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The links between culture, leadership and change.TRANSCRIPT
www.valuescentre.com 1www.valuescentre.comwww.valuescentre.com
Culture, Leadership and Change
Richard BarrettApril 2011
2
What is Culture?
3
What is Culture?
“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 and the legacy of past leaders.
4
What are Values?
5
What are Values?
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
6
Exercise: Values, Beliefs and Behaviours
This exercise takes about 15 minutes
1. Choose 3 values that are important to you and enter them in the left hand column of the worksheet
EXAMPLE: Clarity
2. Write down your beliefs that support this value in middle column
EXAMPLE: Clarity bring focus to decision making
3. Write down the behaviours you exhibit that support this value
EXAMPLE: Seek many opinions, synthesize multiple data points to understand the big picture
7
Hierarchy of Decision Making
Based on past: DNA encoded reaction. Action precedes thought.
Based on past: Learned ego reaction. Action precedes thought.
Based on past: Considered response. Pause between event and response.
Future orientation. Consciously creating the future.
Based on flow. Tap into the collective unconscious and what wants to emerge.
Intuition
Instincts
Sub Conscious Beliefs
Conscious Beliefs
Values
Based on inner voice. Direct influence of the soul on decision-making
Inspiration
8
The Leader and the Values
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.
Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983
Leadership values and excellence
9
The Leader and the Values
Tom Peters, “In Search of Excellence: Lessons from America’s best run companies”, 1983
The real role of the leader is to manage the values of the corporation.
10
Culture and Strategy
11
Culture and Strategy
Strong Culture Good Strategy
High Performance
12
Culture and Strategy
Full Spectrum Leadership
Compelling VisionInspiring Mission
High Performance
Strong CulturePersonal Alignment
Group CohesionStructural Alignment
Good StrategyClear Goals
Measurable Objectives Key Performance
Indicators
13
Both Culture and Strategy are Important
In firms with strong corporate cultures, managers tend to march energetically in the same direction. The alignment, motivation, organisation, and control can help performance, but only if the
resulting actions fit an intelligent business strategy for the specific environment in which the firm operates.
John P. Kotter and James L. Heskett, “Corporate Culture and Performance”, 1992
14
Culture and Brand
15
Culture and Brand
Employee Perspective Customer Perspective
CULTURE BRAND
The Culture
Vision Mission Values Behaviours
Who you are on the inside, looks a lot like who you are on the outside
Do you consciously create your culture, or do you have a default,
unconscious culture?
16
Culture and Valuesin a Rapidly Changing World
17
Organisations as Complex Adaptive Systems
The modern economy resembles a complex adaptive system rather than a close equilibrium system. Thus, markets exhibit periods of relative calm and stability which are interrupted by stormy periods.
Such disequilibriums make it difficult for participants to survive for long periods as their strategies, skills or culture tend to get finely optimized for stable periods, and then suddenly become obsolete when the restructuring occurs. Companies have a hard time surviving upheavals, market shakeouts and technology shifts.
Therefore, strong cultures are only valuable if they exhibit the adaptive and learning qualities. Otherwise, they become a liability during the periods of accelerated change.
Beinhocker, E. (1997) “Strategy at the Edge of Chaos”, McKinsey Quarterly, Vol. 1, pp 25-39
Strong cultures exhibit adaptive and learning qualities
18
The Economic Meltdown
What we currently are experiencing is not a market shakeout or a technology shift.
It is the breakdown of an unsustainable economic paradigm that threatens the global sustainability of human society.
19
Global Sustainability Issues
Pandemics
Climate Change
Global Economy
GlobalTerrorism
Poverty Reduction
Food Resilience
Natural Disasters
Energy Resilience
Species Extinction
WaterShortages
The significant problems we face cannot be solved at the same level of thinking that created them.
Pollution
Waste Disposal
20
What Sustainability Issues is your company facing?
• Internal Issues• External Issues
21
What this Means for Business
Increased focus on Sustainability
Risk and uncertainty are increasing
Change is accelerating – social, economic, technological
Competition is increasing – China, India, South America
Complexity is increasing
Interdependency is increasing
Ethics and public opinion increasingly influence corporate decision-making as societal issues increasingly become political issues
22
Other Business Issues …
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 ensure ethics permeate the corporate culture and the company is in alignment with public opinion
23
The Global Sustainability Challenge?
24
The Sustainability Challenge
The problems of existence have become global but the decision-making structures
we have for dealing with them are national.
We cannot move forward without a high degree of global cooperation.
25
A New Leadership Paradigm
Private Sector
Social Sector
Public Sector
The paradigm that divides the world into the social sector, the private sector, and the
governmental sector is not working.
It creates artificial barriers. We are each a constituent of the problem, so we have to
combine our forces, our efforts, and our competencies.
Tex Gunning, Unilever, Best Foods Asia
26
A New Leadership Paradigm
Private Sector
Social Sector
Public Sector
Average leaders take care of themselves and their families.
Good leaders take care of themselves, their families, and some of the community.
Great leaders—and great companies—not only take care of all stakeholders but also want to change the world.
They want to leave the world better than they found it.
Tex Gunning, Unilever, Best Foods Asia
27
A New Leadership Paradigm
A shift in focus from “I” to “we”
A shift from self-interest to the common good
A shift from being the best in the world to the best for the world.
