All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Welcome To The Denison Consulting Certification Workshop

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Your Facilitators Lindsey Kotrba President, Denison Consulting Ari Black Business Development Manager, Denison Consulting Bryan Adkins CEO, Denison Consulting Dave Croci Director of Client Management, Denison Consulting Dan Denison Chairman & Founder, Denison Consulting Stevie Collini Client Account Manager, Denison Consulting

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Workshop Agenda Tuesday, July 16 NETWORKING BREAKFAST Welcome and Introduction to Facilitators Review of Pre Course Work; Q&A Building a High Performance Organization o What Is Culture o Understanding Habits & Routines o The Denison Model o The Link to Culture & Business Performance o Managing Dynamic Tensions Application o The Language of Culture o A Solutions Scenario LUNCH Analyze, Synthesize & Apply o Business Case Studies GROUP DINNER AT THE EARLE RESTAURANT Wednesday, July 17 NETWORKING BREAKFAST Highlights and re-cap of Day 1 Developing Leaders o The Link Between Leadership and Culture o The Denison Leadership Development 360 o Business Case Studies LUNCH o Business Case Studies Application o Denison Products and Support o Denison Product Pricing o Support Services o Working with Denison o The Survey Process SESSION ENDS

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Building a High Performance Business Culture

What Is Culture? Why Is It Important?

Mindset is the Foundation Norms, Behaviors and Artifacts. Visible, tangible. Personal Values and Attitudes. Less visible, but can be talked about. Cultural Values and Assumptions. Usually not visible at all, often held subconsciously, rarely (if ever) questioned in everyday life. Image by R.A. Clevenger

Culture Reflects the Lessons Learned Over Time Image by R.A. Clevenger LessonsSurvival Culture Underlying Principles Visible Symbols

Rituals, Habits, & Routines We must make automatic and habitual... as many useful actions as we can. The more of the details of our daily life we can hand over to the effortless custody of automation, the more our higher powers of mind will be set free for their proper work. William James

Morrison’s essay opens with a story of a young time & motion expert trying to find a way to speed up artillery crews during WWI, just after the fall of France. He watched one of the five- man gun crews practicing in the field with their guns mounted on trailers, towed behind their trucks. Puzzled by certain aspects of their procedures, he took some slow-motion pictures of the soldiers performing the loading, aiming, and firing routines. When he ran these pictures over once or twice, he noticed something that appeared odd to him. A moment before the firing, two members of the gun crew ceased all activity and came to attention for a three-second interval extending throughout the discharge of the gun. Since this seemed like quite a waste of time, and the young time & motion expert really couldn’t make any sense of it, he asked an old artillery colonel to look at the films to see if he could explain this strange behavior. The colonel, too, was puzzled. He asked to see the pictures again. "Ah," he said when the performance was over, "I have it. They are holding the horses.” Elting Morrison, Gunfire at Sea Hold Your Horses!

Paul O’Neill at Alcoa: Identifying Keystone Habits  It got so bad they would bring dummies to the parking lots, dress them like managers, and burn them in effigy. “Alcoa was not a happy family. It was like the Charles Manson family, but with the addition of molten metal.”  O’Neill picked safety as one thing that unions and executives could agree on. Zero injuries. Injuries must be reported to the CEO within 24 hours.  “We killed this man. It’s my failure of leadership. I caused his death. And it is the failure of all of you in the chain of command.”  Once you see everything as a bunch of habits, it’s like someone gave you a flashlight and a crowbar and you can get to work.

Preserve & Strengthen Invent & Perfect Unlearn & Leave Behind Rethink & Try Again Good Bad Old New Changing Culture By Changing Rituals, Habits & Routines

The Denison Model

What Counts… Building human capability, ownership, and responsibility “Are our people aligned and engaged?” Adaptability Pattern, Trends, & Market Mission Direction, Purpose, & Blueprint Defining a meaningful long-term direction for the Company “Do we know where we are going?” Translating the demands of the business environment into action “Are we listening to the marketplace?” Involvement Commitment, Ownership, & Responsibility Consistency Systems, Structures, & Processes Defining the values & systems that are the basis of a strong culture “Does our system create leverage?”

