Slide 1

EVANZ Conference 2013

The link between culture (Fluffy Shit and Warm Fuzzies) and Productivity and Profit (the real stuff)Today's outlineBackground engagement the outcome of good culture and disengagement

Talk through our change & insights

Leave you with some personal reflection & answer your questions

Would you like these results?37% improvement in absenteeism25% lower turnover48% decrease in H&S incidents28% less shrinkage (loss)10% increase in customer metrics22% improvement in productivity21% improvement in profitabilityWhat engagement isntFluffy Shit & Warm Fuzzies I don't think so its about being good to those that deserve it and tough on those that need it

If any of your leaders think culture is fluffy shit theyre part of the problem and theyre costing your business

-most people leave their boss not their company-

What engagement isA measure of whether your team want to give you their discretionary effort to help your organisation achieve its goals

The chasm between someone being Great versus Just OK

A reflection of the culture and how effective the leaders areDemonstrate a high level of passion, enthusiasm and energyTheir behaviours help the organisation to be successfulTake a personal interest in the success of the organisationAlways looking for a better wayReadily volunteer for new projectsHold a sense of loyalty towards the organisationSpeak positively about the organisation thereby strengthening the organisations reputation and employment brandDefend the organisation (internally and externally)What do engaged staff look like?The organisations detractorsOpenly speak poorly of the organisation and its leadersJust going through the motionsAlways finding the problem not the solutionSorry not my jobQuit yet stay

= very undesirable in the workplace (toxic)

Disengaged people look like?The worst statistic of all...Research shows more than 60% of the disengaged say they dont plan to move on in the next 12 months

Disengaged people are going to stay (if you let them)

What drives engagement?Having leaders worth following

A sense of fairness and equity

A personal understanding of :Whats required (What must I do),What's the purpose (Why is it important to do), and The skills and knowledge to do it (capable, competent and confident)

Our Culture & Engagement2007 our current HR manager was employed

Findings around that time were: largely disengaged team no sense of loyalty and high incidents of dishonesty lack of sense of pride and purpose Blame culture limited training opportunities high turnover

Culture & Engagement History2008 - 2011 HR Manager got commitment by management to conduct engagement survey (Best Workplaces Survey) to seek insights change in style of HR began (from internal police to business and culture development role) management team having recognised the need for change tasked the HR Manager to solve the issues (however no significant increase in resources or budget) group profit reduced by approx 50% over 4 years (in part GFC)Culture & Engagement History2011still lacking major traction on culture changelargely the HR team led change people issues were the HR teams domain lack of ownershipHR Strategy was right but execution reflected the wider organisation culture (head office led top down)Good ideas still met with cynicism and suspicion by manyPerformance reviews had been conducted but behavioural measures didn't existCulture change across the business was required (this is not just an HR team issue)

Toxic actively disengaged Too many in these categories, were not dealing with or getting rid ofNon-performance management (lack of consequences)Lack of skill and ability at manager level weve employed Supervisors, we need LeadersGetting to the 497th person we don't have a method to reach him/herAchievement not rewarded on par or ahead of tenure (annual pay rate increases, 10/15/20 year clubs & no performers club)We tolerate / accept dead wood Are we waiting for GodSilos especially in business planning and decision making,not involving key people in key decisions is impacting on key decisions and engagement/ownership of the issueAppraisal system not working, not measuring key outcomes managers are not doing their job to put pressure on people to perform

Mission Critical downsides Culture / People (2011 review)Team AssessmentSTARS good to greatTO BE SHINEDpoor to goodTO BE CHANGEDpoor to terriblePositive / Can Do / MotivatedWrong attitudeOpen to changeLow energyCustomer focusNo results focusGreat leaders walk the talkNon-responsiveResults driven achieversNo customer focusSelf aware / seeks feedbackNot leadersOptimisticPessimistsFlexiblePoor communicatorsTeam playersIts just a jobInspirationalClosed mindsThink outside the squareTunnel visionSkilfulNo self-awarenessInitiative / entrepreneurialLack of knowledgeGreat coach / helps othersCan MoveMajor Shift RequiredOld stores / venues rationalisation and modernisation Market intelligence we need understand our market use greater market intelligence to inform future decisions Staff - lack of ambassadors (20%)TechnologyLack of sophisticated marketing toolsCommunications platformMeasuring of slow moversSystems not talking to each other, e.g. Accounting and ProclarityNot making use of data warehouse or Proclarity (lack of confidence)Profitability and therefore affordability of essentialsPrice perception were a monopolyLack of time, skill, focus in key areasE.g. retail management support, IT / IS plan, project managementUnprofitable venuesMission Critical Cons Business & TradingThe reviews results and change strategy were shared widely with all staff....Thanks for telling us how shit we arePrevious Top Down Structure CEOHead Office Team(HR, Marketing, IS, Finance & Accounts, Operations Support, Warehouse)On Premise Operations ManagerOff Premise Operations ManagerOn Premise Venue ManagersOff Premise Retail ManagersOn Premise StaffOff Premise StaffCustomer Focussed StructureLeadership expected across all levelsCommercial BoardCEOOn Premise Operations ManagerOff Premise Operations ManagerOn Premise Venue ManagersOff Premise Retail ManagersOn Premise CustomersOff Premise CustomersOn Premise StaffOff Premise StaffSupport Office Team(HR, Marketing, IS, Finance & Accounts, Operations Support, Warehouse)WLT TrusteesPLT TrusteesOne Key InsightHead Office became Support Office