28
We will only get beyond this stage of our collective evolution if we can put aside our
narrow self-interest, focus on the whole system, and build a values-driven
framework of policies that support the common good.
A Crisis of Leadership
Richard Barrett, The New Leadership Paradigm
29
What Evolution can teach us about the New Leadership Paradigm
• Three Universal Principles• Five Characteristics/Strategies• Building a High-Performance
Organisation to Withstand Turbulent Times
30
The Universal Stages of Evolution
From the Big Bang … to the Present Day
Stage 1Entities learn how to become viable and independent in their frameworks of existence.
Stage 2 As life conditions become more complex, viable independent entities bond with each other to create a group structures.
Stage 3 Viable independent group structures then cooperate with each other to form a higher order entity.
Energy Atoms Molecules Cells Organisms Creatures Homo sapiens
31
Evolution and Complexity
At each stage of evolution – from atoms, to cells, to creatures – there was not only an expansion in awareness, but also an expansion in the range of possible reactions or responses that an entity could make to changes in its internal or external environment.
Evolution: The continually unfolding ability to respond to increasingly complex life conditions.
An increase in external complexity demanded an increase in
internal complexity
32
Stage 1:
Entities learn how to become viable and independent in their frameworks of existence.
Stage 2:
As life conditions become more complex, viable independent entities bond with each other to create a group structures.
Stage 3:
Viable independent group structures then cooperate with each other to form a higher order entity.
Particles/waves of information existing in a quantum energy field.
Carbon atom Molecules Cells
Eukaryotic cell Organisms Creatures
Homo sapiens Nations Humanity
The Universal Stages of EvolutionLevels
of
Bein
g
Evolution
33
PERSONAL MASTERYEncourage individuals to become viable independent (be
accountable and responsible for their work)
INTERNAL COHESIONEncourage those individuals to bond together to form teams and
business units with common values and a sense of shared mission and vision
EXTERNAL COHESIONEncourage those teams and business units to collaborate together
to form a higher order entity known as the organization
What this Means for Organisations
Three Stage Leadership Development Process
34
Priorities for Leadership Development
Stage 1: Personal Mastery
Overcoming the fears of the Ego to become viable and independent in your framework of existence
Stage 2: Internal Cohesion
Aligning the motivations of the Ego with the Soul (bonding) to become an authentic individual
Stage 3: External Cohesion
Cooperating with other individuals who share the same values and mission to leverage impact
Evolu
tion
Stage 1: Team Mastery
Overcoming the fears of individual Team membersTo minimize cultural entropy
Stage 2:Internal Cohesion
Aligning the motivations of Team members with the mission of the Team for team alignment
Stage 3:External Cohesion
Cooperating with other Teams who share the same values and vision
Stage 1: Personal Mastery
Overcoming the fears of individual Staff members to minimize cultural entropy
Stage 2:Internal Cohesion
Aligning the motivations of Staff members with the vision and values of the Organization
Stage 3:External Cohesion
Cooperating with other Organizations who share the same values and vision
Leading Self Leading Others Leading an
Organisation
35
Selection Priorities for Talent Management
Adaptability
- Speed- Resilience
Continuous Learning
- Memory - Logic
Ability to Bond
- Compatibility - Trust
Ability to Handle Complexity
- Internal - External
Ability to Cooperate
- Alignment- Empathy
Characteristics of highly successful evolutionary entities
ABILITY TO LEAD SELF AND TO LEAD OTHERSAGE & EXPER-IENCE
36
From Leader’s Values to Shareholder Value
Corporate Sector
Leader’s Values/ Behaviours
Corporate Culture
CompetitiveAdvantage &Resilience
Performance & Shareholder
Value
37
Corporate Sector
From Leader’s Values to Shareholder Value
LeadershipDevelopment
EmployeeFulfillment
CustomerSatisfaction
Performance & Shareholder
Value
38
From Leadership to Customer Satisfaction
Public Sector
Leader’s values/ behaviours
OrganisationalCulture
Mission Assurance
CustomerSatisfaction
39
From Leadership to Customer Satisfaction
LeadershipDevelopment
EmployeeFulfillment
MissionAssurance
Customer Satisfaction
Public Sector
40
Building a High-Performance Organisation
• Focus on the Employee Experience
41
How do you Build a High-Performance Organisation?
By creating an adaptable, vision-guided, values-driven culture that focuses on all stake holder needs and in particular
the employee and customer experience.
42
3 Years 5 Years 10 Years0%
200%
400%
600%
800%
1000%
1200%
S&P 500 Good to Great
Firms of Endearment
Firms of Endearment*
Investor returns over 3, 5 and 10 years comparing S&P 500, Good to Great and Firms of Endearment.
“... the distinguishing feature of “firms of endearment” is that they treat all stakeholders—employees, customers, investors, partners, and society—equally. In addition, they fully recognize that they are a part of an economic ecosystem with many interdependent participants. They are committed to exemplary citizenship, and they embrace the concept of servant leadership.
* Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Seth, Firms of Endearment: The Pursuit of Purpose and Profit (Upper Saddle River, N.J.: Wharton School of Publishing, 2007).
43
Firms of Endearment
“FoEs share four primary elements in their corporate visions.
• A broader purpose than wealth generation• Dedication to servant leadership • Emotionally intelligent leadership• Commitment to exemplary citizenship• Recognition that they are part of an economic ecosystem with many interdependent participants”
Firms of Endearment: How World-Class Companies Profit from Passion and Purpose, David Wolfe, 2006
44
Better returns
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.