MISSION Creating Shared Vision: creating a clear and compelling vision of a future state Defining Strategic Direction & Intent: understanding, developing and executing strategy Defining Goals & Objectives: setting clear goals and tracking progress against those goals

INVOLVEMENT Developing Organizational Capability: developing employees to meet current and future organizational needs Building Team Orientation: developing successful, effective teams Empowering People: sharing information and communicating so that employees have the information they need to make informed decisions – the ability to make a difference

ADAPTABILITY Creating Change: encouraging change and continuous improvement Emphasizing Customer Focus: understanding customer needs - developing responsive, effective working relationships with customers Promoting Organizational Learning: seeing continuous learning and innovation as critical to adapting and leading in a dynamic environment

CONSISTENCY Managing Coordination & Integration: building effective working relationships with a range of colleagues & stakeholders across the organization Working to Reach Agreement: engaging in effective problem solving and decision making Defining Core Values: aligning the behavior of self and others in accordance with the Core Values

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Beliefs and Assumptions: The ‘GREY’ Area in the Middle of the Model  At the heart of every culture are a set of beliefs and assumptions – about the organization and its people; the leaders; the customers; competitors; the sector; etc.  Resolving cultural issues and making progress in the development of a high- performance culture often requires a thoughtful exploration of the underlying beliefs and assumptions. Beliefs and Assumptions

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Effective leaders and organizations are Externally AND Internally focused Effective leaders and organizations focus on Flexibility AND Stability Dynamic Tensions

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Dynamic Tensions Effective leaders and organizations balance ‘External Adaptation’ AND ‘ Internal Integration’ Effective leaders and organizations offer strong leadership AND involve their employees

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. A Culture Profile: The100 Year Old Manufacturing Company

One Hundred Year Old Manufacturing Company

First in industry, but declining Trying to hold on to the past 1 st time in 20 years failed to meet targets Targeted by competitors President operationally focused “We’re a team going down together One Hundred Year Old Manufacturing Company

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. How Culture Links to Business Performance

· Innovation · Customer Satisfaction · Growth Culture Links to Business Performance · Stable Performance Over Time · Profitability ROI, ROS, ROE · Operating Performance · Quality · Employee Satisfaction

Impact on Performance Top 25%Bottom 25% Return-on-Assets Sales Growth Market-to-Book Ratio 2.3% 1.4% % 23.1% 4 The higher the culture scores, the greater profitability, sales growth, & market value (based on a study of 130 firms; ) 26

 Study of Automotive Service Centers in the USA  Total of 338 dealerships and over 12,000 employees  Compares organizational culture and customer satisfaction Satisfying Your Customers Below 50% Highly Satisfied Above 80% Highly Satisfied

Organizational Culture and Employee Engagement 11 th Percentile ENGAGEMENT FACTOR 83 rd Percentile Bottom 10 Top 10 DOCS OVERALL

Culture Causes Performance 1 Year 2 Years In summary, culture comes first and serves as a driver of subsequent performance levels.

When Is High Consistency Bad? When Involvement is low, high Consistency will likely lower an organization’s performance.

2011 Denison Global Benchmark  931 companies in 48 Countries  50% of the respondents in the last 5 years are from outside the US  Headquarter Distribution  28% are Multi-Nationals  75% North American, 14% Europe, 5% Asia/Pacific, 2% Africa/Middle East, 2% Central & South America, 2% Australia/Oceania  Wide classification of industries using the North American Industry Classification System (NAICS)

Why We Use Percentiles Most employees are highly involved in their work There is an ethical code that guides our behaviour and tells us right from wrong Customer input directly influences our decisions People work like they are part of a team There is good alignment of goals across levels Our vision creates excitement and motivation for our employees It is easy to coordinate across different parts of the organization 86% 82% 86% 64% 57% 41% 40% Survey Item Mean % Favorable Percentile Score (4s & 5s) Score

Our Research Is Ongoing European Journal of Work and Psychology Reliability and Validity of the DOCS and other measures of Culture Other exciting research Financial implications of manager / non- manager alignment Effects of Executive coaching interventions Unionization and organizational culture Looking Across the World

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. Application

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. The Language of Culture

1.drive honest conversations among the collective about ‘the way we do things around here’ that… 2.lead to thoughtful actions and… 3.results in higher performance Culture Data Should Do 3 things:

