Building a high performance, values- driven organisation · Building a high performance,...

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Building a high performance, values-driven organisation

Richard Barrett

www.valuescentre.com 1

Who am I? – A World Traveler

Places I have lived Places I have worked


Who am I? – A Fisherman

England Belize USA


Who am I? An Author

19951995 19981998 20062006


The New Operating Reality

� Competition is increasing – China, India, South America

� Change is accelerating – social, economic, technological

� Risk and uncertainty are increasing

� Complexity is increasing

� Interdependency is increasing

� Ethics and public opinion are increasingly influencing corporate decision-making

� Global economic slowdown


Core Issues for Business

� How to attract and keep talented people –War for Talent

� How to increase profitability and shareholder value

� How to increase staff engagement

� How to increase innovation, creativity, agility, and customer satisfaction

� How to make sure ethics permeates the corporate culture and the company is in alignment with public opinion


Organisational Resilience

Given the new operating reality, the critical question is …

How do you build an organisation that can survive and thrive in an uncertain world?

How do you build an organisation that can survive and thrive in an uncertain world?

By building a strong, adaptive and resilient core culture that is values-driven .


Signature Workshop

The New Principles of Business

The New Principles The New Principles

of Businessof Business


The New Principles of Business

Principle 1: Cultural capital is the new frontier of competitive advantage.

Principle 2: Organisational transformation begins with the personal transformation of the leaders.

Principle 3: Measurement matters. If you can measure it, you can manage it. Introducing the Cultural Transformation Tools


New Principles of Business

Principle 1:

Cultural capital is the new frontier of

competitive advantage

Principle 1:

Cultural capital is the new frontier of

competitive advantage


Culture

The culture of an organisation or any group of individuals is a reflection of the values, beliefs and behaviours of

leaders of the group.

The culture represents “the way things are done around here.”

The culture of an organisation or any group of individuals is a reflection of the values, beliefs and behaviours of

leaders of the group.

The culture represents “the way things are done around here.”

WHAT IS CULTURE?WHAT IS CULTURE?


Values

WHAT ARE VALUES? WHAT ARE VALUES?

A shorthand method of describing our individual and collective motivations and what is important to us.

Values can be positive or potentially limiting.

Positive Values: trust, creativity, passion, honesty, integrity, clarity

Potentially Limiting Values: power, blame, greed, status, being liked

A shorthand method of describing our individual and collective motivations and what is important to us.

Values can be positive or potentially limiting.Values can be positive or potentially limiting.

Positive Values: Positive Values: trust, creativity, passion, honesty, integrity, clarity

Potentially Limiting Values:Potentially Limiting Values: power, blame, greed, status, being liked


Leadership and Values

‘The real role of the chief executive is to manage the values of the organization.’

Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983

‘The real role of the chief executive is to manage the values of the organization.’



Signature Workshop

The Link between Culture, Values,

Strategy and Brand

The Link between The Link between

Culture, Values, Culture, Values,

Strategy and BrandStrategy and Brand


Culture and Strategy

Strong CultureStrong Culture Good StrategyGood Strategy

High PerformanceHigh Performance


Culture and Strategy

Strong CulturePersonal AlignmentGroup Cohesion

Structural Alignment

Strong CulturePersonal AlignmentGroup Cohesion

Structural Alignment

Good StrategyClear Goals

Measurable Objectives Key Performance

Indicators

Good StrategyClear Goals

Measurable Objectives Key Performance

Indicators

High PerformanceHigh Performance

Full Spectrum LeadershipFull Spectrum Leadership

Compelling VisionInspiring Mission

Compelling VisionInspiring Mission


Culture and Brand

Employee PerspectiveEmployee Perspective Customer PerspectiveCustomer Perspective

