Cultural Capital. Measuring and mobilizing organizational culture for competitive advantage

Transcription

1 Cultural Capital Measuring and mobilizing organizational culture for competitive advantage 1

2 Professional background Carol Faull & Associates Ltd. Professional Background 2

3 Client engagements Ontario Review Board Client Engagements 3

4 Definition: Culture The way things are done around here Definition: Culture 4

5 How culture manifests How culture manifests 5

6 Clients call when there is a New strategy or direction Merger / acquisition Re-branding Need to build leadership capability Need to navigate a new matrix / shared services environment Need to shift from dysfunctional to high-performing teams (ex. Top teams) Need to create an accountability culture Need to restore or build trust Need to break down silos and improve interpersonal / team dynamics Any aspirational goal or vision that requires a catalytic shift in the mindsets and behaviours of employees to achieve the organization s objectives Clients call when there is a 6

7 Traditional approach to transformation initiatives Leadership: - Vision - Goal - Strategy Mindsets Behaviours Performance What we say we want to happen What people think this means How people actually behave in response What actually happens as a consequence Traditional approach to transformation initiatives 7

8 The way we say we get things done Goals, vision, mission, espoused values, structures, policies, processes, procedures, services/products, behaviours The way we really get things done Ideas, historic patterns, lived values, attitudes, unconscious beliefs, assumptions, perceptions, feelings, fears, personality styles, leadership styles, stories, myths, group norms 8

9 When the winds of an organization are at cross purposes with the currents performance suffers Winds Strategy Mission / Vision Plans Goals / Targets Culture Fears Feelings Values Beliefs Currents The winds vs. currents 9

10 Mindsets and behaviours are the greatest contributors to change failure Factors contributing to failure: Percent % Nearly three-quarters of change failures are related to mindsets and behaviours Inadequate resources or budget All other obstacles Employee resistance to change Management behaviour not supportive of change Source:Beer and Nohria (2000); Cameron and Quinn (1997); CSC Index; Caldwell (1994); Gross et al. (1993); Kotter and Heskett (1992); Hickings (1988); Conference Board report (Fortune 500 interviews); press analysis; team analysis Mindsets and Behaviours 10

11 Mindsets and behaviours are influenced by the environmental context and individual consciousness Mindsets and Behaviours 11

12 Integrated approach to culture transformation The Influence Model The Influence Model 12

13 Definition: Culture The way things are done around here The culture of an organization or any group of individuals is a reflection of the values, beliefs and behaviours of the leaders of the group. Definition: Culture 13

14 Human systems: Transforming mindsets and behaviours Internal External Individual Character Individual values and beliefs Personality Individual behaviours Collective Culture Group values and beliefs Social Structures Group behaviours Based on the work of Ken Wilber Human systems 14

15 When leaders transform, the organization transforms When leaders transform their values and beliefs (1), their behaviours change (2). 1 2 This influences the culture of the group (3), which in turn changes the behaviours of the group (4). 3 4 Organizational transformation begins with the personal transformation of the leaders. Organizations don t transform. People do. Four Step Process When leaders transform, the organization transforms 15

16 How does leadership create culture? How does leadership create culture? 16

17 Typical culture transformation journey *Begins with a clear performance imperative Phase 1 Phase 2 Phase 3 Diagnostic ELT Mirror and Alignment Session SMT Alignment Session Leadership Development / Org-wide Engagement Typical culture transformation journey 17

18 Typical culture transformation journey Typical culture transformation journey 18

19 Phase 1: Diagnostic Quantitative Diagnostic Qualitative Diagnostic Document Review Barrett Values Assessment Deep Structure Interviews Focus Groups Typical culture transformation journey: Phase 1 19

20 Quantitative methodology Quantitative methodology 20

21 Maslow s needs to Barrett s consciousness Self-Actualization Know and Understand Self-esteem Love & Belonging Safety Physiological Needs Consciousness Quantitative methodology: Barrett Values Survey 21

