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Transcript of 1 Welcome to the Denison Certification Workshop Building and Sustaining High Performing...
1
Welcome to the Denison Certification Workshop
Building and Sustaining High Performing Organizations and Leaders
Denison Consulting | March 2015
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Workshop Schedule
March 11, 2015
NETWORKING BREAKFAST
Welcome and Introductions Culture & leadership Denison Model and Link to Performance
Path to High Performance Overview of the change process framework Discovery Planning and overview of Denison tools Diagnosis Analysis Honest Conversation Action Planning Sustainable Improvement
Case study DOCS an DLDS results interpretation/analysis Prioritization and action planning
(Breaks and Lunch provided)
GROUP DINNER
March 12, 2015
NETWORKING BREAKFAST
Highlights and re-cap of Day 1
Transformation & Turnaround
Strategic Alignment
M&A
Leadership Development
Wrap-up and Q&A
(Breaks and Lunch provided)
CONCLUSION
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Path to High PerformanceWhy is culture
important to the performance of your
organization?How can we ensure
effective and sustainable culture
development?
What is your current state?
What is the impact?
How do we translate results
into thoughtful actions?
What is data telling us?How do we create
common understanding?
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TRANSFORMATION & TURNAROUND
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Private Equity Companies
What is the link between culture and performance?
49PE Portfolio Companies
103 separate lines-of-business (P&Ls)
a)Completed a Denison Culture Survey prior to January 2014
b)Financial data was available for the same time period as the Denison Culture Survey
Study sample includes... Inclusion criteria…
Methodology
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Growth Metric
Growth metrics provide an apples-to-apples point of comparison within a diverse sample of companies representing various industries, sizes, etc.
Rolling averages provide a stable estimate:
a) EBITDA Growth*
b) Sales Growth
Focus on Growth
*Two outliers were excluded from the EBITDA Growth analysis
3-year rolling averages(Average growth over a 3 year period)
Methodology
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Link to Growth: Top vs. Bottom Companies
Avg. EBITDA Growth
Avg. Sales Growth
7%
-3%
17%
5%
2.5X
+5X
2.5x EBITDA Growth
+5x Sales Growth
Bottom Half Top Half
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Link to Growth:Predictive Analysis
Across P&Ls, the Involvement trait was most strongly and consistently correlated with EBITDA Growth & Sales Growth
Where should we stick the crowbar?
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Culture Change over Time
+ 13 pts. on average from 1st to 2nd culture survey
1st Survey 2nd Survey
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BUSINESS CASE STUDY:Earthlink
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What would excite you most about integrating Company A? Company B?http://youtu.be/C4Cv6fL-km8
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What would concern you most about integrating Company A? Company B?http://youtu.be/8DLv5GjEJ5s
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Fast Forward….Emphasizing Strategic Alignment
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Culture Development remains a challenging journey
as we work to unite and transform our business.
The need to: Led to:
Define the desired customer experience
Customer segmentation and re-organization
Design integrated processes and systems
Corporate process improvement team and OSS efforts, training, and education
Empower teams to drive change
Now “teams” reported as the primary way work gets done
In 2013 . . .
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Mission (Vision, Strategy & Goals) are becoming less clear or
being viewed with skepticism.Impact in the market is suspect.Less confidence in our ability to
work effectively across the organization to create the
necessary change.Employees feeling less valued and
skill deficits are a concern.
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Strategic Clarity & Alignment
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MERGERS & ACQUISITIONS
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The M&A Landscape
This looks great on paper!
“I remember saying at a vital board meeting where we approved this, that life was going to be different going forward because they’re very different
cultures, but I have to tell you, I underestimated
how different”Richard Parsons, Time
Warner
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Worldwide M&A activity
$3 trillion
70% of deals do not realize
the originally stated goals
“Buying is fun, merging is
hell!”
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Keeping Culture ‘front & center’in the M&A conversation
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Managing culture throughout the M&A Process
TRANSITION
Transition team
to plan integration
INTEGRATION
Integration effort
to create‘one’ business
CULTURAL DUE DILIGENCE
Define the target & Reduce the risks
DATA DESERT
Deal
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Growth Strategy
Internal Integration
STRATEGY
CULTURE
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What level of integration do we need?
ABSORPTIONTarget companyconforms to acquirerCultural Assimilation
TRANSFORMATIONBoth companies findnew ways to operate
Cultural Transformation
PRESERVATIONTarget companyretains independenceCultural Autonomy
REVERSE MERGERUnusual case of
target firm leadingCultural Assimilation
BEST OF BOTH
Additive from both sidesCultural
Integration
LOW HIGH
LOW
HIG
H
Degree of change in acquiring company
Deg
ree
of c
hang
e in
targ
et c
ompa
ny
Adapted from Marks and Mirvis (2010)
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What is the Starting Point?
Interviews to surface Leadership
mindset/beliefs (planning, decision
making, communication, etc.)