Fortune’s Best Companies to Work For
S&P 500
45
Best Employers have Lowest Entropy
Staff Engagement Cultural Entropy
Tier 1 (Best) 89% 5%
Tier 2 76% 8%
Tier 3 55% 15%
Tier 4 (Worst) 40% 21%
Cultural Entropy The degree of dysfunction in the culture – bureaucracy, internal competition, etc.
This research of 163 organisations in Australia was carried out by Hewitt Associates and the Barrett Values Centre in 2008
46
Low Entropy Leads to High Financial Returns
Entropy Level 3 Year Revenue Growth %
<10% 32.87%
10% – 19% 24.90%
20% – 29% 11.39%
>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
The degree of dysfunction in the culture – bureaucracy, internal competition, etc.
47
The distinguishing feature of the best employers was their focus on employee needs and the employees’ experience.
The values that were present in the top ten current culture values of the best companies, that were not present in the worst companies.
Best employers focus on …
Employee needs and employee experience
Employee recognition
Coaching/mentoring
TeamworkBalance (home/work)
48
The Three Mantras of Culture Change
49
The Three Mantras of Culture Change
50
The Three Mantras of Culture Change
Cultural Capital is the new frontier of competitive advantage.
Organisational transformation begins with the personal transformation of the leaders.
Measurement matters. If you can measure it you can manage it.
51
Cultural Evolution Begins with Personal Evolution
The culture ofan organisationis a reflectionof the leadership consciousness.
power (L) 11 Level 3
blame (L) 10 Level 2
demanding (L) 10 Level 2
manipulative (L) 10 Level 2
experience 9 Level 3
controlling (L) 8 Level 1
arrogant (L) 7 Level 3
authoritarian (L) 6 Level 1
exploitative (L) 6 Level 1
ruthless (L) 6 Level 1
1. short-term focus (L) 13 Level 1
2. blame (L) 11 Level 2
3. manipulation (L) 10 Level 2
4. caution (L) 7 Level 1
5. cynicism (L) 7 Level 3
6. bureaucracy (L) 6 Level 3
7. control (L) 6 Level 1
8. cost reduction 5 Level 1
9. empire building (L) 5 Level 2
10. image (L) 5 Level 3
11. long hours (L) 5 Level 3
LV A Feedback 14 Assessors
PL = 1-9 | IRO (P) = 1-0-0 | IRO (L) = 1-8-0
CVA Current Culture
PL= 1-10 | IROS (P)= 0-0-1-0 | IROS (L)= 2-4-4-0
Cultural Entropy 38% Personal Entropy 64%
Culture Values Leader’s Values
52
The culture ofan organisationis a reflectionof the leadership consciousness.
continuous learning 11 Level 4
generosity 11 Level 5
commitment 10 Level 5
positive attitude 10 Level 5
vision 10 Level 7
ambitious 9 Level 3
making a difference 8 Level 6
results orientation 8 Level 3
honesty 7 Level 5
integrity 7 Level 5
intuition 7 Level 6
leadership developer 7 Level 6
1. customer satisfaction 16 Level 2
2. commitment 11 Level 5
3. continuous learning 11 Level 4
4. making a difference 11 Level 6
5. global perspective 9 Level 3
6. mentoring 9 Level 6
7. enthusiasm 8 Level 5
8. leadership development 8 Level 6
9. integrity 7 Level 5
10. open communication 7 Level 2
11. optimism 7 Level 5
12. shared values 7 Level 5
CVA Current Culture
PL= 12-0 | IROS (P)= 4-2-5-1 | IROS (L)= 0-0-0-0
LV A Feedback 27 Assessors
PL = 12-0 | IRO (P) = 9-1-2 | IRO (L) = 0-0-0
Cultural Evolution Begins with Personal Evolution
Cultural Entropy 7% Personal Entropy 9%
Culture Values Leader’s Values
53
Measuring Culture by Mapping Values
54
The Model and Cultural Transformation Tools
Pages: 55-101 Pages: 19-67
55
Growth Needs and Deficiency Needs
Growth NeedsWhen these needs are fulfilled they do not go away, they engender deeper levels of motivation and commitment.
Deficiency NeedsAn individual gains no sense of lasting satisfaction from being able to meet these needs, but feels a sense of anxiety if these needs are not met. Physiological