People Support a World They Help Create

Where did change come from?The Agents of Change

From ToHigh levels of staff disengagement and low levels of engagementHigh levels of engagementDrivers of shift:Values & BehavioursInternal Communication Facebook etc.Excellence Awards Wests BestLeadership Development opportunitiesIncreased staff trainingEffective talent recruitment and management brought in houseRevitalised performance review system with meaningful measuresAwareness that poor performance will not beToleratedSingle vision / Vision updates / New brandStory-telling Our West identity

From ToFocus on the recognition of tenure without equivalent recognition of performancePerception that non-performance accepted / toleratedHigh recognition of performers and high levels of achievementNon-performance managed out10/15/20 year club dinner disbanded in favour of performance recognitionExcellence Awards (including Peoples Choice)Monthly Values awardsPRDs and online CSB performance review systemRemuneration review = fairnessMeasured Tier 1 / Tier 3 departures

From ToUnprofitable or declining venues lacking investmentand driveProperty reinvestment planVenues rationalised and modern on-premise profitable (reduction in losses)Total hospitality loss reduction programme losses are no longer acceptableSuburban bar model ability to experiment and try new modelsHard decisions made = Closure of some venues as part of strategy without losing engagement or confidence by sharing facts and figuresThe real financial story was told to all staff (profit, margins etc in simple terms and diagrams)

From ToDated marketing approachModernisation of marketingRebrandedDevelopment of digital marketing channels Integration across on and off premise and print and digital channelsStore theming and promotions centrally coordinated Our WestWebsites updatedPrinted mailersSeasonal campaignsFocus on growing loyaltyCross promotion of on and off premiseFacebook for venues, retail channels and plus points

What Did This Achieve?Wheres the R.O.I?

Nice AwardsMost Improved Large Workplace

Engagement rose almost 7% - the largest jump theyd seen since the survey began

Dale Carnegie International Leadership Award

Kenexa Best Workplaces Survey 2012 How did we achieve this result?

Agents of changeValuesInvestment in effective leadershipExcellence AwardsFacebookWATZ NewzLearning & Development

Positive OutcomesEBIT (pre-tax profit) = 350% of what it was in 2011 EBITDA (profit less depreciation) more than 200% of pre strategy figuresFree cash flow is 15x what it was in 2011Staff turnover was almost 50% ; last month = 17%Productivity - results are being achieved with 25% less staff70% change in store managers, 75% change in hospitality managers, 30% change in executive teamSome trophies in the cabinet external endorsements are important for our brand as an employer of choice

Our Key DriversSingle vision / New strategy and new brand = all noses pointing in the same direction Our West & giving back = identity/prideValues & Behaviours were developed by them, adopted by us, then measured, discussed and celebrated (monthly awards)Internal Communication Values nominations, Facebook page, Vision updates, birthday cards, thank you & well done cards.dropped the tenure awards dinner and 10/15/20 year clubs in favour of the Excellence Awards Dinner Wests Best, Leadership Development opportunities and training for all in leadership roles (including 360 behavioural assessment)Effective talent recruitment & management brought in housePerformance review system with meaningful measures 50% weighted on how you do the job What we learnt along the way...Be relentless about your purpose and your message of change

Over communicate x10 Motivation = Communication

Seek solutions from others (your job is get the good ideas flowing)

Self ReflectionAm I a leader worth following?

Are those that lead in your organisation people youd like to follow?If I was you from today...Be aware many will not tell the boss directly what they really think but commit to finding out

Get out if youre not up to leading change only do it if you can commit to doing it well assess those around you

Have the courage to seek out underlying issues & then initiate change and empower them

Set aside the noise of the detractors and the dark side

Believe that culture is critical and make sure others know

Culture without strategy is aimless, howeverStrategy without culture is powerless- Robert Burgelmann

simonw@thetrusts.co.nzwww.thetrusts.co.nz