Values Misalignments in the C-Suite and    What’s to be Done About Them   - Spring Leadership Advisory Webinar -          ...
It’s An Old Story   And Did You Know…   In 2002, Enron shares were valued at 60 cents              • At the same time, cop...
Enron (A History Lesson) Most Innovative: Fortune - 6 straight yrs.                          Culture Belied the Values Sta...
Enron Isn’t Alone Unfortunately     While business strategies were suspect for all, culture was the root of their     prob...
Long-term, Successful Companies Have a Clear Sense of Purpose   HDFC Facts       • Founded by H.T. Parekh (a mythic figure...
And Their Leaders Live their Values (the real secret of their success) Stated Values                                      ...
The Right Leader Will Set The Values and Drive the Culture                                           GE and IBM Remain Exc...
In Sum: Culture Must Align with Values (or there will be Problems)   Most companies have an expressed set of Core Values o...
What Does Misalignment Look Like?                                                                       % Responding Favor...
Misalignment CostsImpact of Leadership and Management Practices on Business Results                                       ...
Requires a 5 Step Process                          • Of existing values (and any historical material about their construct...
Won’t Waste Time Wordsmithing!                                                                     Writing Statements     ...
Provide Individualized Leader Support (Where Needed)   Senior leaders MUST express the stated values and corporate ideals ...
Interested in More? Please Sign-Up for Our Upcoming Webinars                 Building an                                  ...
About Sirota Leadership Advisory   We help senior leaders overcome intangible obstacles to business success by   building ...
Thank You for Listening Please contact Douglas Klein, our chief leadership advisor, at dklein@sirota.com or call directly ...
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Sirota Values Webinar Spring2012 For Distribution

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This webinar offers case studies of how companies have either successfully or unsuccessfully established their values as enduring principles that direct the management activities of the company. I also discuss how successful interventions often include realigning senior leaders\' behaviors with newly reaffirmed values, and outline the major elements of Sirota\'s 5-step Values Realignment Process that:
• Focuses on Leader Alignment and the Day-to-Day Animation of the Values
• Distinguishes Enduring Principles and Situation-Dependent Practices (or Habits)
• Ensures the Process Is Driven by the CEO (and Enabled by HR) - Not the Other Way Around

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Sirota Values Webinar Spring2012 For Distribution