Safety
Love & Belonging
Self-esteem
Know and Understand
Abraham Maslow
Self Actualization
56
Maslow’s Needs to Barrett’s Consciousness
Know and Understand
Physiological
Safety
Love & Belonging
Self-esteemAbraham Maslow
Know and Understand
N e e d s C o n s c i o u s n e s s
Self-Actualization
Richard Barrett
57
Maslow’s Needs to Barrett’s Consciousness
Know and Understand
Physiological
Safety
Love & Belonging
Self-esteem
Know and Understand
N e e d s C o n s c i o u s n e s s
1. Expansion of self-actualization into multiple levels.
2. Substitute ‘states of consciousness’ for hierarchy of needs.
3. Each state of consciousness is defined by specific values and behaviours.
58
Stages in the Development of Personal Consciousness
Positive Focus / Excessive Focus
Service
Making a difference
Internal Cohesion
Transformation
Self-esteem
Relationship
SurvivalFinancial Security & SafetyCreating a safe secure environment for self and significant others. Control, greed
BelongingFeeling a personal sense of belonging, feeling loved by self and others. Being liked, blame
Self-worth Feeling a positive sense of pride in self and ability to manage your life. Power, status
Personal GrowthUnderstanding your deepest motivations, experiencing responsible freedom by letting go of your fears
Finding Personal MeaningUncovering your sense of purpose and creating a vision for the future you want to create
Collaborating with PartnersWorking with others to make a positive difference by actively implementing your purpose and vision
Service to Humanity and the PlanetDevoting your life in self-less service to your purpose and vision
59
Positive Focus / Excessive Focus
Financial StabilityShareholder value, organisational growth, employee health, safety. Control, corruption, greed
BelongingLoyalty, open communication, customer satisfaction, friendship. Manipulation, blame
High PerformanceSystems, processes, quality, best practices, pride in performance. Bureaucracy, complacency
Continuous Renewal and LearningAccountability, adaptability, empowerment, teamwork, goals orientation, personal growth
Building Corporate CommunityShared values, vision, commitment, integrity, trust, passion, creativity, openness, transparency
Strategic Alliances and PartnershipsEnvironmental awareness, community involvement, employee fulfillment, coaching/mentoring
Service To Humanity And The PlanetSocial responsibility, future generations, long-term perspective, ethics, compassion, humility
Stages in the Development of Organisational Consciousness
Service
Making a difference
Internal Cohesion
Transformation
Self-esteem
Relationship
Survival
60
Placement of Values by Level
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)
10
42 5
7
9
6
8
3
110
Service
Making a difference
Internal Cohesion
Transformation
Self-esteem
Relationship
Survival
61
Cultural Entropy
Distribution of Values by Level
Current Culture 100 Employees
11%
1
2
3
4
5
6
7Service
Making a difference
Internal Cohesion
Transformation
Self-esteem
Relationship
Survival
62
Engineering and Projects Company (339)
Level 7
Level 6
Level 5
Level 4
Level 3
Level 2
Level 1
Personal Values Current Culture Values Desired Culture Values
IRS (P)= 6-4-0 | IRS (L)= 0-0-0 IROS (P)= 0-2-5-0 | IROS (L)= 1-1-1-0 IROS (P)= 1-3-6-0 | IROS (L)= 0-0-0-0
Matches
PV - CC 1CC - DC 4PV - DC 2
Health Index (PL)
PV: 10-0CC: 7-3
DC: 10-0
1. honesty 169 5(I)
2. accountability 165 4(R)
3. commitment 150 5(I)
4. continuous learning 92 4(I)
5. balance (home/work) 91 4(I)
6. family 91 2(R)
7. self-discipline 91 1(I)
8. responsibility 89 4(I)
9. respect 81 2(R)
10. open communication 76 2(R)
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. continuous improvement
111 4(O)
2. customer satisfaction
111 2(O)
3. safety conscious 102 1(O)
4. cost reduction 88 1(O)
5. job insecurity (L) 77 1(O)
6. inconsistent (L) 75 3(I)
7. teamwork 74 4(R)
8. accountability 71 4(R)
9. blame (L) 71 2(R)
10. corporate image 64 3(O)
1. accountability 180 4(R)
2. customer satisfaction
147 2(O)
3. continuous improvement
143 4(O)
4. employee development 111 4(O)
5. employee recognition 96 2(R)
6. commitment 95 5(I)
7. inspirational leadership 95 6(O)
8. employee fulfilment 94 6(O)
9. teamwork 90 4(R)
10. professionalism 80 3(O)
Values Plot Copyright 2011 Barrett Values Centre February 2011
The values that are important to
employees in their personal
lives.
How employees experience the company - What is working well? What is undermining the sustainability
of the company.
What employees believe is necessary
for the company to achieve
its full potential
1%
1%
1%
9%
12%
17%
24%
8%
6%
21%
0% 20% 40%
1
2
3
4
5
6
7
6%
5%
12%
10%
8%
14%
11%
9%
5%
20%
0% 20% 40%
1
2
3
4
5
6
7
1%
1%
0%
6%
12%
16%
19%
13%
5%
27%
0% 20% 40%
1
2
3
4
5
6
7
Engineering and Projects Company (339)
C
T
S
Values Distribution Copyright 2011 Barrett Values Centre February 2011
C = Common GoodT = TransformationS = Self-Interest
Positive ValuesPotentially Limiting Values
CTS = 38-21-41Entropy = 3%
CTS = 25-20-55Entropy = 23%
CTS = 37-27-36Entropy = 2%
Personal Values
Current Culture Values
Desired Culture Values
Total number of votes for all
values at each level
Cultural Entropy % of Votes for Limiting Values