22 Seven levels of organizational consciousness Positive Focus/ Excessive Focus Service Making a Difference Internal Cohesion Transformation Self-esteem Relationship Survival Service to Humanity and the Planet Social responsibility, future generations, long-term perspective, ethics, compassion, humility Strategic Alliances and Partnerships Environmental awareness, community involvement, employee fulfilment, coaching/mentoring Building Internal Community Shared values, vision, commitment, integrity, engagement, trust, passion, creativity, openness, transparency Continuous Renewal and Learning Accountability, adaptability, empowerment, teamwork, goals orientation, continuous improvement, personal growth High Performance Systems, processes, quality, best practices, competitive, pride in performance. Bureaucracy, complacency Belonging Loyalty, open communication, customer satisfaction, friendship, employee recognition. Manipulation, blame Financial Stability Shareholder value, organizational growth, employee health, safety. Control, corruption, greed Quantitative methodology: Barrett Values Survey 22

23 Survey questions 1) Personal Values Please select ten of the following values/behaviours that most reflect who you are, not who you desire to become. 2) Current Organizational Culture Values Please select ten of the following values/behaviours that most reflect how your organization currently operates. 3) Desired Organizational Culture Values Please select ten of the following values/behaviours that you would desire for your organization to achieve it's highest performance. Quantitative methodology: Barrett Values Survey 23

24 Definition: Cultural entropy Cultural Entropy is the amount of energy in a group that is consumed in unproductive work. It is a measure of the conflict, friction, and frustration that exists within a group. Quantitative methodology: Barrett Values Survey 24

25 Cultural entropy What does 44% entropy look like? Energy available for productive work Non-productive or destructive energy Quantitative methodology: Barrett Values Survey 25

26 Entropy risk bands 10% or less: Prime: Healthy functioning 11% - 19%: Minor Issues: Requiring cultural and structural adjustments 20% - 29%: Significant Issues: Requiring cultural and structural transformation and leadership coaching 30% - 39%: Serious Issues: Requiring cultural and structural transformation, leadership mentoring/coaching, and leadership development 40-49%: Critical Issues: Requiring cultural and structural transformation, selective changes in leadership, leadership mentoring/coaching, and leadership development > 50%: Cultural Crisis: For private sector or corporations, high risk of bankruptcy, takeover or implosion Quantitative methodology: Barrett Values Survey 26

27 Best employers have lowest entropy This research of 163 organisations in Australia was carried out by Hewitt Associates and Barrett Values Centre. CULTURAL ENTROPY STAFF ENGAGEMENT TIER 1 (BEST) 5% 89% TIER 2 8% 76% TIER 3 15% 55% TIER 4 (WORST) 21% 40% Quantitative methodology: Barrett Values Survey 27

28 Low entropy leads to high revenue growth This research of 163 organisations in Australia was carried out by Hewitt Associates and Barrett Values Centre. ENTROPY LEVEL 3-YEAR REVENUE GROWTH TIER 1 (BEST) <10% 32.87% TIER % 24.90% TIER % 11.39% TIER 4 (WORST) >29% 11.07% Quantitative methodology: Barrett Values Survey 28

29 Nedbank: Entropy reduction Quantitative methodology: Barrett Values Survey 29

30 Nedbank: Financial impact of culture transformation Share Price grew on average 20.4% (CAGR) per year from 2004 to 2007 Revenue grew on average 16.9% (CAGR) per year from 2004 to Quantitative methodology: Barrett Values Survey 30

31 Example Client: Overall group (913) Level Personal Values (PV) Current Culture Values (CC) Desired Culture Values (DC) IRS (P)=7-4-0 IRS (L)=0-0-0 IROS (P)= IROS (L)= IROS (P)= IROS (L)= Ideal Matches honesty 349 5(I) community involvement 314 6(S) balance (home/work) 260 4(O) PV - CC 3+ respectful 346 2(R) cost reduction (L) 300 1(O) teamwork 255 4(R) CC DC 6+ accountability 316 4(R) brand image 264 3(O) continuous improvement 239 4(O) Matches PV - CC 0 CC - DC 2 PV - DC 2 Cultural Entropy: Current Culture 23% positive attitude 294 5(I) integrity 283 5(I) family 275 2(R) continuous learning 243 4(I) balance (home/work) 239 4(I) efficiency 230 3(I) caring 228 2(R) humour/ fun 228 5(I) customer/member satisfaction 232 2(O) organisational growth 221 1(O) teamwork 216 4(R) results orientation 214 3(O) bureaucracy (L) 204 3(O) hierarchy (L) 170 3(O) silo mentality (L) 168 3(O) coaching/ mentoring 227 6(R) customer/member satisfaction 224 2(O) talent development 221 4(O) competitive (market) 219 3(O) accountability 214 4(R) employee engagement 207 5(O) employee recognition 204 2(R) Black Underline = PV & CC Orange = PV, CC & DC Orange = CC & DC Blue = PV & DC P = Positive L = Potentially Limiting (white circle) I = Individual R = Relationship Diagnostic: Barrett O = Organisational Values Survey S = Societal Quantitative methodology: Barrett Values Survey 31

