Building and Sustaining High Performing Organizations and Leaders

Building and Sustaining High Performing Organizations and Leaders
Denison Certification Workshop | MAY 2015

Workshop Schedule May 13, 2015 May 14, 2015 NETWORKING BREAKFAST
 Welcome and Introductions  Culture and leadership  Denison Model and link to performance  Path to High Performance Culture change business case (Breaks and Lunch provided) GROUP DINNER May 14, 2015 NETWORKING BREAKFAST  Highlights and re-cap of Day 1  Transformation & Turnaround  Strategic Alignment  M&A  Leadership Development  Wrap-up and Q&A (Breaks and Lunch provided) CONCLUSION

Highlights & recap of day 1

Turnaround & transformation
Denison practice area

OVERVIEW Understand the critical levers to get business back on track!  Assess current reality by reaching out to internal and external stakeholders and get a broad and deep perspective of the business situation  Generate support for a shared vision for the future to create a strong coalition  Execute (with constant follow-up and communication) while anticipating and managing through the dip as fatigue sets in; and recognizing extra effort

Private Equity Companies
What is the link between culture and performance? Methodology Study sample includes... Inclusion criteria… 49 Completed a Denison Culture Survey prior to January 2014 Financial data was available for the same time period as the Denison Culture Survey PE Portfolio Companies 103 separate lines-of-business (P&Ls)

3-year rolling averages (Average growth over a 3 year period)
Growth Metric Methodology Focus on Growth 3-year rolling averages (Average growth over a 3 year period) Growth metrics provide an apples-to-apples point of comparison within a diverse sample of companies representing various industries, sizes, etc. Rolling averages provide a stable estimate: a) EBITDA Growth* b) Sales Growth *Two outliers were excluded from the EBITDA Growth analysis

Link to Growth: Top vs. Bottom Companies
Bottom Half Top Half 2.5x EBITDA Growth +5x Sales Growth Avg. EBITDA Growth 7% 17% 2.5X Avg. Sales Growth -3% 5% +5X

Link to Growth: Predictive Analysis
Where should we stick the crowbar? Across P&Ls, the Involvement trait was most strongly and consistently correlated with EBITDA Growth & Sales Growth

Culture Change over Time
1st Survey 2nd Survey + 13 pts. on average from 1st to 2nd culture survey

Business case

Strategic alignment Denison practice area

OVERVIEW Align your culture to your business strategy!  Clarify the ‘collective’ purpose and the tactics across the organization to develop a clear and aligned workforce at every level and from every part of the organization  Foster a shared understanding of your vision, values, strategy and goals throughout the entire organization  Help people understand the key organizational priorities and promote a deep sense of ownership

One organization?

Acquisitions > Transformation > Alignment
Business case Acquisitions > Transformation > Alignment

What would excite you most about integrating Company A? Company B?

What would concern you most about integrating Company A? Company B?

Culture ALIGNment remains a challenging journey
The need to: Led to: Define the desired customer experience Customer segmentation and re-organization Design integrated processes and systems Corporate process improvement team and OSS efforts, training, and education Empower teams to drive change Now “teams” reported as the primary way work gets done 2013 Talking Points As we review the 2013 survey results, you’ll see some trends that remain. While we have continued the work to unite and transform our business we’ve all experienced the challenges of that journey at some level. And, it’s not just happy talk. Let’s walk through how the 2012 Denison results helped us identify tangible opportunities and drive real change: We saw the need to re-define the EarthLink customer experience This led to customer segmentation and re-organization of our sales teams and most recently IT, with a growing focus on IT Services while continue to fully service and maintain our consumer and legacy product customers We saw the need for integrated processes and systems This led to formation of the Corporate process improvement team and OSS efforts, training, and education We saw the need to empower teams to drive change With the 2013 results “teams” are now reported as the primary way work gets done Some efforts succeeded, others failed and changed course, still others remain in progress.

In 2014… Mission (Vision, Strategy & Goals) are becoming less clear or being viewed with skepticism. Impact in the market is suspect. Less confidence in our ability to work effectively across the organization to create the necessary change. Employees feeling less valued and skill deficits are a concern.

Strategic Clarity & Alignment

Mergers & acquisitions

OVERVIEW Manage culture throughout the M&A process!  Understand the organization’s current growth strategy and culture  Conduct pre-deal cultural due diligence  Plan for smooth transition and successful integration  Continue high performance culture development

“What is your advice for the board?”
business case “What is your advice for the board?”