CULTURE BRAND CULTURE BRAND

The Culture Vision, Mission, Values

and Behaviours

The Culture Vision, Mission, Values

and Behaviours

Who you are on the inside, looks a lot like who you are on the outside

Who you are on the inside, looks a lot like who you are on the outside


Evolution of arenas of competitive advantage

Intellectual CapitalIntellectual Capital

Cultural CapitalCultural Capital

Quality of ProductQuality of Product

ManpowerManpower

Agricultural Age

Industrial Age

Information Age

Consciousness Age

200020001900190018001800


Evolution of competitive advantage

Industrial Age

Quality of Product

Change

QualityProductivityEfficiencySix SigmaMass

marketing

Industrial Age

Quality of Product

Change

QualityProductivityEfficiencySix SigmaMass

marketing

Information Age

Intellectual Capital

Transformation

KnowledgeLearning

EmpowermentPersonal growth

Customer satisfaction

Information Age

Intellectual Capital

Transformation

KnowledgeLearning

EmpowermentPersonal growth

Customer satisfaction

Consciousness Age

Cultural Capital

Evolution

ValuesEthicsSocial

ResponsibilityCustomer

collaboration

Consciousness Age

Cultural Capital

Evolution

ValuesEthicsSocial

ResponsibilityCustomer

collaboration


Strong adaptive cultures = Exemplary Performance

A four year study of 9 - 10 firms in each of 20 industries, carried out by Kotter and Heskett of Harvard Business School, found

that firms with a strong adaptive culture based on shared values, outperformed firms with rigid or weak cultures

by a significant margin.

John P. Kotter and James L. Heskett, “Corporate Culture and Performance”, 1992

A four year study of 9 - 10 firms in each of 20 industries, carried out by Kotter and Heskett of Harvard Business School, found

that firms with a strong adaptive culture based on shared values, outperformed firms with rigid or weak cultures

by a significant margin.



Impact of strong adaptive cultures

� Revenues grew four times faster than weak cultures

� Rate of job creation seven times higher

� Stock price grew twelve times faster

� Profit to performance ration was 750 percent higher



Strong adaptive cultures

Strong cultures are only valuable if they exhibit the adaptive and learning qualities. Otherwise, they become

a liability during the periods of accelerated change.

This perspective offers one possible explanation why the strong culture-performance results are mixed.

“Corporate Culture and Organizational Performance”Siew Kim Jean Lee and Kelvin Yu, National University of Singapore

Strong cultures are only valuable if they exhibit the adaptive and learning qualities. Otherwise, they become

a liability during the periods of accelerated change.

This perspective offers one possible explanation why the strong culture-performance results are mixed.

“Corporate Culture and Organizational Performance”Siew Kim Jean Lee and Kelvin Yu, National University of Singapore


Research on long lasting successful companies

Long lasting companies live their values – values-driven

Have a culture that gives guidance to employees –vision-guided and mission-driven

Jim Collins and Jerry Porass, “Built to Last: Successful habits of visionary companies”, 1995

Long lasting companies live their values – values-driven

Have a culture that gives guidance to employees –vision-guided and mission-driven



Financial returns from long lasting companies

Cumulative Stock Returns

$1 invested on January 1st ,1926 until December 31st , 1990

Long lasting successful companies

� 15 times general stock market� 6 times comparison companies



Business Needs Scorecard – Long Lasting Companies

20%

18%

6%

19%

26%

11%

Finance

Fitness

Evolution

Societal Contribution

Allocation of values of long lasting successful companies

Client Relations

Culture


What long-lasting companies focus on

Finance


BEST EMPLOYERSAUSTRALIA 2008

Client Relations

Culture

20%

18%

6%

19%

26%

11%

Finance

Fitness

Evolution


LONG LASTING COMPANIES


Best and worst employers in Australia 2008

Finance Finance

FitnessClient Relations

Evolution Culture



Allocation of top ten current culture values

BEST EMPLOYERS WORST EMPLOYERS

BEST EMPLOYERS FOCUS ON CULTURE BEST EMPLOYERS FOCUS ON CULTURE


Best employers have lowest entropy

Staff Engagement

Cultural Alignment

Cultural Entropy

Tier 1 (Best) 89% 83% 5%

Tier 2 76% 66% 8%

Tier 3 55% 47% 15%

Tier 4 (Worst) 40% 34% 21%

Cultural Entropy represents the degree of dysfunction in the culture – bureaucracy, internal competition, etc.

This research of 160 organisations in Australia was carried out by Hewitt Associates and the Barrett Values Centre in 2008


Low entropy leads to high financial returns

EntropyLevel

3 Year Revenue Growth %

29% 11.07%

This research of 163 organisations in Australia was carried out by Hewitt Associates and the Barrett Values Centre in 2008

Cultural Entropy represents the degree of dysfunction in the culture – bureaucracy, internal competition, etc.