Common Good
Transformation
Self Interest
6464
ValueCurrent
Culture VotesDesired
Culture VotesValue Jump
accountability 71 180 109
inspirational leadership 15 95 80
employee fulfilment 23 94 71
employee recognition 28 96 68
employee development 57 111 54
professionalism 36 80 44
efficiency 30 74 44
commitment 55 95 40
honesty 33 70 37
balance (home/work) 29 66 37
Value JumpsValue JumpsVotes for Values in
Current CultureVotes for Values in
Desired Culture
6565
ESPOUSED VALUE
CC VOTES DC VOTES Difference*
Customer satisfaction
111 147 +10%
Accountability 71 180 +32%
Honesty 33 70 +11%
Employee fulfilment
23 94 +21%
Espoused Values AnalysisEspoused Values Analysis
Votes for Values in Current Culture
Votes for Values in Desired Culture
66
Nedbank, South Africa: An Example of Cultural Evolution
67
68
Entropy 13%Entropy 25% Entropy 19% Entropy 17% Entropy 14%
Nedbank: Current Culture Evolution
1. cost-consciousness2. profit 3. accountability 4. community involvement 5. client-driven 6. process-driven7. bureaucracy (L)8. results orientation 9. client satisfaction10. silo mentality (L)
2005
1. cost-consciousness2. accountability 3. client-driven 4. client satisfaction 5. results orientation 6. performance driven7. profit8. bureaucracy (L)9. teamwork 10. community involvement
2006
1. client-driven 2. accountability 3. client satisfaction 4. cost-consciousness5. community involvement6. performance driven 7. profit8. achievement9. being the best 10. results orientation
2007 2008
1. accountability2. client-driven 3. client satisfaction 4. community involvement 5. achievement6. cost-consciousness7. teamwork8. performance driven9. being the best 10. delivery
2009
1. accountability2. client-driven 3. client satisfaction 4. cost-consciousness5. community involvement 6. achievement7. teamwork 8. employee recognition 9. being the best10. performance driven
5 matches4 matches4 matches3 matches 6 matches
69
25%
19%17%
14%13%
0%
5%
10%
15%
20%
25%
2005 2006 2007 2008 2009
Nedbank: Cultural Evolution
Entropy reduction leads to improved performance—increased revenues, profits and share price. Working toward entropy of <10% will result in healthy functioning of the organisation and improvement of staff morale.
Entropy Scores
Entropy risk bands
<10% Healthy functioning10-19% Some problems requiring careful monitoring20-29% Significant problems requiring attention30-39% Crisis situation requiring immediate change40%> Impending risk of implosion, bankruptcy or failure
70
Cultural entropy represents the degree of dysfunction in a culture
Cultural Entropy
Entropy Impact
<10% Prime: Healthy Functioning
11-19% Minor Issues: Requiring cultural and/or structural adjustment
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/coachingand leadership development
71
Nedbank: Response Rate to Values Survey
1827
6083
10155
14091
18206
0
4000
8000
12000
16000
20000
2005 2006 2007 2008 2009
63.0%
50.4%
28.0%
35.5%
20.2%
28,898 employees in 2009
Response rate
nu
mb
er
of
pa
rtic
ipa
nts
72
Nedbank: Cultural Evolution
Nedbank Staff Survey Scores
59.6% 66.3%71.5% 75.1% 78.8%
0.0%20.0%40.0%60.0%80.0%
100.0%
2005 2006 2007 2008 2009
73
Revenue grew on average 16.9% (CAGR) per year from 2004 to 2007
Share Price grewon average 20.4% (CAGR) per year from 2004 to 2007
Nedbank: Financial Impact of Cultural Evolution
78
100
134 136
96
0
20
40
60
80
100
120
140
160
2004 2005 2006 2007 2008
Closing share price (Rand)
1402715809
18948
22428 22077
0
5000
10000
15000
20000
25000
2004 2005 2006 2007 2008
Revenue Rm (operating income)
CAGR : Compound Annual Growth Rate
74
Entropy Costs (Alienation & Money)
• Value Proposition• Cost of Limiting Values
75
Employee Value Proposition
Company BEspoused Valuesclient collaborationteamworkdeliverymeritocracyintegrity
Company A Espoused Valuesintegritycompassionaccountabilityrespectexcellence
1. long hours (L)2. being the best3. cost reduction (L)4. poor communication (L)5. client collaboration6. bureaucracy (L)7. confusion (L)8. arrogance (L)9. hierarchy (L)10. silo mentality (L)
Cultural Entropy 37%
1. accountability2. customer satisfaction 3. being the best 4. commitment 5. compassion 6. continuous improvement 7. integrity8. teamwork 9. cost effectiveness10. respect
Cultural Entropy 9%
76
77
Cost of Limiting Values
• Short-term Focus£3,489,818
• Confusion£3,178,636
• Bureaucracy (unnecessary)£1,799,618
• Empire Building£1,764,682
• Information Hoarding£1,634,045
• Sickness and Leavers £834,225
• Hierarchical £624,327
• Long Hours £187,909
• Total Entropy Cost (potential business value) £13,504,261
Based on staff’s perception of lost productivity and opportunity. Annual income £33,000,000 and loss of £500,000 in 2000.
78
Cost of Limiting Values
1. over-engineering (L)
2. bureaucracy (L)
3. complacency (L)
4. job security (L)
5. inefficiency (L)
6. inflexibility (L)
7. risk-averse (L)
8. hierarchical (L)
9. tradition (L)
10. control (L)
11. cynicism (L)
12. short-term orientation (L)
13. turfism (L)
Exec Team Estimate of Costs of Limiting Values
€5.4bn per year
(€7bn income - €235,000 profit)
European Corp Current Culture250,000 employees
Rule of Thumb: Each limiting value in top ten represents a loss of 6% to
7% of potential revenue.