Understand your culture first
Assess your own culture 1 Define strengths you are trying to build 2 Define the limitations you are trying to overcome 3 Define the ideal culture for your target acquisition 4

What level of integration do we need?
ABSORPTION Target company conforms to acquirer Cultural Assimilation TRANSFORMATION Both companies find new ways to operate Cultural Transformation PRESERVATION Target company retains independence Cultural Autonomy REVERSE MERGER Unusual case of target firm leading BEST OF BOTH Additive from both sides Cultural Integration LOW HIGH Degree of change in acquiring company Degree of change in target company Adapted from Marks and Mirvis (2010)

Cultural Due Diligence
External Stakeholders Social Media & Public Data HR Data On-Site Deal High Low Invasiveness External Internal Data location

What level of integration do we need?
ABSORPTION Target company conforms to acquirer Cultural Assimilation TRANSFORMATION Both companies find new ways to operate Cultural Transformation PRESERVATION Target company retains independence Cultural Autonomy REVERSE MERGER Unusual case of target firm leading BEST OF BOTH Additive from both sides Cultural Integration LOW HIGH Degree of change in acquiring company Degree of change in target company Adapted from Marks and Mirvis (2010) This Acquisition

SOCIAL MEDIA DATA ANALYSIS
Acquiring Firm Target Firm 80% recommend as an employer 40% recommend as an employer Culture profile Estimate Qualitative Comment Themes Talented and hard-working people Overall healthy culture Pay & benefits / Work-life balance Unclear future direction Talent management challenges Quality of products Employee discounts Silos Short-term focus Leadership challenges

SOCIAL MEDIA DATA ANALYSIS
Competitor Analysis

HR DATA & PREVIOUS SURVEY
HR document Review Review of HR documents and data – e.g., employee handbook, tenure, performance appraisal Archival Employee Survey Mapping Conceptual and data mapping based on the comparison of the archival employee survey vs. the Denison survey Qualitative Comment Analysis Identification of major themes linked to the Denison Model based on qualitative analysis of open-ended comments

HR DATA & PREVIOUS SURVEY
Acquiring Firm Target Firm Archival Employee Survey Mapping Qualitative Comment Analysis Autonomy/ Talent mgmt Teamwork/ Collaboration Culture Innovation Industry leadership Strategy Leadership Values Flexibility Teamwork/ Customer Products

INTERNAL STAKEHOLDER INTERVIEWS
Semi-structured interviews with the transition Team and leadership  THE END STATE REVISITED ABSORPTION Target company conforms to acquirer Cultural Assimilation TRANSFORMATION Both companies find new ways to operate Cultural Transformation HIGH BEST OF BOTH Additive from both sides Cultural Integration This Acquisition Degree of change in target company Target’s expectation PRESERVATION Target company retains independence Cultural Autonomy REVERSE MERGER Unusual case of target firm leading Cultural Assimilation LOW LOW Degree of change in acquiring company HIGH Adapted from Marks and Mirvis (2010)

SYNTHESIS: KEY INTEGRATION CHALLENGES
Synthesis of all data sources to identify: The points of synergy Passion for the products and customer Strong relationships Deal in-character for the acquiring company Cultural differences Speed of decision-making and operations Emphasis on values and people

SYNTHESIS: KEY INTEGRATION CHALLENGES
Synthesis of all data sources to identify: 3. Key integration challenges Different integration expectations Management and organization structure Branding of retail stores Talent management Create a bridge to the integration process TRANSITION Transition team to plan integration INTEGRATION Integration effort to create ‘one’ business CULTURAL DUE DILIGENCE Define the target & Reduce the risks Deal

Leadership development

OVERVIEW Effective leadership is a key driver of performance!  Establish and articulate direction and clear priorities  Model the values and behaviors that promote consistency and alignment across the organization  Translate the demands of the external environment into action  Create and manage high-performance organizations and teams  Cultivate environments that maximize human capital and create aligned action

3 Frames Competencies Culture

3 frames Competencies Culture

3 frames Personality Competencies Culture

Integration of frames Personality Competencies Culture
Leader impact on the culture Cultural opportunities and constraints [External] Leader potential vs. actual performance Personal opportunities and constraints [Internal] View of Internal and External influences on leader behavior Optimize development to maximize impact on the organization

DLPR (Denison leadership Potential Report)
Apples to apples Personality Competencies Culture DLPR (Denison leadership Potential Report) DOCS (Denison Organizational Culture Survey) DLDS (Denison Leadership Development 360° Survey)

Denison leadership development survey (DLDS)
Assessment of leader competencies

Denison leadership development survey (dlds)
360 tool based on the Denison model 96 items Benchmarked against 15,000+ leaders in the normative database Feedback broken out by rater source

Denison leadership potential report (DLPR)
Assessment of leader competencies

DLPR Alignment of Hogan and Denison scales
Complete the 3 core Hogan Personality Assessments Predicted capabilities or “potential” on each Denison index Benchmarked scoring around levels of potential Facilitator’s Guide & Web Course available

The Leadership Potential Report
Denison Leadership Potential Report The Leadership Potential Report Scoring Key

DLPR Look to the “gaps” “Negative” scales “Positive” scales

Integration of 3 frames in practice
DOCS + DLDS + DLPR

Integration – 4 key concepts
Competencies Personality Leader Challenge Leader Strength Challenge Understand how the culture may be constraining leader development Agent Equip the leader to be a champion of positive culture change Culture Challenge Culture Develop Leverage the culture to benefit the leader’s development Flow Build on the existing strengths of the leader and culture Culture Strength Nieminen, Biermeier-Hanson, & Denison (2013), Consulting Psychology Journal: Practice and Research.

