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Establishing and Sustaining a High Performance Culture: Article #2, The Mechanics of How High Performance Cultures Work

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

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.

Whats Next?

Next in this series is The Role of Senior Leadership in Establishing a High Performance Culture.

If you would like the series delivered directly to you, feel free to contact us by clicking here!

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.

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Establishing and Sustaining a High Performance Culture

By Gerald Taylor, Managing Director TPMG

We have heard many definitions for corporate culture. Some academics take an anthropological perspective defining corporate culture as a system of company values, beliefs, norms and customs. Anthropologists believe it is culture that shapes the identity of society. They conclude culture determines how members of the society dress, what they eat, how they worship and overall how they govern themselves. By the same token, a business culture shape the identity of a corporation. It determines how company employees work, how they set priorities and accomplish goals. In effect, corporate culture is the day to day climate that absolutely plays the dominant role in determining the success of the firm. But what is a high performance culture?

At TPMG Consulting we define a high performance culture quite simply as:

The collective and consistent individual decisions and organizational practices that systematically pursue and obtain higher levels of individual and overall productivity. A high performance culture is the collection of decisions made and actions taken which deliver improvements in results and value. Based on research from TPMG analytics, companies with high performing cultures possess an intense, almost religious focus on four key organizational functions:

  1. Service: there is a fanatical commitment to meeting the needs, attitudes and perceptions of customers.
  2. Workforce Engagement: the terms and conditions upon which people and functions relate are very well defined and integrated.
  3. Performance Analysis: leaders review, analyze, share and improve performance using data and analytics.
  4. Leadership: management creates and maintains formalized methods and practices that promote and reinforce measurable improvement.

Like a genome, high performance cultures can be both dominant and recessive. This means high performance cultures literally exist on a continuum within organizations.

culture

Why does a High Performance Culture Matter?

Before getting into the mechanics of cultivating a winning culture, it is important for all senior leaders to first understand the benefits of a High Performance Culture.

A recent Gallup study uncovered several insights. They concluded high performance cultures inspire high commitment from employees. Their study revealed that companies with a favorable culture attracted and retained talented employees at a measurably higher rate and their employees were more easily inspired to consistently deliver on their organization’s value proposition.  Favorable cultures improve performance. Among US healthcare systems, when 8 in 10 of their employees feel connected to their organization’s mission and purpose. They realize a 41% reduction in absenteeism, a 50% drop in patient safety incidents and a 33% improvement in quality. According to a McKinsey & Company study (2013), a favorable culture is a key predictor of revenue, profits, costs and quality of customer service. The bottom line is……employees and teams who most align with their organization’s culture consistently perform higher on internal performance metrics than those who least align.

The Leadership Challenge: Culture Eats Strategy for Lunch!

We all know how it goes…. At the beginning of the fiscal year, senior leaders convene off-site meetings. The goal is to set the stage so the accomplishments for the coming year will out perform prior year’s results. They reflect on organizational performance and most always believe they can achieve more.

For the most part leaders know their business. The know their competition and are experienced enough at formulating winning strategies. Every year they go big and expect things will be different……but the results usually end up falling short of expectation. What continually frustrates their success is their company culture. No matter how much they plan, implement policies, or how many consultants they engage…..their day-to-day climate limits their potential. The one true lesson in both business and government is – culture eats strategy for lunch!  This subject is what the coming series of articles is all about: How to Establish and Sustain a High Performance Culture. 

In this series, we will provide real world examples of why high performance cultures matter. We will break down the organizational climate and discuss the mechanics of how cultures work and share proven practices we have applied over the past 15 years.

If you would like the series delivered directly to you, feel free to contact us directly by clicking here!

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.

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