STRATEGIC LEADERSHIP ISSUES - Madison · STRATEGIC LEADERSHIP ISSUES “Culture and Leadership”...

STRATEGIC LEADERSHIP ISSUES

“Culture and Leadership”

Cheryl L. ThomasManaging Director

Impacting People, LLCWadsworth, IL

[email protected]

July 31, 2018

Graduate School of BankingJuly/August 2018

IMPACTING PEOPLE LLC 1

Culture and Leadership

Agenda•Why Culture Matters

•What is Culture?

•Culture and Change

•Strategic Leadership

2IMPACTING PEOPLE LLC

Leadership Questions1. Do you know your

organization’s current culture?

2. How do you know?• Observation, Feedback

• Formal Assessments

3. Is it enhancing success, or a barrier to success?


Why Culture Matters1. Better financial performance

2. Positive customer experience

3. Greater employee engagement

4. Higher levels of productivity


Why Now1. Economic Recovery

2. Leadership and Management revolution

3. Creating Value for customers and employees

4. Software/technology has reshaped how people engage with each other.

5. Workplaces and spaces are changing• Remote work is becoming a viable option for more people.

• Some companies re-thinking work-at-home


Re-establishing Trust


Success and CultureOverwhelming research correlates strong culture to:

Intention to Stay

Cooperation/Teamwork

Quality

Adaptability

Satisfaction

Turnover

Stress

Source: Correlations from Szumal, J.L. 2001


What Is Culture?The shared values, beliefs,

and behaviors that underscore:

◦how things get done,◦how decisions get made

◦how people interact


Edgar Shein, Organzational Culture and Leadership

Organizational Culture “The way we are expected to do things around here.”

•Culture is cognitive: what people believe and know.

•It reflects shared values (what is important) and beliefs (how things work).

•It encompasses norms and expectations that influence the way members of the organization think and behave.

•However, norms and expectations (Current Culture) are not always in alignment with shared values (Ideal Culture).

9

Copyright © 2015 by Human Synergistics International. All Rights Reserved.

IMPACTING PEOPLE LLC

Values - Exercise

1. What are your institution’s stated values?


Financial Institutions Values


Values - Exercise

1. What are your institution’s stated values?

2. What does your institution value?

Why is there a difference?


The Elements of Culture

•Business Environment

•Artifacts, Physical Settings, Work Environment

•Values and Beliefs

•Heros, “Standard Bearers”, Influencers

•Rituals, Traditions, Known History

•The Cultural Network

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Source: Deal, T.E. and Kennedy, A.A., Corporate Cultures, 2000

IMPACTING PEOPLE LLC

Culture and Engagement Relationship


Assessing Your Culture

Organizational Culture Inventory

(OCI)



OCI -Cultural Norms

Research and development by Robert A. Cooke, Ph.D. and J. Clayton Lafferty, Ph.D. Copyright © 1973-2015 by Human Synergistics International. All Rights Reserved.


Cultural Style Clusters Constructive Passive/Defensive Aggressive/Defensive

Characterizes behavior that

contribute to one’s level of

satisfaction, ability to develop healthy

relationships and work effectively

with people and accomplish tasks

Represent self-protecting

behavior that promote the

fulfillment of security needs

through interaction with

people.

Reflects self-promoting

behavior used to maintain

one’s status/position and

fulfill security needs through

task-related activities

Research and development by Robert A. Cooke, Ph.D. and J. Clayton Lafferty, Ph.D.

Copyright © 1973-2015 by Human Synergistics International. All Rights Reserved.

Types of Cultures

•Constructive Cultures

•Defensive Cultures•Passive

•Aggressive

Source: Research by Robert A. Cook, PhD. Copyright 2003 Human Synergists International


Constructive CulturesBehavioral norms contribute to high levels of satisfaction, ability to develop healthy relationships, work effectively with people and accomplishment of tasks. Examples:

1. Establishes challenging and realistic goals

2. Employees develop themselves

3. Employees are supportive and open to influence in working with each other

4. Cooperative

5. Sensitive to each others needs.


Characteristics of Constructive Culture

Humanistic

Affiliative

Achievement

Self-Actualizing ______________________________________________________

•Employees share a set of relatively consistent values and methods of doing business

•New employees adopt values quickly

•Seen by outsiders as having a certain “style”

•Strong alignment among strategy, goals, values, and behaviors


Constructive Cultures Impact on Performance

•Goal alignment

•Increased motivation and engagement

•Structure and controls without having to rely on bureaucracy

•Efficiency and fewer mistakes/risks


Defensive CulturesBehavioral norms are self-protecting or self-promoting in order to maintain one’s status or position. Behaviors meet security needs, focused either on the interaction with people, or accomplishment of tasks. Examples:

1. Employees are expected to agree and be liked

2. Employees do what they are told

3. Clear all decisions with superiors

4. Avoid being blamed for mistakes

5. Oppose new ideas

6. Operate in a “win-lose” with colleagues.


Characteristics of Defensive Culture

Oppositional, Competitive

Power, Perfectionistic

Avoidance, Dependent

Conventional, Approval__________________________________________________________________________________

•Employees focused inwardly (focus on self-protection, promotion)

•Many beliefs but no agreement about what is important

•Behaviors that are disruptive or destructive

•High degree of fear ; little innovation; resistance to change


Signs of a Culture in Trouble

1. No clear values or beliefs about how to succeed;

many beliefs but no agreement on which is most

important; different beliefs in different areas

2. Behaviors that are destructive or disruptive;

emotional outbursts

3. Short-term focus; morale problems

4. Fragmentation/Inconsistency

5. Subculture values preempt shared company values

Source: Deal, T.E. and Kennedy, A.A., Corporate Cultures, 2000



Constructive Cultures Matter

Better

Financial Performance

Positive Customer

Experience

Greater Employee

Engagement

Higher

Productivity



In a study of 69 companies across a variety of industries . . .