Honest conversations that lead to thoughtful action… and higher performance Step I Assessment of the Current State Goal: To assess the current culture to surface strengths and weaknesses (and identify possible sub- cultures/areas of opportunity) Step II Creating Understanding Goal: To engage in dialogue to create a common understanding of the data and discuss the implications of the current culture for the business Step III Choosing to Shift the Culture? Goal: To establish agreement regarding the need for culture change/ development AND to focus efforts on areas of business impact Step V Implementation & Evaluation Goal: To execute against the action plans and measure progress – with a link back to organizational and/or group performance Step IV Action Planning Goal: To generate ideas for moving the culture forward; prioritizing and developing specific action plans

Are our people happy? Is our culture… good or bad? strong or weak? Are we clear and aligned? Culture

Average levels of performance Mix of clarity & confusion Lower levels of performance Confusion & uncertainty reigns Higher levels of performance High level of clarity & alignment

What you might hear…

“ There’s a clear line-of-sight.” “We do a good job of Connecting the Dots” “One-on-ones and 360 reviews provide individuals with constant reminders of our goals.” “The focus on short term and long term goals makes the company reach high levels of achievement.” “Flying blind” “We’re fire fighters” “We’re not sure what the future holds.” “Uncertainty is the best word to describe working here.” “The vision is inspiring and exciting” “Frustrating” “Purpose.” “My priorities are whatever my boss says they are that day.” “We all have the same vision which keeps us focused on what really matters.”

“Silos” “It’s all about winners and losers.” “Stove pipes” “We have a Moral Compass” “Alignment” “We engage in Constructive Conflict.” “Communication efforts across departments have allowed broader perspectives and better decisions.” “The end justifies the means” “Self-serving” “We solve problems and we move forward together.” “The leaders don’t walk the talk.” “My manager lives the core values and regularly addresses them on conference calls – impressive!” “All the team members believe in doing the right thing and creating win-win situations.” “Issues remain unresolved and the team stays in flux.”

“I don't feel like I work for this great company - I feel a sense of ownership.” “There is a high level of transparency in this organization.” “We've learned to play towards each other's strengths and we work together to improve our weaknesses.” “Check your brain at the door.” “I feel that I am using my skills and intelligence rather than being micro- managed.” “This is a Compliance Culture.” “We have trouble retaining our best talent.” “Leaders believe they always know best.” “Internal competition is valued over cooperation.” “We band together to work as a single unit to achieve our daily goals.” “Information is power.” “We value highly capable people. The talent level here is very high.”

“Fear is prevalent throughout the organization.” “We can be arrogant…we don’t always listen to our customers.” “This is how we’ve always done it.” “Our philosophy is Naming - Blaming – Shaming.” “Change is NOT a criticism of the past.”“Forgive and remember” “We do project post-mortems and lessons learned events.” “Change happens to us, not with us.” “Change is not a program…it is a matter of survival.” “A customer mind-set permeates the organization.” “We ask ourselves what does the customer want and need when we are looking at our processes.” “Hiding mistakes is more detrimental than making them.” “Finger pointing.”

Internal and External Forces that have the ‘potential’ to create more uncertainty and ambiguity Leadership changes Competition Regulatory changes Economy New technologies Restructuring Mergers & acquisitions

Building a High Performance Business Culture Turnaround & Transformation Leadership Transitions Leadership Development Mergers & Acquisitions Strategic Alignment The Denison Solutions

All content and images Copyright © 2012 Denison Consulting, LLC. All Rights Reserved. A Solutions Scenario… A Merger & Acquisition Example

Growth Strategy Potential Targets Due Diligence Cultural Integration ‘One’ Business Develop and Sustain Culture in Mergers & Acquisitions

What is the level of integration and change required? AbsorptionTransformation Stand Alone Best of Both Reverse Acquisition Degree of Change in Acquired Company Low High From Marks & Mirvis, Managing the Merger Degree of Change in Acquiring Company

The focus (stated intent) of most M&A’s External Focus  Move into new markets  Acquire new technologies  Increase scale  Access to lower cost operations

The focus immediately after the deal closes Internal Focus Alignment of…  IT Systems  Financial Systems  Compensation Systems  Sales Process  Etc.