Connects Organizational Culture with Financial Performance.

1. Culture and its IMPACT! on Financial Performance Presented by: Richard S. Dillard, PMP Research and Development by Robert A. Cooke, Ph.D. and J. Clayton Lafferty, Ph.D. Copyright 1973-2006 by Human Synergistics International. Used by permission.

2. Does Culture Improve Financial Performance?

3. Culture Impacts the Bottom Line Three Cross-Sectional and Two Longitudinal Studies show strong relationships between culture and performance measures: Higher Product/Service Quality Stronger Revenue Growth Higher Profits Copyright E.J. Sanders and R.A. Cooke (2005). “Translating ‘Soft’ Changes Into ‘Hard’ Dollars”. Paper presented at ASTD Expo 2005, Orlando, Florida. Used by permission.

4. Culture and Profitability Correlation Financial Data provided by Towers-Perrin for 69 companies in various industries. R.A. Cooke (2004). “Vision is Not Shortsighted”. Paper presented at the 6th Australian Conference on Culture and Leadership. Syndney, Australia. Used by permission.

5. Culture and Profitability Correlation

6. Corporate culture can have a significant impact on a firm’s long-term economic performance: Adaptive Unadaptive Revenues682%166% Work Force 282%36% Stock Price901%74% Net Income756% 1% Corporate Culture: Kotter & Heskett (1992)

7. 1998 2000 2002 1996 2004 1996 1997 1998 1999 2000 2004* 2001* 2002* 2003* REVENUE 8.6 3.9 6.6 6.2 1.8 1.2 1.0 -0.8 -0.8 EBITA 11.0 4.3 9.1 7.3 5.1 5.1 4 YAGO % B/(W) -1 19.6 14.0 12.5 NPAT -12 11.2 7.8 7.5 6.2 -16.1 * Before significant items -26 Culture and Profit at Lion Nathan Copyright © 2006 by Human Synergistics® International and Human Synergistics (NZ) Ltd. Used by permission.

8. 1998 2000 2002 1996 2004 Net Profit After Taxes in Millions of Australian $ Culture and Profit at Lion Nathan Copyright © 2006 by Human Synergistics® International and Human Synergistics (NZ) Ltd. Used by permission.

9. Organizational Culture and the Bottom Line The latest research from links organizational culture with profitability, sales growth, market value, and customer satisfaction. The results are based on a study of 102 public companies from a broad range of industries surveyed by Denison Consulting from 1996-2004. Companies are incorporated primarily in the U.S. (89%).

10. If we compare the 102 firms in the top and bottom 25% based on their overall average of the 12 indexes, companies with higher culture scores have greater profitability, sales growth, and market value than those with lower culture scores. Top 25% Bottom 25% Each of the 12 indexes has a score. It is the percentile score based on our normative database which shows you the percentage of 707 companies that scored lower on the index. Each color bar indicates the percentile quadrant of the score. The more color the better. These firms are earning almost $2 more on every $100 spent on assets! Managers in the top 25% are creating more value in the marketplace. The market value (share price x #shares) is 440% of book value (which is a company's assets minus liabilities).

11. Impact on Sales Growth Looking at the impact on sales growth, firms in the top 25% of each trait in the Denison model have dramatically higher sales in the year the company was surveyed. Each bar represents the average sales growth of ~24 firms. For example, the 24 firms with the highest total mission score have a sales growth average=14.3% versus the 24 lowest rated firms which have a sales growth average= -.1%. Therefore, focusing on culture is a great way to improve sales.

12. What about the Long-Term (ROA)? Here we show the return-on-assets* for the top 25% and bottom 25% of each trait over a three-year period. On average, 72% of firms in their industry rank below these companies in profitability. These firms are only matching the industry average in ROA. *Standardized within industry

13. Customer Satisfaction In a separate study of 240 automotive dealerships, firms with higher culture scores have higher customer satisfaction ratings. N=10 N=12

14. Conclusion Your organization’s culture can have a dramatic impact on the bottom line. Culture is a controllable aspect of the organization that can improve profitability, sales growth, market value, and customer satisfaction. Developing culture today will improve your performancetomorrow.