Employee insights
Archival Data
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Identifying Potential
• Areas of leverage/synergy: Practices, habits and behaviors that each organization seem to value and demonstrate
• Best practices: Practices, habits and behaviors that one organization has that are missing or underutilized by the other organization(s) – that can be captured and shared
• Blind spots: Practices, habits and behaviors where none of the organizations have clearly demonstrated capabilities - and that need development to maximize performance
The more color we see in any given area – the more likely leaders and employees can articulate the beliefs and habits that have driven the high
level of clarity and alignment indicated
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Clarity & Alignment:A double-edged sword?
Best Practice
s?
Wealth of Arrogance
?
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BUSINESS CASE STUDY:RJR
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Consumer Products Co.
Merger of 2 consumer products companies “We’re two old companies with rich histories”
Strong competitors with one another “We are constantly fighting each other for shelf space and brand
recognition”
Organization’s leaders see value in using the Denison Model “We need help and using a model that neither organization has used is
good”
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Consumer Products Co (cont.)
Decided not to conduct Denison Culture survey just prior to - or immediately after the merger “There will be a lot of turmoil in the first 120 days. We know there will be
uncertainty and confusion”
New leadership team is a combination of execs from each legacy company “We want this to be viewed as a ‘merger of equals’ – not an acquisition”
Seeking a ‘best of both’ approach to integration “Together we can be much stronger than either of us on our own”
±6,500 employees (post-merger) “We have to get this right, our market is not growing and cost savings and
research are what we need.”
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The Goal:
To create a Single, High Performing Organization
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Consumer Products Merger
How might you utilize the Denison Model without conducting the survey in the early stages of the merger*?*Early stages = first 6 - 9 months of the integration effort
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Habits & Routines
100 Most Powerful Women: Susan
Ivey
“For those history buffs among us, or for anyone who has ever played a sport or cheered for your favorite team…you know what it takes to win battles…you know what it takes to win championships. It is a camaraderie, an esprit de corps, a common interest. For us, its company culture – the way we think…the way we act…and the way we operate as an organization. Show me an army, a team or a company that has achieved greatness…that have been winners…and I’ll show you a group of individuals with a well-defined culture, brought together in a common interest, with clear goals and a passion for success.”
Ivey has maintained the company's market share,
and the company has consistently beat analysts'
expectations. The stock has risen 33% since her post-merger takeover in 2004.
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A Habit – using the culture model for framing activitiesNew company – A Single High-Performance Culture
Sales force integration
Launched Core Values
Immediate all-employee meetings
100 Day Focus Groups
Formed High Performance Culture integration teams
Defined Vision and Roadmap
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9 Months Post-Merger
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Did we mention…
Integration of 1,200 new employees, equipment transfers, facility closings
Continuous Productivity Improvement initiatives launched
Replaced 70 systems with SAP
New business/portfolio strategy
Stock price up SUBSTANTIALLY Pre-merger stock price of $57.00 Immediately after merger $70.00 18 months after the merger: $104 -$115
Dividend up to $5 per share annually Exceeded all key financial and market-share targets Resulted in highest-ever performance bonus payout to employees
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BUSINESS CASE STUDY:Cultural Due Diligence
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Cultural Due Diligence
ExternalStakeholders
Social Media& Public Data
HR Data On-Site Deal
HighLowInvasiveness
External InternalData location
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Understand your culture first
Assess your own culture1
Define strengths you are trying to build2
Define the limitations you are trying to overcome3Define the ideal culture for your target acquisition4
CDD FRAMEWORK
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Clarity the end state
ABSORPTIONTarget companyconforms to acquirerCultural Assimilation
TRANSFORMATIONBoth companies findnew ways to operate
Cultural Transformation
PRESERVATIONTarget companyretains independenceCultural Autonomy
REVERSE MERGERUnusual case of
target firm leadingCultural Assimilation
BEST OF BOTH
Additive from both sidesCultural
Integration
LOW HIGH
LOW
HIG
H
Degree of change in acquiring company
Deg
ree
of c
hang
e in
targ
et c
ompa
ny
Adapted from Marks and Mirvis (2010)
CDD FRAMEWORK
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“We are acquiring a firm. How do we make sure
there will be a good culture fit?”