Fortune’s Best Companies to Work For

A portfolio of the top twenty publicly listed best companies to work for in the USA in 2008 would have returned an average annualized return of 16.74% over the past ten years –compared to 2.83% for the S&P 500.

S&P 500S&P 500



Principle 2:

Organisational transformation begins with the personal transformation of the leaders.

Organisations don’t transform.People do.

Principle 2:

Organisational transformation begins with the personal transformation of the leaders.

Organisations don’t transform.People do.


The leader and the values

As a leader, your values define the organisational culture, and

Your culture defines your competitive advantage.

In particular:

Your ability to attract and keep talented peopleYour ability to attract and keep talented people

Your ability to build and sustain high-performanceYour ability to build and sustain high-performance

Your ability to build resilience and adaptive capacityYour ability to build resilience and adaptive capacity



‘The excellent companies developed cultures that incorporated the values and practices of their great leaders, and those shared values

can be seen to survive for decades.’


‘The excellent companies developed cultures that incorporated the values and practices of their great leaders, and those shared values

can be seen to survive for decades.’




‘The real role of the leader is to manage the values of the corporation.’


‘The real role of the leader is to manage the values of the corporation.’



John McFarlane, CEO, ANZ

Living the

Values

Living the

Values


From leader’s values to shareholder value

Leader’s values/ behaviours

Leader’s values/ behaviours

Corporate Sector

Corporate Culture

Corporate Culture

CompetitiveAdvantage

CompetitiveAdvantage

Shareholder Value

Shareholder Value


From leader’s values to shareholder value

LeadershipDevelopment

LeadershipDevelopment

Corporate Sector

EmployeeFulfillment

EmployeeFulfillment

CustomerSatisfaction

CustomerSatisfaction

Shareholder Value

Shareholder Value



Principle 3:

Measurement matters. If you can measure it,you can manage it.

An introduction to the Cultural Transformation Tools

Principle 3:

Measurement matters. If you can measure it,you can manage it.

An introduction to the Cultural Transformation Tools


Richard BarrettRichard Barrett

Maslow’s Needs to Barrett’s Consciousness

Know and Understand

Physiological

Safety

Love & Belonging

Self-esteem

Self-Actualization

Abraham Maslow Abraham Maslow Know and

Understand

NeedsNeeds ConsciousnessConsciousness


Stages in the Development of Organisational Consciousness

Service

SERVICE TO HUMANITY AND THE PLANETSocial responsibility, future generations, long-term perspective, ethics, compassion, humility

External Cohesion

STRATEGIC ALLIANCES AND PARTNERSHIPSCollaboration, environmental awareness, community involvement, employee fulfillment, coaching/mentoring

Internal Cohesion

BUILDING CORPORATE COMMUNITYShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency

Transformation

CONTINUOUS RENEWAL AND LEARNINGAccountability, adaptability, empowerment, delegation, teamwork, innovation, goals orientation, personal growth

Self-Esteem

HIGH PERFORMANCESystems, processes, quality, best practices, pride in performance,

Relationship

EMPLOYEE RECOGNITIONLoyalty, open communication, customer satisfaction,friendship,

Survival

FINANCIAL STABILITYShareholder value, profit, organisational growth, employee health and safety

Positive Focus / Excessive FocusExcessive Focus

Control, Corruption, Greed

Bureaucracy, Complacency

Manipulation, Blame


CTT – Sample of Corporate Clients

ABN AmroANZ Bank AstraZenecaBanque PopulaireBarclays CapitalBP OilBridgestone FirestoneCampbell’s FoodCommonwealth Bank Computer AssociatesCorningCampbell’s FoodComputer AssociatesDeutsche BankDHLErnst & Young

EricssonExxonFord Motor CompanyIBM IKEAIng BankJohnson & JohnsonKLMKraftKPMGLloyds TSBL’OrealMarsh McLennanMicrosoftMcDonald’sMotorola

NedBankNestleNortelPetrobrasPfizer PWCSEB Bank SkandiaSmith & NephewTotal PetroleumUnileverVattenfallVolvoWegmansWrigleyXerox


Cultural Values Assessment (CVA)


CVA: Demographics

42

Usually anonymous unless working with Senior Team


CVA: Personal Values


CVA: Current Culture Values


CVA: Desired Culture Values


Placement of values by level

46

Current Culture 100 Employees

Top Ten Values

1. tradition (L) (59)