32 Example Client: Overall group (913) Cultural Entropy Report This table depicts the survey participants total votes for Current Culture potentially limiting values by level. Potentially limiting values reflect the degree of disorder within a system and are found only at levels 1, 2 and 3. Please note that among the report diagrams slight variations in total Cultural Entropy percentages may occur as a result of rounding the level/category percentages to the nearest whole number. Level Potentially Limiting Values (Votes) Cultural Entropy % bureaucracy (204) hierarchy (170) silo mentality (168) confusion (159) long hours (151) information hoarding (128) power (47) blame (101) internal competition (99) manipulation (66) empire building (56) cost reduction (300) control (158) short-term focus (109) job insecurity (107) caution (106) exploitation (28) 11% of total votes 3% of total votes 9% of total votes This level of cultural entropy reflects significant issues requiring cultural and structural transformation and leadership coaching. It is important to reduce the level of cultural entropy to improve performance. Total 2157 out of % of total votes Quantitative methodology: Barrett Values Survey 32

33 Example Client: Overall group (913) Values Jumps A value jump occurs when there are more votes for a value in the Desired Culture than in the Current Culture. Listed below are the values with the largest increase in votes. The values in bold are represented in the Desired Culture. Current Culture Votes Desired Culture Votes Jump employee fulfilment talent development competitive (market) open communication innovation coaching/ mentoring continuous improvement information sharing balance (home/work) employee recognition Quantitative methodology: Barrett Values Survey 33

34 Qualitative methodology Phase 1: Qualitative methodology 34

35 Phase 1: Executive team mirror and alignment session Phase 1 Combined Diagnostic: Mirror Session: Exec Team Alignment Session: Play back of diagnostic themes Engagement of Exec Leadership Team Commitment to do something about it Agree to cultural goals to achieve strategic goals Development of From To s (Top 3-5 themes that will really matter) Draft Transformation Story (Vision) Identify potential barriers and roadblocks Solid business case for leadership and cultural transformation work & how to measure success Phase 1: Mirror and Alignment Session 35

36 Phase 1: Executive team mirror and alignment session Client s people are hardworking, committed professionals who desire the best for the organization; but who experience systemic structural, operational and even mechanical difficulties that affect their performance Silos & Role Confusion We could use help between Divisions where budgets are held vs. responsibilities trust is an issue We do not focus on interdivisional team building Sometimes people have no clue as to why some people are involved / included in a project We are different organizations under one roof We are sometimes defensive on crossdivisional input Division 1 is business casual and family oriented Division 2 is suits and Bay Street boys Our silos start right at the top. I wonder how we get such different messages from our SVP s and are expected to be on the same page at the lower levels Someone needs to tell our senior leaders that they are a bunch of Premiers and we are all Canadian but do we truly know and understand each other s Provinces (Divisions)? The Snr Team is completely 100% siloed meet once a month It feels like we are separate businesses Does the Snr Team back each other up? Row in the same direction? If they could get on the same agenda it will trickle down and we could be ONE XXX We need alignment and team building at the very top of the organization. When I interact with the Snr Team, I feel like they are not all on the same page We are strategic on the Division 1 side and reactive on the Division 2 side silos definitely exist We need to clearly define roles and responsibilities there is confusion on who should or shouldn t be involved so we end up with no follow-up or duplication of effort If I had a magic wand I would have the divisions operate more interdependently break down the silos Phase 1: Mirror and Alignment Session 36

