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Lecture Materials
STRATEGIC LEADERSHIP ISSUES
Cheryl L. Thomas Director, Strategic Advisory Services
Wipfli LLP Milwaukee, Wisconsin [email protected]
414-259-6729
August 2, 2016
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The Role of Culture in
Leadership
Date or subtitle Graduate School of Banking
August 2016
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Presenter
Cheryl Thomas
Director, Strategic Advisory Services
414.259.6729
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Agenda
Why Culture Matters
What Is Culture?
Culture and Change
Strategic Leadership
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Leadership Questions
1. Do you know your organization’s current culture?
2. How do you know?
• Observations, feedback
• Formal survey results
3. Is it enhancing success, or a barrier to success?
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Why Culture Matters
1. Better financial performance
2. Positive customer experience
3. Greater employee engagement
4. Higher levels of productivity
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Why Now
1.Recovery from Financial Crisis
2.Leadership and Management are undergoing a
revolution—at a minimum, a major evolution!
3.Creating Value for customers and employees is
key.
4.Software/technology has reshaped how people
engage with each other.
5.Remote work is becoming a viable option for more
people.
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Re-establishing Trust
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Success and Culture
Overwhelming research correlates strong culture to:
Intention to Stay
Cooperation/Teamwork
Quality
Adaptability
Satisfaction
Turnover
Stress
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Source: Correlations from Szumal, J.L. 2001
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What Is Culture?
DEFINITION ________________________________________________________
The shared values, beliefs, and
behaviors that underscore:
how things get done,
how decisions get made, and
how people interact
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“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).
Copyright © 2015 by Human Synergistics International. All Rights Reserved. 10
Organizational Culture
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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
Source: Deal, T.E. and Kennedy, A.A., Corporate Cultures, 2000
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Culture and Engagement Relationship
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Values - Exercise
1. What are your institution’s Stated Values?
2. What does your institution Value?
Why is there a difference?
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Financial Institutions Values
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Assessing Your Culture
Organizational Culture Inventory
(OCI)
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Human Synergistics
40+ years of
research
Valid and reliable
Normed globally
Linked to team and
organizational
behaviors
High-Performing
Individuals
High-Performing
Teams
High-Performing
Organizations
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The Circumplex
Dimensions based on theory
(e.g., Maslow’s Hierarchy of
Needs) and analysis of
thousands of surveys tying
behaviors to style descriptions
and to outcomes
Measures 12 distinct styles that
describe key behavioral styles
Raw scores from the survey
are converted to a percentile
score relative to the database
of thousands of responses
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OCI Circumplex—Cultural Norms
18 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.
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Cultural Style Clusters
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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.
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Types of Cultures
Constructive Cultures
Defensive Cultures
•Passive
•Aggressive
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Source: Research by Robert A. Cook, PhD. Copyright 2003 Human Synergists International
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Constructive Cultures
Behavioral norms contribute to high levels of
satisfaction, ability to develop healthy relationships,
work effectively with people and accomplishment of
tasks. Examples:
Establishes challenging and realistic goals
Employees develop themselves
Employees are supportive and open to influence in working
with each other
Cooperative
Sensitive to each others needs.
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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
Characteristics of Constructive
Culture
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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
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Defensive Cultures
Behavioral 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:
Employees are expected to agree and be liked
Employees do what they are told
Clear all decisions with superiors
Avoid being blamed for mistakes
Oppose new ideas
Operate in a “win-lose” with colleagues.
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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
Characteristics of Defensive Culture
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Signs of a Culture in Trouble
No clear values or beliefs about how to succeed;
many beliefs but no agreement on which is most
important; different beliefs in different areas
Behaviors that are destructive or disruptive; emotional
outbursts
Short-term focus; morale problems
Fragmentation/Inconsistency
Subculture values preempt shared company values
26 Source: Deal, T.E. and Kennedy, A.A., Corporate Cultures, 2000
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Constructive Cultures Matter
Better
Financial Performance
Positive Customer
Experience
Greater Employee
Engagement
Higher
Productivity
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.
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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.
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Copyright © 2012 by Human Synergistics International.
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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.
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
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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.
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”
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Ideal Culture Casual Factors Current Culture Outcomes
Values and Beliefs Levers for Change Norms and Expectations Effectiveness
Focus
Measuring
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Leadership Responsibility
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“Culture happens. Leaders and
managers can let it happen or
they can manage what happens.
It is a choice!” .
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Organizational Change Model
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Transformational Leadership
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. . . 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!
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Culture and Strategy
Strategy alone is not sufficient.
“Culture eats strategy for
breakfast” - Peter Drucker
Organizations must have a strong culture that
aligns with the strategy and is supported by
structure, leadership, management systems,
processes, and people.
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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
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Why Strategy Fails
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Cultural Barriers
Turf issues
Blame
Bureaucracy
Hierarchy
Self-Interest
Poor Communication
Strategy
Lack of . . .
Agility
Bias for Action
Openness and Trust
External Focus
Alignment at the Top
Success
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Aligning Culture – Top Ten
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
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Aligning Culture – Top Ten
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
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Aligning Culture – Top Ten
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
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Change for Positive Growth
Assess Culture • Look at all levels
• Identify where culture and engagement supports or
detracts from performance
Plan and Manage Change • In the context of culture
• In alignment with strategy and goals
Focus on: • Organization structure
• Management systems
• People
• Measure and monitor progress
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Questions for Effective Change
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?
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Challenges by Industry
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“Leaders cannot truly be judged until ten
years have passed after their tenure.”
• Did the company stay the course?
• Did it produce other leaders just as
successful?
“10 Greatest CEO’s” Jim Collins
- Marilyn Carlson Nelson
Chair, Carlson Companies
How We Lead Matters
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QUESTIONS?
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