2. diversity (54)

3. control (L) (53)

4. goals orientation (46)

5. knowledge (43)

6. creativity (42)

7. productivity (37)

8. image (L) (36)

9. profit (36)

10. open communication (31)

ServiceService

External cohesionExternal cohesion

Internal cohesionInternal cohesion

TransformationTransformation

Self-esteemSelf-esteem

RelationshipRelationship

SurvivalSurvival

4422 55

77

99

66

88

33

110


Distribution of values by level

47

Current Culture 100 Employees

ServiceService

External cohesionExternal cohesion

Internal cohesionInternal cohesion

TransformationTransformation

Self-esteemSelf-esteem

RelationshipRelationship

SurvivalSurvival

11%

Cultural Entropy

Cultural Entropy

1

2

3

4

5

6

7


Cultural Entropy – Definition

CULTURAL ENTROPY

Cultural entropy is the amount of energy in an organization that is consumed in unproductive work. It is a measure of the friction, and pent-up frustration that

exists within an organization.

CULTURAL ENTROPY

Cultural entropy is the amount of energy in an organization that is consumed in unproductive work. It is a measure of the friction, and pent-up frustration that

exists within an organization.


Cultural Entropy

Cultural entropy represents the degree of dysfunction in a culture

Entropy Impact


Signature Workshop

Examples of Cultural Values Assessments

Examples of Examples of

Cultural Values Cultural Values

AssessmentsAssessments


Flexlite (53)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Personal Values Current Culture Values Desired Culture Values

PL= 10-0 | IRS (P)= 5-5-0 | IRS (L)= 0-0-0 PL= 4-7 | IROS (P)= 0-0-4-0 | IROS (L)= 0-4-3-0 PL= 11-0 | IROS (P)= 1-5-5-0 | IROS (L)= 0-0-0-0

Matches

PV - CC 0CC - DC 1PV - DC 2

1. honesty 27 Level 5

2. commitment 24 Level 5

3. accountability 20 Level 4

4. adaptability 18 Level 4

5. reliability 18 Level 3

6. responsibility 18 Level 4

7. trust 17 Level 5

8. fairness 16 Level 5

9. caring 15 Level 2

10. humor/fun 15 Level 5

Black Underline = PV & CC Orange = CC & DC P = Positive L = Potentially Limiting I = Individual O = Organizational

Orange = PV, CC & DC Blue = PV & DC (white circle) R = Relationship S = Societal

1. blame (L) 27 Level 2

2. long hours (L) 24 Level 3

3. profit 23 Level 1

4. bureaucracy (L) 22 Level 3

5. control (L) 21 Level 1

6. cost reduction 20 Level 1

7. productivity 20 Level 3

8. short-term focus (L) 18 Level 1

9. manipulation (L) 15 Level 2

10. continuous improvement 14 Level 4

11. power (L) 14 Level 3

1. customer satisfaction 31 Level 2




5. quality 15 Level 3

6. teamwork 15 Level 4

7. cooperation 14 Level 5

8. employee fulfillment 14 Level 6

9. employee recognition 14 Level 2

10. information sharing 13 Level 4

11. respect 13 Level 2

Values Plot Copyright 2008 Barrett Values Centre August 2008


Flexlite (53)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1

Personal Values

PL= 10-0 | IRS (P)= 5-5-0 | IRS (L)= 0-0-0

Matches








7. trust 17 Level 5








Flexlite (53)

Current Culture Values

PL= 4-7 | IROS (P)= 0-0-4-0 | IROS (L)= 0-4-3-0
















Flexlite (53)

Desired Culture Values

PL= 11-0 | IROS (P)= 1-5-5-0 | IROS (L)= 0-0-0-0














August 2008

Flexlite (53)

C

T

S

Values Distribution Copyright 2008 Barrett Values Centre August 2008

C = Common GoodT = TransformationS = Self-Interest

Positive Values

Potentially Limiting

Values

CTS = 42-24-34Entropy = 4%

CTS = 13-17-70Entropy = 41%

CTS = 33-27-40Entropy = 0%

Personal Values



Personal Current Culture Desired Culture

Flexlite (53)

Positive Values Distribution Copyright 2008 Barrett Values Centre August 2008

Flexlite (53)

