IMPACT ON HUMAN PERFORMANCE THE BUSINESS CASE FOR CULTURE MANAGEMENT

Why Is Organisational Culture Important?

“Culture eats strategy for breakfast.” — Peter Drucker

Why values gets more attention today

• Evolution of human consciousness • Flowering of democracy • Need for resilience, goodwill,

connection • Navigation through complexity • Need for conscious, ethical business

Evolution of Business Paradigms

Culture is now a fundamental driver of operational and financial performance

Consciousness Age

Information Age

Industrial Age

Agrarian Age

1800 1900 2000 2100

Quality and skilled labour

Manpower

Intellectual capital

Cultural capital

The New Operating Reality

• VUCA • Interdependency • Social Media • Social Responsibility • Alignment with Public Opinion • Attracting and Retaining Talent • Rising Shareholder Expectations • Rising Customer Expectations

Top 40 publicly traded Best Companies to Work for in North America Average annual Return 16.39%S&P 500 Average annual Return 4.12%

Best companies to work for in N. America

Firms of Endearment Average annual Return 13.10%

S&P 500 Average annual Return 4.12%

Rajendra S. Sisodia, David B. Wolfe, and Jagdish N. Seth, Firms of Endearment: The Pursuit of Purpose and Profit (Wharton School of Publishing, 2007)

Firms of Endearment

0 %

300 %

600 %

900 %

1200 %

3 Years 5 Years 10 YearsS&P 500 Good to Great Firms of Endearment

Firms of EndearmentAll stakeholders — employee, customer, investor, partner, and society — treated equally.

Focus: exemplary citizenship and servant leadership

1. citizen satisfaction 2. making a difference 3. integrity 4. teamwork 5. humor/fun 6. quality 7. ethics 8. financial stability

1. blame L 2. short term focus L 3. internal competition L 4. buck passing L 5. risk averse L 6. citizen satisfaction 7. information hoarding L 8. bottom line result

Culture impact on organisational performance

Talent Finance Excellence Ethics Capability

CTT Definition: Cultural Entropy

The amount of energy in a group that is consumed in unproductive work.

A measure of the conflict, friction and frustration that exist within a group.

Cultural Entropy scoreThe Cultural Entropy score is a measure of the percentage of fear, dysfunction, negative and destructive energy in the organisation.

40% = Crisis

10% = Healthy

Best Employers have Lowest Cultural Entropy score

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

Low Cultural Entropy Score Leads to High Revenue Growth

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

CULTURAL ENTROPY

LEVEL

3-YEAR REVENUE GROWTH

TIER 1 (BEST) <10% 32.87%

TIER 2 10–19% 24.90%

TIER 3 20–29% 11.39%

TIER 4 (WORST) >29% 11.07%

The Impact on Engagement

25 %

39 %

53 %

66 %

80 %

0 % 8 % 15 % 23 % 30 %

Cultural Entropy score

Empl

oyee

Eng

agem

ent

Culture, Engagement and Performance

GOOD TO GREAT TEAM TEAM OF ENDEARMENT

Engagement

Perf

orm

ance

Culture

TRANSFORM ADAPT

COMPLY

Accomplish tasks and budget to satisfy

self interest

CONTROL

MAKE A DIFFERENCE

Innovate for stakeholder satisfaction and loyalty;for business & system

sustainability

EMPOWER

ACHIEVE

Achieve personal objectives to satisfy

self interest

COORDINATE

ADD VALUEInnovate for that extra mile,

and for the common interest of the organisation

MOTIVATE

TEAM

LEAD

ER

TEAM

LEAD

ER TEAM

LEAD

ER

CONVENTIONAL TEAM

TEAM

LEAD

ER

Cost of Fear

Personal Fear Defined

Two components:

Quality of parental upbringing Fear from our early family environment about satisfying our deficiency needs.

Cultural “DNA” Fear Fear based on the historical journey of an ethnic group or an organisation, passed from one generation to the next about meeting its deficiency needs.