Profitability (Over 3-Year Period)1

Strength of Cultural Norms2

Earnings/Sales Ratio

(n=69)

Earnings/Sales

Volatility (n=60)

Constructive + 0

Passive/Defensive 0 0

Aggressive/Defensive 0 ++

+/- signifies positive or negative correlation significant at p<.05.

++/-- signifies positive or negative correlation significant at p<.01.

0 signifies relationship is not statistically significant.

1Financial data for the three-year period provided by Towers Perrin for 69 companies in various industries.

Ratios are averages for the three-year period; volatility scores are standard deviations. 2Organizational culture data provided by Human Synergistics, based on factor scores.

Research conducted by Robert A. Cooke, Ph.D. Copyright © 2003 by Human Synergistics International.

. . . there were positive correlations between Constructive Cultures and

profitability and Defensive Cultures and sales volatility.

Copyright © 2012 by Human Synergistics International.

Discussion1. Pair up 2 or 3 nearest people

2. Share your OCI results:•Is it Constructive, Passive/Defensive or Aggressive/Defensive?

•What is the primary style? Secondary?•Share 1 or 2 experiences that illustrate your OCI results

•Identify 1 or 2 styles to change



How Culture Is Supposed to Work

Philosophy

Mission

Individual

Level

Group Level

Organizational

Level

Goals

Strategy

Ideal Culture Current Culture Outcomes

Values and Beliefs Norms and Expectations Effectiveness

Focus

Measuring

“What should be

expected here”

“The way

we are

expected to

do things

around

here”

“How we’re

doing here”

Assumptions

Espoused

Values



Organizational Factors

Philosophy

Mission

Structures

Systems

Technology/

Processes

Skills/Qualities

Individual Level

Group Level

Organizational

Level

Goals

Strategy

Assumptions

Espoused

Values

“The way

we are

expected to

do things

around

here”

Ideal Culture Casual Factors Current Culture Outcomes

Values and Beliefs Levers for Change Norms and Expectations Effectiveness

Focus

Measuring


Leadership Responsibility

“Culture happens. Leaders and

managers can let it happen or

they can manage what happens.

It is a choice!”.


Wells Fargo

Culture or Strategy?

Leadership Impact?


Organizational Change Model


McKinsey 7 S model

http://en.wikipedia.org/wiki/File:McKinsey_7S_framework.svg


Transformational Leadership

. . . Leadership in which the leader

identifies the needed change, creates a

vision to guide the change through

inspiration, and executes the change

with the commitment of the members of

the group

The non-quantitative ‘stuff’ ultimately is the real

driver of sustained bottom line profitability . . . the

numbers are not the plan!

Culture and Strategy

Strategy alone is not sufficient.“Culture eats strategy for breakfast”

- Peter Drucker

Organizations must have a strongculture that aligns with the strategy and is supported by structure, leadership, management systems, processes, and people. – Edgar Shein


Current Issues Impacting Strategy

•Non-traditional competitors disrupting the industry

•Need for competitive differentiation

•Cyber-security

•Technology to transform core business activity

•Technology to enhance customer experience

•Integration of Risk Management and Compliance

•Big-data—Advanced Analytics

•Succession/Talent Management

•Mergers/Acquisitions

•Diversity and Inclusion



Why Strategy FailsCultural Barriers

Turf issues

Blame

Bureaucracy

Hierarchy

Self-Interest

Poor Communication

StrategyLack of . . .

Agility

Bias for Action

Openness and Trust

External Focus

Alignment at the Top

Success

Culture and LeadershipTop Ten Practices

1. Define the desired culture◦ Values described in terms of behaviors

2. Make the Mission/Vision/Values known

3. Hire for “fit”◦ Consider behavioral assessments; screen for

values and competencies

4. Best Practices in Performance Management◦ Clarity of roles and responsibilities (Job

descriptions)◦ SMART goals/clear objectives◦ Regular feedback◦ Coaching/training◦ Rewards tied to performance



5. Establish and align incentives and rewards

Performance driven rewards

6. Best practices in Staff Development

7. Establish effective lines of defense• Staff and Management attend to the desired behaviors• Human Resources on the Executive Team• Ability to monitor; report issues



8. Assess and measure Culture• Intentional management

9. Establish shared responsibilities for culture• Executives• Managers• All employees

10. It starts at the top – Board Governance• Own the issue; Lead by example; Cascade culture from

the top; Define cultural leadership attributes; Monitor progress


Leadership Questions 1. What habits in our culture will get in

the way of achieving our strategy?

2. What qualities do we need to add or strengthen in our culture to support our strategic goals?

3. Do we have the necessary alignment between our strategy, structure, systems and behaviors to execute?

4. What behavioral shifts are needed to align our culture?


Final Thought

“Corporate culture is the only sustainable

competitive advantage that is completely

within the control of the leader.”

– David Cummings, Co-Founder, Pardot



QUESTIONS?

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