 th annual global CEO surveys Fit for the future capitalising on global trends (2014) A marketplace without boundaries? Responding to disruption (2015) 20 Challenges CEOs will face in 2015 (Business News Daily) CEO challenge 2015 creating opportunity out of adversity (The Conference Board) Nine Challenges and Opportunities Individualizing Customer Relationships Workforce Strategies for a Skilled and Inclusive Workforce Systematic Processes and Creativity Cybersecurity Social Media/Digital Interaction and Mobile Technology 10

11 10/31/ Nine Challenges and Opportunities (continued) Collaboration, Partnering, and Alliances, including External Innovation Ethics and Social Responsibility Big Data and Analytics Overregulation Impact of Criteria Use 92.5% 65.5% 84.0% 2.5% Growth in revenue Growth in jobs Growth in number of sites Two-time Baldrige Award winners (median) Matched set of industries and time periods (mean) Where to Begin? With Three Simple Questions: Is your organization doing as well as it could? How do you know? What and how should your organization improve or change? 11

12 10/31/ Thank You! 12