37 Phase 1: Executive team mirror and alignment session Below the surface, cornerstone elements of the strong culture are seriously challenged Tyranny of Nice I don t have the hard conversations as I find it hard to set boundaries these people are my friends I have had positive feedback on being more open than most here but I don t know if that is true or people are just being nice I have heard new people described as having sharp elbows simply because they are open and direct We have no clue how to balance kindness with brutal honesty We are not having REAL conversations On the surface we all appear respectful but our behaviours are not consistent with this. People are late or don t show up for meetings or even the CEO s breakfast No one wants to let anyone down here so we don t do anything that might jeopardize our relationships At the Town Halls, no-one asks questions or challenges what is going on it is wrong We don t even fire / remove the problem people we compensate by bringing on extra people to work around them Our internal communication is killing us we keep putting out positive messages but no one really believes them As a result of a reporting error in the past failure is not an option so we sugar coat everything as a result we spin even for the Board We report that a project is going green-green-green and then it fails at launch because we cannot tell the truth We value collectivism consensus we don t address performance We waste so much time because we are not having real conversations We lack candor in addressing issues people do not understand the toxicity of this behaviour We are so nice that we do not see the elephant on the table as much as we should Phase 1: Mirror and Alignment Session 37

38 Phase 1: Executive team mirror and alignment session Resulting From To s FROM Victim TO Empowered Accountability Status Quo Growth and Innovation Fear and Mistrust Trust Careful and Cautious Communication Courageous Communication Silos Embracing interdependencies Phase 1: Mirror and Alignment Session 38

39 Desired mindset shifts: North American Bank Prevailing Mindsets We are a complex business (we must deliver on every single one of our many priorities, the market is unforgiving) I/we value consensus and acceptance (I ask everyone else s opinion and I am offended if my views are not respected) I/we respect each other (and therefore am very careful with difficult messages, especially around performance issues) We focus on what matters (we prioritize and focus on the few, key things that matter, while still delivering the rest, the market is unforgiving) I trust others to do their job (and only take part in decisions that I really need to, and trust others to make the right decisions) I/we respect each other (and therefore are very open and honest with each other, especially around important performance issues) I trust my team/group (but I don t trust other groups to adequately serve my clients) As an enterprise, we are the best bank for our clients (and I gladly refer my clients to other parts of the bank to meet all of their financial needs) Phase 1: Mirror and Alignment Session 39

40 Desired mindset shifts: Recent client example Phase 1: Mirror and Alignment Session 40

41 Sample executive team charter Phase 1: Mirror and Alignment Session 41

42 Phase 2: Senior management team alignment session Phase 2 Senior Mgmt. Team Alignment Session: Engage and align Senior Leadership Team Collectively draft Culture Transformation Roadmap and Leadership Development curriculum Finalize Culture Plan / Curriculum Phase 2: SMT Alignment Session 42

43 Developing a culture plan: Transformation roadmap SMT Alignment Session: Transformation roadmap 43

44 Creating a transformation roadmap SMT Alignment Session: Transformation roadmap 44

45 Transforming customer service SMT Alignment Session: Transformation roadmap 45

46 Transforming healthcare SMT Alignment Session: Transformation roadmap 46

47 The culture transformation journey Phase 3 Leadership Development / Org-wide Engagement: Leadership Development for ExT- followed by SMT to role model new behaviours Identify champion(s) and begin to implement the Culture Transformation Roadmap Cascaded engagement for balance of the org. Team Charters Internal capability building? Establish common frameworks, tools and vocabulary Role specific commitments Phase 3 47

48 Spheres of leadership development Transforming Creating High Performing Strengthening Personal Leadership Relationships Teams Cultures and Organizations Spheres of leadership development 48

49 Typical leadership development program Typical leadership development program 49

50 What results are possible? What results are possible? 50

51 Impact of a culture transformation program % Employees agreeing that the cultural element describes the organization: Start End Yr 2 We live our values 20% 85% Collaboration between areas 34% 64% Honest with one another 60% 92% We have a can do culture 58% 81% Meetings are productive 61% 91% Our community trusts us 33% 81% Employee satisfaction 45% 80% With corresponding improvement in business results: Total shareholder return index 80 to 140 Cost income ratio percentage 60 to 50 Customer satisfaction index 62 to 67 What results are possible? 51

52 Performance impact of an engineered transformation program What results are possible? 52

53 Performance impact of an engineered transformation program What results are possible? 53

54 Questions? Questions? 54