Agent Develop Flow Challenge Culture Competencies Potential Challenges
Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge 26-50 Challenges Strengths Culture 51-75 Develop Flow 76-99

Agent Develop Flow Challenge Challenge X Culture Competencies
Challenges Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 1-25 Agent Challenge Challenge X 26-50 26-50 Challenges Strengths Culture Moderate Cultural Challenge High Competency Strength High Potential * Competencies that fall in this box may point to unique opportunities to Lead the Culture Forward 51-75 Develop Flow 76-99

Agent Develop Flow Challenge X Culture Competencies
Challenges Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 X Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge Clear Cultural Challenge Moderate Competency Strength Low Potential * Competencies that fall in this box may be at High Risk of Regression 26-50 Challenges Strengths Culture 51-75 Develop Flow 76-99

Agent Develop Flow Challenge ?? Culture Competencies Potential
Challenges Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 ?? Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge 26-50 Challenges Strengths Culture 51-75 Develop Flow 76-99

Agent Develop Flow Challenge ?? Culture Competencies Potential
Challenges Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge 26-50 Challenges Strengths Culture Work with the leader to tap into potential that is there. 51-75 Develop Flow 76-99 ??

Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge Customer 26-50 Challenges Strengths Culture Change 51-75 Learning Values Develop Empower Develop Flow Agreement Coordinate Teams Vision 76-99 Strategy Goals

Strengths Competencies Low Potential High 1-25 26-50 51-75 76-99 Customer Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge Change 26-50 Challenges Strengths Culture Agreement Coordinate Develop Learning 51-75 Develop Flow Empower Teams Values Vision 76-99 Strategy Goals

Competencies Composite
Challenges Strengths Competencies Composite Low Potential Composite High 1-25 26-50 51-75 76-99 Challenge Understand how culture may be constraining your development as a leader Agent Realize your potential to lead positive culture change in the organization Develop Leverage the culture to benefit your development as a leader Flow Build on the synergies of aligned personal and organizational strengths 1-25 Agent Challenge Customer Change 26-50 Challenges Strengths Culture Composite Learning 51-75 Empower Values Teams Agreement Develop Flow Develop Coordinate Vision 76-99 Strategy Goals

business case “How would you use the Denison tools in designing a leadership development program?”

Leader development Program design Exercise
Pair up or Solo: Spend 10 minutes designing a program for Executive Leaders that builds on what you’ve learned in the Denison Workshop. Design considerations: What is the objective of your program? What kind of feedback do you want to provide to the leaders? How will you support their use of the feedback? What tools (Denison and/or non-Denison) would you use? How would you order and space the activities or steps in the program? Tables: Spend 10 minutes sharing/discussing your program.

Example Leadership Development Program
# External Culture Project 2014 Q2 # Internal 4-6 wks 6-8 wks 12-16 wks #1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review Executive Leaders 2014 Nov 2015 May 2015 June 2015 Aug 2015 Dec Business Leaders #1 #2 #3 #4 #5 2014 Nov 2015 June 2015 Aug 2015 Oct 2015 Dec

#1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review #1 Workshop & Coaching DLPR Pre-work: Hogan Personality Assessments Workshop: Program kickoff and setting the foundation for personality and potential Provide background and interpretation support on DLPR Dialogue on composite DLPR results Coaching: Personalized interpretation support, sense-making, & feedback Set honest conversations in motion Set draft IDP in motion

#1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review #2 Workshop & Coaching DLDS Pre-work: Denison Leadership Development 360° Survey Workshop: Setting the foundation for leader actions that create high-performance cultures Provide background and interpretation support on 360° Dialogue on composite 360° results Coaching: Personalized interpretation support, sense-making, & feedback Set honest conversations in motion Look ahead to revision of IDP

#1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review #3 Coaching Action Planning Pre-work: Honest conversations Coaching: Sense-making on the additional feedback Identify 1-2 priorities for development Brainstorming actions and ideas Creating/Modifying the IDP Setting actions in motion

#1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review #4 Coaching Course Correction Pre-work: Action learning and feedback Coaching: Progress check: What’s working (or not) and how do you know? Identify obstacles and ongoing support needs IDP update and adjustment Sustainment planning

#1 Workshop & Coaching DLPR #2 Workshop & Coaching DLDS #3 Coaching Action Planning #4 Coaching Course Correction #5 Coaching Progress Review #5 Coaching Progress Review Pre-work: Action learning and feedback Coaching: Progress review with Coach & Boss: What has the impact been for you; Where might you need to rethink and try again? Identify obstacles and ongoing support needs IDP update and adjustment Sustainment planning

Wrap-up

Your Pilot 25 person Denison Organizational Culture Survey
1 Person Leadership Development Survey OR Your pilot package includes the full survey of your choice, full report generation, and basic interpretation and feedback on results from a Senior Denison Consultant.

Questions? Thank you!

Building and Sustaining High Performing Organizations and Leaders

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