79
Mergers & Acquisitions
80
Merger of Equals – Health Insurance (USA)
Personal Values
IRS (P)= 5-5-0 | IRS (L)= 0-0-0
1. accountability 5511 4(R)
2. honesty 4573 5(I)
3. family 3962 2(R)
4. reliability 3713 3(R)
5. commitment 3701 5(I)
6. responsibility 3290 4(I)
7. caring 3280 2(R)
8. integrity 2958 5(I)
9. adaptability 2888 4(I)
10. respect 2842 2(R)
Personal Values
IRS (P)= 5-5-0 | IRS (L)= 0-0-0
1. accountability 2696 4(R)
2. commitment 2227 5(I)
3. honesty 2185 5(I)
4. reliability 1817 3(R)
5. responsibility 1810 4(I)
6. family 1642 2(R)
7. caring 1546 2(R)
8. adaptability 1533 4(I)
9. respect 1471 2(R)
10. integrity 1409 5(I)
Company A Company B
10 Matching Personal Values
81
Merger of Equals – Health Insurance (USA)
Company A – Entropy 14% Company B – Entropy 17%
8 Matching Current Culture Values
Current Culture Values
IROS (P)= 2-3-4-1 | IROS (L)= 0-0-0-0
1. customer satisfaction 4617 2(O)
2. community involvement 3887 6(S)
3. accountability 3328 4(R)
4. diversity 3099 4(R)
5. teamwork 2816 4(R)
6. commitment 2624 5(I)
7. continuous improvement 2596 4(O)
8. organizational growth 2466 1(O)
9. employee health 2364 1(O)
10. integrity 2361 5(I)
Current Culture Values
IROS (P)= 1-3-5-1 | IROS (L)= 0-0-0-0
1. customer satisfaction 2337 2(O)
2. community involvement 2188 6(S)
3. accountability 1658 4(R)
4. teamwork 1600 4(R)
5. commitment 1459 5(I)
6. organizational growth 1356 1(O)
7. continuous improvement 1355 4(O)
8. cost reduction 1242 1(O)
9. diversity 1194 4(R)
10. productivity 1177 3(O)
82
Merger of Equals – Health Insurance (USA)
Company A Company B
7 Matching Desired Culture Values
Desired Culture Values
IROS (P)= 3-3-4-0 | IROS (L)= 0-0-0-0
1. accountability 5368 4(R)
2. customer satisfaction 4414 2(O)
3. continuous improvement 3557 4(O)
4. commitment 3523 5(I)
5. teamwork 3404 4(R)
6. balance (home/work) 2967 4(O)
7. open communication 2949 2(R)
8. integrity 2830 5(I)
9. adaptability 2404 4(I)
10. information sharing 2287 4(O)
Desired Culture Values
IROS (P)= 1-3-5-1 | IROS (L)= 0-0-0-0
1. accountability 2741 4(R)
2. customer satisfaction 2369 2(O)
3. commitment 2003 5(I)
4. continuous improvement 1891 4(O)
5. teamwork 1802 4(R)
6. information sharing 1395 4(O)
7. open communication 1375 2(R)
8. continuous learning 1228 4(O)
9. community involvement 1189 6(S)
10. leadership development 1170 6(O)
83
Merger of Equals – Health Insurance (USA)
Company A Company B
Current Culture Values
Finance Finance
Fitness
Evolution Culture
Societal Contribution
Societal Contribution
Client Relations
84
Merger of Un-Equals – IT (Europe)
Company A Company B
5 Matching Personal Values
Personal Values
IRS (P)= 8-2-0 | IRS (L)= 0-0-0
1. enthusiasm 58 5(I)
2. humour/fun 49 5(I)
3. creativity 37 5(I)
4. accountability 33 4(R)
5. honesty 32 5(I)
6. responsibility 32 4(I)
7. balance (home/work) 30 4(I)
8. integrity 30 5(I)
9. reliability 28 3(R)
10. optimism 27 5(I)
Personal Values
IRS (P)= 8-2-1 | IRS (L)= 0-0-0
1. humour/fun 15 5(I)
2. enthusiasm 14 5(I)
3. integrity 13 5(I)
4. balance (home/work) 12 4(I)
5. making a difference 12 6(S)
6. reliability 12 3(R)
7. being the best 11 3(I)
8. independence 11 4(I)
9. open communication 11 2(R)
10. achievement 10 3(I)
11. performance 10 3(I)
85
Merger of Un-Equals – IT (Europe)
Company A – Entropy 39% Company B – Entropy 7%
1 Matching Current Culture Values
Current Culture Values
IROS (P)= 1-1-4-0 | IROS (L)= 0-1-4-0
1. short-term focus (L) 67 1(O)
2. achievement 62 3(I)
3. bureaucracy (L) 55 3(O)
4. control (L) 52 1(R)
5. results orientation 51 3(O)
6. cost reduction 47 1(O)
7. workload (L) 38 3(O)
8. politics (L) 34 3(O)
9. profit 33 1(O)
10. accountability 29 4(R)
11. success 29 3(O)
Current Culture Values
IROS (P)= 3-1-6-0 | IROS (L)= 0-0-0-0
1. humour/fun 19 5(O)
2. being the best 18 3(O)
3. customer satisfaction 15 2(O)
4. success 15 3(O)
5. teamwork 13 4(R)
6. achievement 12 3(I)
7. passion 11 5(I)
8. professionalism 11 3(O)
9. enthusiasm 10 5(I)
10. entrepreneurship 10 4(O)
86
Merger of Un-Equals – IT (Europe)
Company A Company B
7 Matching Desired Culture Values
Desired Culture Values
IROS (P)= 3-3-5-0 | IROS (L)= 0-0-0-0
1. employee recognition 41 2(R)
2. customer satisfaction 39 2(O)
3. entrepreneurship 39 4(O)