CULTURAL DUE DILIGENCE1. Inform strategy of deal process2. Highlight integration challenges
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Social Media Analysis
Employee Generated
SocialMediaData
COMPETITORAnalysis
CultureProfile
Estimate
QualitativeCommentTHEMES
1
2
3
4
5
Overall Culture Work-life Sr Mgmt Compensation Career
TARGET Competitor A Competitor B Competitor C Competitor D
40%
55%49%
39%
71%
87%
43% 45%
36% 33%
Recommendas employer
CEO approval
Talent
Teamwork/
Training
Career Conflict
CustomerFocus
Industryleadership Strategy
GoalsSr. mgmt
Alignment
Marketing
Values
CDD FRAMEWORK
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Social Media Analysis
Talented and hard-working people Overall healthy culturePay & benefits / Work-life balance
Unclear future directionTalent management challenges
Quality of products Employee discounts
SilosShort-term focusLeadership challenges
Acquiring Firm Target Firm
Cultureprofile
Estimate
QualitativeCommentThemes
80% recommend as an employer 40% recommend as an employer
CDD FRAMEWORK
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External Stakeholder Interviews
ACQUIRERFormer Executives
Former Employees Suppliers
Customers
Channel partners
TARGETFormer Executives
Former Employees Suppliers
Customers
Channel partners
Semi-structured interviews with various stakeholders including previous employees to understand the target firm’s culture
CDD FRAMEWORK
44
HR Data & Previous Survey
Survey (Data)
Mapping
Comment Analysis
HR Data Review
CDD FRAMEWORK
45
HR Data & Previous Survey
ArchivalEmployee
SurveyMapping
QualitativeCommentAnalysis
Acquiring Firm Target Firm
Autonomy/
Talentmgmt
Teamwork/Collaboration
Culture
InnovationIndustryleadership
StrategyLeadership
Values Flexibility Teamwork/
CustomerProducts
CDD FRAMEWORK
46
Internal Stakeholder Interviews
ACQUIRER
Leadership TeamMiddle ManagersDeal Team
Sample of employees
TARGET
Leadership TeamMiddle ManagersDeal Team
Front Line Employees (sample)
Interviews with current leaders, managers, and employees to identify the target firm’s cultural strengths and weaknesses
CDD FRAMEWORK
47
Internal Stakeholder Interviews
Semi-structured interviews with the transition Team and leadership
ABSORPTIONTarget companyconforms to acquirerCultural Assimilation
TRANSFORMATIONBoth companies findnew ways to operate
Cultural Transformation
PRESERVATIONTarget companyretains independenceCultural Autonomy
REVERSE MERGERUnusual case of
target firm leadingCultural Assimilation
BEST OF BOTH
Additive from both sides
Cultural Integration
LOW HIGH
LOW
HIG
H
Degree of change in acquiring company
Deg
ree
of c
hang
e in
targ
et c
ompa
ny
Adapted from Marks and Mirvis (2010)
Target’sexpectation
THE END STATE REVISITED
This Acquisition
CDD FRAMEWORK
48
Synthesis
1. The points of synergy Passion for the products and customer Strong relationships Deal in-character for the acquiring company
2. Cultural differences Speed of decision-making and operations Emphasis on values and people
3. Key integration challenges Different integration expectations Management and organization structure Branding of retail stores Talent management
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LEADERSHIP DEVELOPMENT
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BUSINESS CASE STUDY:Silicon Valley HR Executive
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Background
Sr. Vice President of Human Resources entering a 12 week leadership development program
Program goal is to gain initial insights about their leadership capabilities Program includes:
approximately 20 participants a combination of on-site training Action Learning team assignments individual activity
Each leader receives their 360 feedback prior to the first on-site meeting
Combined Other Raters3 Peers7 Direct Reports1 Boss3 Other
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Thought Questions
What are your initial impressions of this leader? What might be some reasons or possible explanations for the
feedback this leader is receiving? What does the feedback from each sub-group (Peers, Direct
Reports, Boss, Others) tell us about the leader? What would you recommend to this leader to help him/her
move forward with the feedback?
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58
59
60
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BUSINESS CASE STUDY:Culture & Leadership DevelopmentAt a large public institution
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Background
Going through a lot of change, with more coming Budget & resource constraints Restructuring:
Consolidating roles, functions, changing reporting structures
Utilizing both OCS & LDS
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Unit X
Largely blue collar workforce in service and maintenance positions
Wide gaps between staff and leadership
Largely impacted by org restructure
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Unit X
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Discussion Questions
How would you help this organization summarize this data?
What would you suggest they focus on?
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Overall Summary & Recommendations
Customer Focus remains a clear cultural strength
Build involvement through a focus on Mission Work to better define and track on Goals & Objectives and allow
people to work autonomously Build empowerment by engaging people to feel part of the process Leverage strength in customer focus and change in structure to begin to
drive greater clarity in mission Parallel path approach for relentless communication Continually connect initiatives to Mission – provide the “why”
Focus on creating an environment of “with” not “to”
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This Unit’s Executive Vice President
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This Unit’s Executive Vice President
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This Unit’s Executive Vice President
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Discussion Questions
What do you see as this leader’s Strengths to build on?
Where does this leader have areas of opportunity for improvement and development?
How does the culture data help inform your interpretation of this leader’s data?
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Patterns and Themes
Strengths to build on: Visionary, strategic, forward thinking Leading strategic change rooted in customer Integrity, do the right thing
Comments: Vision for the future, highly strategic Change oriented, lead others to change Honesty, respected, walks the talk
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Patterns and Themes
Potential opportunities in: Managing downward Empowerment and skill building of others Facilitating agreement incorporating diverse perspective
Comments: Trust staff, delegate, ability to make decisions
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Wrap-up
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Your Pilot
25 person Denison Organizational Culture
Survey
1 Person Leadership Development Survey
OR
Your pilot package includes the full survey of your choice, full report generation, and basic interpretation and feedback on
results from a Senior Denison Consultant.
80
Solutions Essentials
Learning the Basics Understanding Denison’s Solutions Selling the Solutions Sample Proposals Preparing for the Survey Interpreting the Results Linking to Denison And more……………..
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Final Questions?
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Thank You!