Culture Transformation Case Study

The Culture Transformation Organisational culture is now widely accepted as the major factor in long-term levels of performance. Culture can be measured and this case study provides strategies that have transformed cultures to greatly improve business performance. When an organisations culture becomes more constructive, working relationships and internal cooperation improve. The desire to make processes more effective and economical increases and relationships with customers and other stakeholders improve. It is possible to build a constructive, positive culture in any organisation regardless of its activity. The organisation described in this case study is highly visible and employs over 700 people. It has been operating for many decades and the mid-2000s was facing unprecedented challenges. The prevailing way of doing things would not deliver the high level of performance that was required. Improvement is not assured The truth about efforts to improve organisational culture is sobering and needs to be appreciated before a change program is implemented. American researcher, John Kotter, noted the high failure rate of cultural change programs in his seminal work Leading Change, Harvard University Press, 1996. Kotter believes that only about10% of change programs succeed. In Australia, Human-Synergistics, who provide tools and consulting advice to organisations that want to enhance their culture, identify a 67% failure rate in attempts to improve culture in Australia: source In Great Company 2006. Our approach: top down bottom up and make it personal The desire to improve organisational culture must be accepted and driven by senior managers and be made relevant to people down the line. We rolled out a comprehensive program that would improve the daily working lives of employees and help them develop as human beings. What We Did 1. Measurement and Diagnosis The Managing Director started the program by communicating the rational and objectives for change. The Executive Leadership Team agreed with the strategies and the surveying of the prevailing culture began. Through a blind questionnaire, over fifty managers described their Preferred Culture using a Human-Synergistics tool called the

Organisational Culture Inventory (OCI). They were instructed to form their answers based on what they thought their people would say if the organisation was working at its optimum. They (and everyone else) then completed the survey based on the reality of the situation. The results showed the challenge ahead. Preferred Culture N=55 Managers

The OCI measures expectations on people at work. It ranks culture against a large sample of organisations with the darkest circle being the 50th percentile. The Constructive styles, shown in blue, are about good relationships and effective approaches to tasks. The Passive-Defensive styles (green) measure the amount of insecurity about relationships. The Aggressive-Defensive styles (red) measure expectations about aggression on tasks. The managers blindly described a constructive culture as being their ideal.

Actual Culture

The survey clearly demonstrated that our client did not have a culture that its leaders believed to be the best our peoples performance and wellbeing.

Taking it to the people The survey results for every group, level and team were openly shared and debriefing sessions were held for every team to help people understand their results. Every person was given the opportunity to think about what was already working well as well as providing ideas for improvement for their own team and the business. The use of a respected, academically proven tool of measurement was very important at the beginning. The engineering and scientific orientation of many staff members meant that the measurement had to be credible and stand up to, at times, intense scrutiny. Key themes emerged from the staff feedback sessions. People wanted: 1. Empowerment to make decisions and take responsibility for outcomes 2. Less bureaucracy and restrictive rules that add little or no value 3. A clearer understanding of the functions and roles of different workgroups and people

4. A clear picture of business direction 5. Standards of behaviour consistent with a blue (constructive) culture

Responses: Initial changes made quickly and publicly The response was pivotal and implemented quickly: 1. Authority to spend: expenditure levels were increased to reduce the need for one-up approvals where it added little value 2. Many minor activities previously requiring manager approval were opened up to people as a demonstration of trust 3. Teams took on the task of sharing activities, priorities and successes with each other 4. The vision and strategic priorities were revised in a way that gave 80% of employees the opportunity to provide input. Every person who contributed was given feedback about how a nd why their input was or wasnt included 5. Leadership is a major factor in the performance of any organisation. It was critical in achieving the change we needed at this organisation. An intensive program of personal awareness and development was initiated for people from Managing Director to Team Leader. Within a few months 160 managers were provided with individual 360degree feedback from their colleagues using the Human-Synergistics Life Style Inventory (LSI). A skilled practitioner debriefed them, in depth and privately. The individual results were then shared in facilitated management groups. This process cemented the leaders understanding of the strengths and less productive elements of their self-image and the way they were perceived by others. Participants showed concern and support for each other as well as providing honest feedback on how people could be more effective. The 360-degree process was an important element of the leadership program. Following their comprehensive individual feedback, each manager committed to personal strategies and specific actions to improve their effectiveness. A critical mass of our leaders put the plans into practice. The required leadership behaviour was now crystal clear. People at the top of the business were on their personal and collective development journeys.

