EVANZ Conference 2013

The link between culture (“Fluffy Shit” and “Warm Fuzzies”)

and Productivity and Profit (“the real

stuff”)

Today's outline

Background 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 turnover

48% decrease in H&S incidents28% less shrinkage (loss)

10% increase in customer metrics22% improvement in productivity21% improvement in profitability

What engagement isn’t

Fluffy 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” they’re part of the problem and they’re

costing your business

-most people leave their boss not their company-

What engagement is

A 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 are

Demonstrate a high level of passion, enthusiasm and

energy

Their behaviours help the organisation to be

successful

Take a personal interest in the success of the

organisation

Always looking for a better way

Readily volunteer for new projects

Hold a sense of loyalty towards the organisation

Speak positively about the organisation thereby

strengthening the organisations reputation and

employment brand

Defend 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 solution“Sorry – not my job”Quit 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 don’t 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 :1. What’s required (What must I do),2. What's the purpose (Why is it

important to do), and 3. The skills and knowledge to do it

(capable, competent and confident)

Our Culture & Engagement

2007 – 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 History

2008 - 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 History2011

• still lacking major traction on culture change

• largely the HR team led change “people issues were the HR teams domain” – lack of ownership

• HR Strategy was right but execution reflected the wider organisation culture (head office led – top down)

• Good ideas still met with cynicism and suspicion by many

• Performance reviews had been conducted but behavioural measures didn't exist

• Culture change across the business was required (“this is not just an HR team issue”)

• Toxic – actively disengaged “Too many in these categories, we’re not dealing with or getting rid of”

• Non-performance management (lack of consequences)• Lack of skill and ability at manager level

“we’ve employed Supervisors, we need Leaders”

• Getting to the 497th person – we don't have a method to reach him/her

• Achievement 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 God”

• Silos – especially in business planning and decision making,

“not involving key people in key decisions is impacting on key decisions and engagement/ownership of the issue”

• Appraisal 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)

The review’s results and change strategy were shared widely with all staff....

“Thanks for telling us

how shit we are”

Previous Top Down Structure

CEO

Head Office Team(HR, Marketing, IS, Finance & Accounts, Operations Support, Warehouse)

On Premise Operations Manager

Off Premise Operations Manager

On Premise Venue Managers

Off Premise Retail Managers

On Premise Staff Off Premise Staff

Customer Focussed Structure

Lead

ersh

ip e

xpec

ted

acro

ss a

ll le

vels

Commercial Board

CEO

On Premise Operations Manager

Off Premise Operations Manager

On Premise Venue Managers

Off Premise Retail Managers

On Premise Customers Off Premise Customers

On Premise Staff Off Premise Staff

Support Office Team(HR, Marketing, IS, Finance & Accounts, Operations Support,

Warehouse)

WLT TrusteesPLT Trustees

One Key Insight

Head 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 engagement

High levels of engagement

Drivers of shift:Values & BehavioursInternal Communication – Facebook etc.Excellence Awards “West’s Best”Leadership 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 / tolerated

High recognition of performers and high levels of achievementNon-performance managed out

‘10/15/20 year club’ dinner disbanded in favour of performance recognition

Excellence Awards (including People’s Choice) Monthly Values awards PRDs and online CSB performance review system Remuneration review = fairness Measured Tier 1 / Tier 3 departures

From …………… ToUnprofitable or declining venues lacking investmentand drive

Property reinvestment planVenues rationalised and modern on-premise profitable (reduction in losses)

Total hospitality loss reduction programme “losses are no longer acceptable” Suburban bar model – ability to experiment and try new models Hard decisions made = Closure of some venues as part of strategy – without losing

engagement or confidence by sharing facts and figures The real financial story was told to all staff (profit, margins etc in simple terms and

diagrams)

What Did This Achieve?

Where’s the R.O.I?

“Nice” Awards

Most Improved Large Workplace

Engagement rose almost 7% - the largest jump they’d seen since the survey began

Dale Carnegie International Leadership Award

Positive Outcomes

• EBIT (pre-tax profit) = 350% of what it was in 2011 • EBITDA (profit less depreciation) more than 200% of

pre strategy figures• Free cash flow is 15x what it was in 2011• Staff turnover was almost 50% ; last month = 17%• Productivity - results are being achieved with 25%

less staff• 70% change in store managers, 75% change in

hospitality managers, 30% change in executive team• Some trophies in the cabinet – external

endorsements are important for our brand as an employer of choice

Our Key Drivers Single vision / New strategy and new brand = “all

noses pointing in the same direction” Our West & “giving back” = identity/pride

Values & 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 “West’s Best”,

Leadership Development opportunities and training for all in leadership roles (including 360 behavioural assessment)

Effective talent recruitment & management brought in house

Performance 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 Reflection

Am I a leader worth following?

Are those that lead in your organisation people you’d 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 you’re 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, however

Strategy without culture is powerless”

- Robert Burgelmann

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