4. teamwork 37 4(R)
5. long-term perspective 34 7(O)
6. creativity 31 5(I)
7. accountability 29 4(R)
8. continuous improvement 28 4(O)
9. innovation 28 4(I)
10. continuous learning 26 4(O)
11. enthusiasm 26 5(I)
Desired Culture Values
IROS (P)= 4-1-7-0 | IROS (L)= 0-0-0-0
1. customer satisfaction 16 2(O)
2. being the best 14 3(O)
3. employee recognition 14 2(R)
4. humour/fun 13 5(O)
5. entrepreneurship 12 4(O)
6. continuous improvement 11 4(O)
7. innovation 11 4(I)
8. success 10 3(O)
9. creativity 9 5(I)
10. enthusiasm 9 5(I)
11. excellence 9 3(I)
12. professionalism 9 3(O)
87
Merger of Un-Equals – IT (Europe)
Company A Company B
Current Culture Values
Finance Finance
Fitness
Evolution Culture
Societal Contribution
Societal Contribution
Client Relations
88
Questions
In each of the two case studies discuss and decide:
1. How aligned the people are2. How aligned the companies are 3. What can Company A teach Company B4. What can Company B teach Company A5. What are the chances of a successful outcome with reasons
89
Whole System Change
90
The Concept of Whole System Change
Pages: 119-157 Pages: 370-379
91
Four Conditions for Whole System Change
Interior Exterior
Individual
Collective
Personality: Values and Beliefs of an Individual
Culture: Values and Beliefs of a Group
Social Structures:
Actions and Behaviours
of a Group
Character: Actions and
Behavioursof an
Individual
Based on the Four Quadrants of Ken Wilber
The Four Quadrants
92
Four Conditions for Whole System Change
Interior Exterior
Individual
Collective
Personality: Values and Beliefs of an Individual
Culture: Values and Beliefs of a Group
Social Structures:
Actions and Behaviours
of a Group
Character: Actions and
Behavioursof an
IndividualMis
sio
n A
lign
men
tValu
es A
lig
nm
en
t
Structural Alignment
Personal Alignment
The Four Conditions for Whole System Change
93
4. Define core values & behaviours of the organisation
3. Revisit the Vision and Mission of the Organisation
1. Commitment from leadership team to personal transformation
2. Baseline measurement of the culture and key performance indicators. Create scorecard.
How do we build a high-performance culture
How do we become and remain agile and adaptable?
How can we position ourselves for the future?
How can we build our long-term resilience?
5. Develop compelling
reasons for change
Whole System Change: Nine Step Process
94
Why?
Whole System Change: Implementation Phase
6. Personal Alignment
Begin with the leadership team and then expand to the larger leadership group including managers and supervisors (Leading Self and Leading a Team)
7. Structural Alignment
Set up incentives to make the espoused values and behaviours pervasive
• New employee/ Executive selection
• New employee/ Executive orientation
• Employee/executive performance evaluation
• Employee/executive promotion criteria
• Talent selection and development programme
• Management development programme
• Leadership development
programme
8. Values Alignment
Inculcate espoused values and behaviours into the executive and employee population. Explore personal values.
9. Mission Alignment
Integrate the vision and mission of the organisation into the executive and employee population. Explore personal motivations.
Whole System Change: Nine Step Process
95
Begin with the Leadership Team
• Personal Alignment of Leaders • Internal Cohesion in the Leadership Team
96
Personal Alignment of the Leaders
1
3
2
4
Wilber’s Four Quadrants
Organisational transformation begins with the personal transformation of the leaders. Organisations don’t transform. People do.
When leaders change their beliefs and values (1), their behaviours change (2).
This influences the culture of the group (3), which in turn changes the behaviours of the group (4).
97
The Leadership Values Assessment is a feedback instrument that compares a leader’s perception of the values he or she believes best describe his or her management/operational style with their colleagues’ perception of their management/operational style.
The instrument also compares leader’s perception of their own strengths, and the behaviours that they believe they need to improve or stop, with the assessors’ perceptions and measures personal entropy.