Development of all people It is important to have an all-inclusive approach to culture improvement. If a critical mass of people saw the benefits, we would improve as an organisation. Our change program helped people to feel that they were getting a

direct personal benefit. They got to understand more about their personal, internal drivers of behaviour. Becoming more aware and open about their impact on others was crucial in encouraging them to take responsibility for improving culture and performance. Innovative daylong workshops were held for all people in their teams. These sessions built more understanding of the language and gave insight to the behaviours measured by the tools. Within a few months we achieved the desired aim people were talking. Not everyone embraced the stimulus enthusiastically. It varied between teams and individuals. However, most people saw the benefits and the logic of what we were trying to achieve. A critical mass of early believers had been created to give the program momentum. By the start of Year 2 the vision of a workplace where people could contribute and reach their potential, became more tangible. People were showing greater willingness to take responsibility for their personal performance, their contribution to their team and the integrity of their behaviour. Corridor and worksite conversations are a great form of intelligence gathering. Key influencers were out in the organisation. People became keen to talk. When more people starting having conversations about how insight into their thinking and that of others was helping them at home, as well as at work, we knew we had started something that may prove to be special. Mate this is helping me at home and this is helping me with the kids was music to my ears. Ian Douglas Follow up workshops were run in Year 4. People from all sites and levels across the organisation, were asked to work together on problem-solving and more personal development.

Keeping in touch While the people who had been in the organisation at or near the beginning of the program, adopted the language, thinking and behaviour of the desired culture, new people to the business were at risk of being left out. We made the decision to incorporate culture awareness workshops as a part of induction. All new starts attended the full day program on culture and personal awareness. Human Resources in cultural integration of policies and processe The Human Resources function had two key challenging: The Challenge of Synergy: ensuring that policies, systems and practices support and encourage constructive behaviour. This is not always as easy. In fact, HR practitioners can be the most judgmental and least trusting of others and leading cultural change can require a great deal of self-reflection from HR groups. Persistence and action in driving constructive behaviours: there are always urgent actions for HR groups and, very likely, the odd failed initiative in the culture space. Time moves fast, new employees join dont lose them!

What leaders did to directly improve synergy: All of the Executive Leadership Team members, their reports and team leaders faced the challenge of giving people the behaviour that would make it easier for them to contribute effectively. As you would expect, some were already leading in a constructive way. Some were not. A few found the required change difficult and left the organisation. The Executive Leadership team continued to work on their individual and collective performance. They were less concerned about controlling daily operational issues. They became a far more strategic group focused on creating an environment for success. This change allowed their reports to make more decisions and reduce some of the bureaucracy that can emerge in any organisation. Some senior managers and Team Leaders stood out in their efforts to create better teams. Sometimes they used outside facilitators in team development and some of them did it themselves. These efforts started to show that we are smarter than I am. When people were given appropriate opportunities to contribute ideas to the way things could be done better, we could see significant improvement. Respected role models are critical in the improvement process and the creation of synergy. It is easier to look into yourself and be courageous when you see someone else doing it and succeeding because of his or her constructive behaviour. The people who stood up and took these opportunities were the early pathfinders who showed the way for others. The importance of the courage of leaders to ask questions, listen to answers and devolve responsibility and trust to other people cannot be underestimated. Its not about being nice! When we commenced the culture program, there was some cynic ism about it just being nice. Sometimes this showed a lack of understanding. Sometimes it was used as a defensive weapon, used by people who sought to avoid difficult conversations. If it could be put down it would allow me to keep on doing what Ive alw ays done! The leaders who really led the improvement showed that having the hard conversations in a constructive ways was an important element of the culture they were trying to create. In time, more managers were able, and sufficiently confident to not only initiate the hard discussions, but to also receive feedback from others on where they could improve. The top down, bottom up approach to the process could only work when managers became leaders. Further development of leaders It is now proven that the level of Emotional Intelligence possessed by the individual leader is a key factor in the leadership effectiveness. The business continued to invest in feedback and leadership programs to show a leader whether or not he or she is applying leadership strategies to get constructive outcomes. Clear and specific ways to improve their impact on others is provided if needed.

