In our last article, Establishing and Sustaining a High Performance Culture, we defined what a high performance culture is and described its four key organizational functions. This article is intended to be more pragmatic in that it will outline the mechanics of cultivating a winning culture.
Before we get into the mechanics, lets talk about the real benefits senior leaders realize by focusing on culture. We will look at these benefits through the lens of a real world example – ANZ Bank. The Australia and New Zealand Banking Group Limited, commonly called ANZ, is the third largest bank by market capitalization in Australia and also the largest bank in New Zealand. In 2008, for the second year in a row, ANZ was named the most sustainable bank globally by the Dow Jones Sustainability Index. They attribute their success in the last decade to their focus on culture. In 2003, the bank implemented an initiative they described as a “unique plan of eschewing traditional growth strategies and recasting the culture of the bank to lift efficiency and earnings.” Their results were significant:
- In two years, the share of employees having the sense that ANZ “lived its values” went from 20 to 80 percent
- The share seeing “productivity in meetings” went from 61 to 91 percent
- Revenue per employee increased 89 percent
- The bank overtook its peers in total returns to shareholders and customer satisfaction
Ten years later, ANZ has sustained its results. Its profit after tax has grown at a cumulative average growth rate of 15 percent, putting it well ahead of its industry. It announced a statutory profit after tax for the half year ended 31 March 2018 of $3.32 billion up 14% and a cash profit on a continuing basis of $3.49 billion up 4% on the prior comparable period.
ANZ Chief Executive Officer Shayne Elliott attributes most, if not all if their success to its corporate culture. In their half year results of 2018 he reported, “We are now benefiting from a more focused organization with sector-leading capital and improving returns. The progress of our multi-year transformation demonstrates we have the right team in place to manage difficult conditions and deliver for our customers and our shareholders.”
Organizational Culture and Leadership
The model illustrated above is the traditional way of viewing how organizational cultures influence the day-to-day environment in which managers and senior leaders operate. It depicts how the collective values, beliefs, norms and customs of the organization determine how decisions are made. Decisions lead to actions. Actions lead to results. The results reinforce the values, beliefs, norms and customs of the culture. In this article, I am going to propose a counter argument regarding organizational cultures that will be a departure from this model. Not only will it challenge the efficacy of the model depicted above, but it may also challenge any predisposition about business cultures you have been educated to adopt. However…after considering its potential value, you will find the proposition at least interesting enough to ponder or test.
We all know how it goes…at the beginning of the fiscal year, senior leaders convene off-site meetings. Along with producing a corporate strategy and a compliment of initiatives, senior leaders often create a set of corporate beliefs and values. They invest a significant amount of thought and time to define and communicate the meaning of these value statements. The hope is that the values will become a code of conduct by which the workforce can operate whenever they are faced with a unique circumstance or an absence of a defined policy. If the workforce operates by the values, they can consider their conduct to be in the company’s interest thereby making them good corporate citizens. This, my friends and colleagues, is a fallacy! Moreover….the posters, speeches and business workshops built around this model not only creates an illusion of corporate culture, but also explains why the expression, “Culture eats strategy for lunch,” is valid.
Organizational Culture: Which comes first the chicken or the egg?
In reality organizational culture resides in how leaders and managers make decisions and take actions. Whether their decision models are used to address corporate politics, problem-solving or improving performance; organizational culture resides in the nature of the decisions leadership makes and actions they take. For example, if leadership values a culture of collaboration but their decisions are made 1. without seeking the pooled knowledge and creativity of a team, or 2. by kicking them upstairs to be made by a select group of senior leaders, then consensus and collaboration are killed in their infancy. If, on the other hand, the senior leaders value managing-by-fact and they use a series of metrics and scorecards to analyze shifts, trends and changes in key performance indicators, then a culture of data-based decision making can thrive.
In conclusion: proposed beliefs, values, norms and customs don’t feed decision and actions. Quite the contrary. The way we make decisions, the decisions we make, the actions we take and the results we achieve, produce and sustain our business cultures.
When TPMG first began training and coaching senior leaders on high performance cultures ten years ago, this theory was met with some skepticism. But….through exhaustive experimentation and analysis, we have found the theory to hold true. We welcome any and all comments.
Next in this series is The Role of Senior Leadership in Establishing a High Performance Culture.
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Gerald Taylor is the Managing Director of TPMG’s Strategy and Operations Advisory Practice. His expertise includes coaching and advising senior leaders, strategy and performance improvement.