Current Culture Values Desired Culture Values

Finance Finance

FitnessClient

Relations

Evolution Culture

Societal

ContributionSocietal

Contribution

Current Culture

Desired Culture

Financecost reduction

profit

Fitness

bureaucracy (L)

long hours (L)

productivity

accountability

quality

Client Relations

customer

satisfaction

Evolution

continuous

improvement

short-term focus

(L)

continuous

improvement

Culture

blame (L)

control (L)

manipulation (L)

power (L)

cooperation

employee

fulfillment

employee

recognition

respect

teamwork


Business Needs Copyright 2008 Barrett Values Centre August 2008


Best Employers in Australia Top 9 (1744)

Level 7

Level 6

Level 5

Level 4

Level 3

Level 2

Level 1


PL = 10-0S|S

IRS (P) = 7-3-0S|SIRS (L) = 0-0-0S

PL = 10-0S|S

IROS (P) = 1-4-5-0S|SIROS (L) = 0-0-0-0S

PL = 10-0S|S

IROS (P) = 2-4-4-0S|SIROS (L) = 0-0-0-0S

Matches

PV - CC=3

CC - DC=9

PV - CC=4


2. balance (home/work) 634 Level 4

3. achievement 629 Level 3




7. enthusiasm 509 Level 5


9. family 439 Level 2






3. brand image 526 Level 3


5. being the best 524 Level 3




9. coaching/mentoring 439 Level 6






5. coaching/mentoring 511 Level 6



8. brand image 451 Level 3



Dot Plotcopyright

August 2008

C

T

S

Values Distributioncopyright

August 2008

C = Common GoodT = TransformationS = Self-Interest

Positive Values

Potentially Limiting

Values

CTS = 40-21-39Entropy = 4%

CTS = 35-24-41Entropy = 5%

CTS = 37-26-37Entropy = 1%

Personal Values




Personal Current Culture Desired Culture

Positive Values Distribution

copyrightAugust 2008



Signature Workshop

Cultural EvolutionExamples

Cultural Cultural

EvolutionEvolution

Examples Examples


An example of cultural evolution

1. profit2. cost-consciousness3. accountability 4. community involvement 5. client-driven 6. Bureaucracy (L)7. process-driven8. client satisfaction9. results orientation 10. silo mentality (L)

2005

1. accountability 2. cost-consciousness3. client-driven 4. client satisfaction 5. results orientation 6. profit7. performance driven 8. Bureaucracy 9. teamwork 10. community involvement

1. client-driven 2. accountability 3. client satisfaction 4. cost-consciousness5. profit6. performance driven 7. community involvement 8. being the best 9. achievement10. results orientation

2006 2007

ENTROPY 25% ENTROPY 19% ENTROPY 17%

2008

1. accountability2. client-driven 3. client satisfaction 4. achievement5. teamwork6. performance driven 7. community involvement 8. being the best 9. commitment10. cost-consciousness

ENTROPY 13%



2005 2008

CTS = 29-21-50Entropy = 13%

CTS = 24-17-59Entropy = 25%

RESULTS

•5 point increase in common good and 9 point decrease in self-interest – shift towards full-spectrum

•12 point decrease in cultural entropy – revenues grew by 60%



Share Price grew on average 38% per year from 2004 to 2007


Share Price

Revenue

Revenue grew on average 20% per year from 2004 to 2007




2003

1. Profit2. Customer focus3. Community involvement4. Accountability5. Organisational growth6. Achievement7. Brand image8. Results orientation9. Shareholder value10.Cost reduction.

2006 2008

ENTROPY 16% ENTROPY 11% ENTROPY 9%

1. Customer focus2. Cost reduction3. Accountability4. Profit5. Continuous improvement6. Achievement7. Community involvement8. Results orientation9. Shareholder value10.Customer satisfaction

1. Profit2. Customer focus3. Community involvement4. Results orientation5. Organisational growth6. Brand image7. Accountability8. Achievement 9. Customer satisfaction10.Shareholder value.



2003 2008

CTS = 25-20-55Entropy = 16%

CTS = 31-20-49Entropy = 9%

RESULTS

•6 point increase in common good and decrease in self-interest – shift towards full-spectrum

•7 point decrease in cultural entropy – revenues grew by 60%





Share Price

Revenue




Signature Workshop

For more information:

www.valuescentre.com

For more information:For more information:

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