The people who make valuable contributions usually show courage as well as Emotional Intelligence. Perhaps the two things are connected. Following the Life Styles Inventory we saw more leaders giving people what they needed, not just what they wanted. Leaders are regularly challenged and were encouraged to understand that success is never final. They are now expected to maintain high levels of performance and the business is far more proactive in helping managers who for whatever reason, are struggling. An example One manager had failed to communicate with his employees for years, except when things went wrong. In that case, he offered corrections. Disputes were mediated and resolved. The manager never saw that he was part of the problem and never owned his part in or heard the employees legitimate concerns. There was a long way to go to achieve a constructive working environment. Following LSI, the manager began to understand himself more and how he impacted on others. He became less fearful about listening to others and more willing to get the best out of a relationship with a former enemy. Many fruitful conversations resulted and now both parties are seen as strong performers, who will work together. Leadership: It starts at the top The Managing Director provided outstanding leadership in his highly effective, quiet, considered and insightful way. He carried an immense load in a time of unprecedented pressure. He continually encouraged others to take more responsibility and to be considered and courageous. He brought a group of individuals together and made them a high-performing team. He kept communicating in person and through other mediums to keep all people informed and involved. The Outcomes When the organisations culture improves, performance measures, staff satisfaction and productivity improve as a result. The environmental impact also improved greatly. 1. Human Resources metrics - Diversity: in 2005 23% of staff members were female. This increased, through developing a more inclusive flexibile culture in a traditionally engineering organisation, to 33% in 2011. This improvement applied in senior leadership and technical roles as well as across all levels of the business - Wellbeing, average sick leave per person per year continued to reduce each year down to 2.7 days per person per year. This is significantly lower than industry averages and is a major achievement - Retaining and growing talent internally - turnover remained steady at around 7%, during a time of major infrastructure investment in the state and around Australia, when many organisations were losing key talent.

It is clear that culture was a strong contributor to people deciding to stay. We retained people when other job opportunities were offered to them when demand for people with engineering skill was rampant. In addition, around half of all vacancies are now successfully filled internally on merit. This is an increase of around 20% in the years prior to the focus on culture. There was more focus on developing and encouraging people to grow their confidence and capacity. 2. Business performance The improvement in synergy was achieved in a time of perceived crisis. It was done through years of extreme drought and bushfires. Both were serious challenges to this organisation, Constructive behaviours, attitudes and innovation were central in guiding decisions, with the belief that how we do things is as important as what we do. A poor execution of a good strategy leaves a negative legacy in the mind of the people involved. - This mindset was central in meeting key challenges including the most significant increase in capital expenditure in the history of the business. Our leaders, employees and construction partners acknowledged that this extraordinary achievement could not have been achieved without a genuine commitment to creating a constructive culture. The legacy of this work has positively impacted the construction industry as design and construction partners also adopted the philosophy. A community wide disaster had a major impact on the business and some of its people. The overarching concern people had for their colleagues and their critical role in dealing with this emergency enabled us to get through the incident without a lost time injury (LTI). This contributed to a landmark of 12 months without a lost time injury. 3. Reputation and relationships Prior to starting the culture program, a stakeholder survey indicated that the business was not seen as being as collaborative as they would need to be to meet the challenged ahead. Despite the enormous challenges faced by the organisation, stakeholder feedback greatly improved resulting in higher levels of productivity and satisfaction. A commitment creating a constructive culture to get us to a higher level of synergy, became a pivotal element of the organisations reputation in the employment market. In addition to maintaining low turnover, the average time to recruit during a tight labour market reduced to around 8 weeks from a starting point where some key positions would take many months to fill. Key Factors in Culture Improvement Our experience shows that there are key components in a culture transformation and the attainment of synergy. These include:

1. Engagement with critical mass of the organisations people: they have to been involved actively: creating the feeling that we are all in this together for our individual and collective benefit 2. The use of measurement to quantify the starting place and to create the disturbance needed to help individuals and groups see the need to change 3. A tangible and relevant vision that describes the desired destination and the desirability of the outcome 4. The development of leadership capacity: culture improvement wont happen without high levels of leadership performance at the highest levels of the organisation 5. A Human Resources focus that champions, supports and facilitates a range of internal activities in a strategic, not just procedural manner 6. Courage from leaders to be honest and to take on the hard issues and the integrity to tell the truth 7. The development of people to increase their self-awareness to work (and live) more effectively with others

This is the measurement of the journey. The circumplexes show the picture of the growth in constructive elements of the culture and the reduction in the less helpful styles. The results show maximum statistical significance in the improvement but the journey has not ended with this measurement of success.

The Last Word The organisational challenge is to perform well with the available resources. We are judged on outcomes for customers, stakeholders and the environment.

We couldnt have achieved what we did, with the pressure we were under, if we hadnt changed the culture. Robert Skinner, Managing Director We hope that the experience and insight we have gained will help you to increase your chances of success in achieving cultural transformation or keeping your already constructive culture in a healthy state into the future. Written by Ian Douglas and Leigh Keath About the authors: Ian and Leigh played leading roles in this organisations transformation. Leigh was the General Manager of People and Safety and Ian was the external transformational change agent.