Leadership Values Assessment
Level 7
Level 6
Level 5
Level 4
Level 3
Level 2
Level 1
Jeff's Values Assessors' Top 11 Values
Matches 5
Jeff Vader
balance (home/work) Level 4
balance (physical/emotional/mental/spiritual)
Level 6
empathy Level 6
fairness Level 5
internal community builder
Level 5
nurturing Level 6
personal relationships Level 2
positive attitude Level 5
trustworthy Level 5
wisdom Level 7
Orange = Values match P = Positive I = IndividualL = Potentially Limiting R = Relationship
(white circle) O = organisational
Leadership Values Plot Copyright 2008 Barrett Values Centre August 2008
balance (physical/emotional/mental/spiritual)
Level 6
compassion Level 7
empathy Level 6
employee development Level 4
forgiveness Level 7
humor/fun Level 5
listener Level 2
mentoring Level 6
nurturing Level 6
personal relationships Level 2
positive attitude Level 5
PL = 10-0 | IRO (P) = 4-5-1 | IRO (L) = 0-0-0 PL = 11-0 | IRO (P) = 3-7-1 | IRO (L) = 0-0-0
How Jeff sees
himself
How Others see Jeff
Matching Values
0%
0%
0%
0%
10%
0%
40%
30%
10%
10%
0% 20% 40% 60%
1
2
3
4
5
6
7
0%
0%
0%
0%
18%
0%
18%
36%
18%
9%
0% 20% 40% 60%
1
2
3
4
5
6
7
Jeff Vader
C
T
S
C = Common GoodT = TransformationS = Self-Interest
Positive ValuesPotentially Limiting Values
CTS = 80-10-10Entropy = 0%
CTS = 72-9-19Entropy = 0%
Jeff's Values
Assessors' Values
Leadership Distribution Copyright 2008 Barrett Values Centre August 2008
Level of Personal Entropy
Level 7
Level 6
Level 5
Level 4
Level 3
Level 2
Level 1
Jim's Values Assessors' Top 11 Values
Matches 3
Jim Vader
balance (physical/emotional/mental/spiritual)
Level 6
goals orientation Level 4
listener Level 2
mission focus Level 4
organisational growth Level 1
perseverance Level 4
respect Level 2
results orientation Level 3
team player Level 4
trustworthy Level 5
Orange = Values match P = Positive I = IndividualL = Potentially Limiting R = Relationship
(white circle) O = organisational
Leadership Values Plot Copyright 2008 Barrett Values Centre August 2008
balance (physical/emotional/mental/spiritual)
Level 6
compassion Level 7
employee fulfillment Level 6
humor/fun Level 5
listener Level 2
mentoring Level 6
personal relationships Level 2
positive attitude Level 5
strategic alliances Level 6
team player Level 4
vision Level 7
PL = 10-0 | IRO (P) = 3-4-3 | IRO (L) = 0-0-0 PL = 11-0 | IRO (P) = 4-5-2 | IRO (L) = 0-0-0
How Jim sees
himself
How Others see Jim
Matching Values
0%
0%
0%
10%
20%
10%
10%
10%
0%
40%
0% 20% 40% 60%
1
2
3
4
5
6
7
0%
0%
0%
0%
18%
0%
18%
36%
18%
9%
0% 20% 40% 60%
1
2
3
4
5
6
7
Jim Vader
C
T
S
C = Common GoodT = TransformationS = Self-Interest
Positive ValuesPotentially Limiting Values
CTS = 20-40-40Entropy = 0%
CTS = 72-9-19Entropy = 0%
Jim's Values
Assessors' Values
Leadership Distribution Copyright 2008 Barrett Values Centre August 2008
Level of Personal Entropy
Level 7
Level 6
Level 5
Level 4
Level 3
Level 2
Level 1
Darth's Values Assessors' Top 11 Values
Matches 2
Darth Vader
ambitious Level 3
courage Level 4
creativity Level 5
excellence Level 3
integrity Level 5
long-term perspective Level 7
passion Level 5
results orientation Level 3
strategic alliances Level 6
vision Level 7
Orange = Values match P = Positive I = IndividualL = Potentially Limiting R = Relationship
(white circle) O = organisational
Leadership Values Plot Copyright 2008 Barrett Values Centre August 2008
achievement Level 3
authoritarian (L) Level 1
being the best Level 3
competitive (L) Level 2
demanding (L) Level 2
determination Level 4
excellence Level 3
knowledge Level 4
power (L) Level 3
results orientation Level 3
risk-taking Level 4
PL = 10-0 | IRO (P) = 7-0-3 | IRO (L) = 0-0-0 PL = 7-4 | IRO (P) = 6-0-1 | IRO (L) = 0-4-0
How Darth sees
himself
How Others
see Darth
Matching Values
0%
0%
0%
0%
0%
30%
30%
10%
20%
10%
0% 20% 40% 60%
1
2
3
4
5
6
7
9%
18%
9%
0%
0%
36%
0%
0%
0%
27%
0% 20% 40% 60%
1
2
3
4
5
6
7
Darth Vader
C
T
S
C = Common GoodT = TransformationS = Self-Interest
Positive ValuesPotentially Limiting Values
CTS = 60-10-30Entropy = 0%
CTS = 0-27-73Entropy = 36%
Darth's Values
Assessors' Values
Leadership Distribution Copyright 2008 Barrett Values Centre August 2008
Level of Personal Entropy
104
Darth Vader Video
105
Building Internal Cohesion in the Leadership Team
• Mutual Trust• Shared Accountability
106
Trust
Character
Intent
1. Caring
2. Transparency
3. Openness
Integrity
4. Honesty
5. Fairness
6. Authenticity
Competence
Capability
7. Skills
8. Knowledge
9. Experience
Results
10. Reputation
11. Credibility
12. Performance
Mutual Trust: The Trust Matrix Exercise
Inspired by Stephen Covey: The Speed of Trust
107
Shared Accountability: State of Grace Document
Stage 1
Leadership Values
Assessment with 2-3 hours
coaching
Stage 2
Team WorkshopStory of Me
Document
2 days
Focus on Self-Knowledge and
Personal Mastery
Stage 3
Team Workshop Story of UsDocument
2 days
Focus on Group Knowledge and
Cohesion
The New Leadership Paradigm: Pages 344 - 349
The expectations and agreements contained in the document enable the team to design how they want to be and act in their business relationships together, develop protocols for facing conflict head-on in an open and mature manner, and make sure there are no elephants in the room that are not being addressed. It is a blueprint for how the team works together.