  1. 1. Values Misalignments in the C-Suite and What’s to be Done About Them - Spring Leadership Advisory Webinar - May 16, 2012 Organizational breakthroughs. Bottom line results.
  2. 2. It’s An Old Story And Did You Know… In 2002, Enron shares were valued at 60 cents • At the same time, copies of the Enron Code of Ethics were selling on eBay for 33 times as much (20 dollars)© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 2
  3. 3. Enron (A History Lesson) Most Innovative: Fortune - 6 straight yrs. Culture Belied the Values Stated Values • Leadership valued massive growth and entrepreneurism, not a crime • Respect, Integrity, Communication, Excellence • But culture became risk-seeking, personal gain-seeking, arrogant, etc. Overt Deceptions and Illegality Appears while lacking any needed counter- • When market cooled (‘01-’02), so did balancing forces (oversight, ethics, its stock, leading to margin calls, disclosure, functioning ombudsman, which led to aggressive moves to accountability, etc.) prop up perceptions of value - Board famously suspended Failed to Reward/Advance the Values their code of ethics when Prime Example of a True Failure of convenient, conflicts of interest Leadership and shortcuts abounded, etc.) • Strategy was suspect, but it was the A Driver of the Sarbanes-Oxley Regulations failures of moral leadership and the • Many see SOX as putting lipstick on abuses of trust that killed them a pig (but still needed)© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 3
  4. 4. Enron Isn’t Alone Unfortunately While business strategies were suspect for all, culture was the root of their problems. Each had stated Values that bore little resemblance to the day-to-day actions that were rewarded.© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 4
  5. 5. Long-term, Successful Companies Have a Clear Sense of Purpose HDFC Facts • Founded by H.T. Parekh (a mythic figure and businessman) • Incorporated in 1977 in Mumbai - India’s first housing finance company  Objective of meeting a social need: promoting home ownership by providing long-term finance to middle and lower-middle class Indians • HDFC’s main goals are to: - Develop close relationships with individual households, - Maintain its position as the premier housing finance institution in the country, - Transform ideas into viable and creative solutions, - Provide consistently high returns to shareholders, and - To grow through diversification by leveraging off the existing client base© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 5
  6. 6. And Their Leaders Live their Values (the real secret of their success) Stated Values Culture Expresses the Values • Integrity • A dominating industry force - e.g., employees encouraged to - Yet encouraged rather than make decisions they can stand by quashed competition forever – the company should be • During disarray in the 90’s, transformed transparent in financial reporting into a retail bank - e.g., no bribes (“speed money”) in - To fund its operations at rates transactions (standard industry people could afford practice at the time). This has - Now second largest lender in India been, and is, the biggest no-no at • In past, rejected formal code of ethics HDFC - Norms best transmitted by example • Excellence in Customer Service • People treated as adults – intelligent, - e.g., delinquencies are aided hardworking, creative, unique rather than scared to meet their obligations - Low turnover, high loyalty, people love their work and environment • Civic Responsibility • Highly acclaimed company - e.g., contributions for the poorest sector of Indian society - For governance, accounting practices, customer service and • Teamwork and Employee Commitment civic mindedness - e.g., to foster efficiency and - Continues to win recognition today effectiveness© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 6
  7. 7. The Right Leader Will Set The Values and Drive the Culture GE and IBM Remain Excellent Examples of How Values and Culture Enable Strategy Execution (of course it also helps to have the right strategy) Jack Welch was Chairman and CEO Louis V. Gerstner, Jr. was Chairman and between 1981 and 2001 CEO from 1993 - 2002 (1st outsider) • Changed and streamlined GE • He is credited with saving IBM by • Focused on inefficiency (adopted Six refocusing the strategy (IT services, the Sigma mid 90’s), execution, Internet ) and culture by keeping the performance management, reward, company together and addressing and shareholder value both “sacred cows” and an insular • Be #1 or #2 environment • $27 billion to $130 billion in revenue, • 100,000+ additional employees were $14 billion to ~$400 billion market cap laid off from a company that had painfully broken with its security pact • Lengthy succession planning: Jeffrey Immelt (still CEO 11 yrs later) • Samuel J. Palmisano succeeded him (and just recently retired, 10+ yrs later) • In 1999 he was named "Manager of the Century" by Fortune magazine • In 2008, received the Legend in Leadership Award from Yale© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 7
  8. 8. In Sum: Culture Must Align with Values (or there will be Problems) Most companies have an expressed set of Core Values or Enduring Principles that state what the institution stands for (or should) • Often highlighting one or more of their key deliverables to: - Employees, Customers, Communities, Investors, etc. • Covering principles that would be pursued regardless of business conditions, industry, etc. – they represent strongly held convictions - Most would attribute leadership and business success to them As we have seen, some companies have cultures and work environments in conflict with aspects of their Core Beliefs and Values • And is ultimately the root cause for many corporate ills - Turnover, Customer Dissatisfaction, Inefficiency, Low Productivity, Marketplace failures, etc. • Due to systematized behaviors that don’t represent the Core Values - Leader beliefs and behaviors, management policies and practices (including the performance management systems), etc. Alignment is the process of affirming/reaffirming the Core Values and their omnipresence in the company as THE singular most important driver of decisions and behavior© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 8
  9. 9. What Does Misalignment Look Like? % Responding Favorably (n=284 units) Core Values (Company XYZ) Low 10% of Avg. Unit Hi 10% of Units Score Units Integrity 62 83 100 Openness 40 67 100 Customer Service 32 62 86 Accountability 29 56 81 Teamwork 35 51 72 XYZ Corp.© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 9
  10. 10. Misalignment CostsImpact of Leadership and Management Practices on Business Results Improvement of Impact of a 1% Improvement Customer Satisfaction of Customer Satisfaction Openness .6 Innovation Sales Turnover .5 $12.3m $m .3 Customer Favoritism Satisfaction $3.6m .3 Fair Policies and Net Operating Procedures .3 Income $m Clear Priorities XYZ Corp. © 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 10
  11. 11. Requires a 5 Step Process • Of existing values (and any historical material about their construction) • Of the hard business metrics that drive decision-making (& stresses they create) Archival Analysis • Of the internal assessments of key publics if they exist (current culture & practices) • 1-on-1 meetings w/Key Executives other Internal and External Publics as needed • How variable are the belief systems? How variable are the aspirations for success? Interviews • Top-line review of interview results CEO • Specific plan presented, and input sought, for Affirmation and Alignment Phase Check-in • Focus on commonly held beliefs regarding enduring principles & business success • Distinguish between enduring principles and long-standing practices (habits) Affirmation • Consensus on what to add, subtract and modify as needed • Develop behavior expectations for each Value (and corresponding metrics) • Uncover existing Values violations and plan/prioritize the actions to be taken Alignment • Plan for corporate-wide reaffirmation© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 11
  12. 12. Won’t Waste Time Wordsmithing! Writing Statements Affirmation / Buy-in Operationalization • Rather than waste time developing perfectly worded values statements, focus on buy-in, animation & operationalization (let others struggle w/words, if they haven’t been established) • Use a data-driven process that seeks the inputs of a wide-range of key publics beyond the Executive Team (VP’s/Directors, HIPO’s, Customers, and Investors) • Distinguish between enduring principles and situation-dependent practices (or habits) while emphasizing observable, measurable behaviors Will be driven by the CEO (and enabled by HR) – not the other way around© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 12
  13. 13. Provide Individualized Leader Support (Where Needed) Senior leaders MUST express the stated values and corporate ideals in both their actions and beliefs in order for them to be seen as credible Nearly all senior leaders have ingrained beliefs and behaviors in conflict with those stated values and corporate ideals • Some are motivated to change (whether aware of the conflicts or not) • Some are not (my #’s are fine, I am successful, why should I change) Keys to Success: • Providing a mirror of feedback from a range of constituencies - This isn’t therapy, or career counseling, the feedback is focused on specific violations (and positive expressions) of the values (and the business-related consequences of both) • Exploring leader’s strongly held management conviction - Challenging the leader to distinguish between career-long habits and strongly held convictions - Pointing out areas of convergence and divergence • Seeking avenues for compromise (the goal is alignment with Co. Values) - Finding specific policies, practices and personal behaviors to change (often involved BU-based culture change efforts)© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 13
  14. 14. Interested in More? Please Sign-Up for Our Upcoming Webinars Building an • Why Culture Matters, How to Change Effective It, and the Specific Role of Senior Corporate Leadership • September 12th Culture Resolving • Poison in C-Suite: The Impact of Conflicts, Festering Conflicts and How to Building Overcome Them • December 4th Partnerships Please contact Elizabeth Feola directly at efeola@sirota.com if you are interested in pre-registering© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 14
  15. 15. About Sirota Leadership Advisory We help senior leaders overcome intangible obstacles to business success by building and maintaining highly effective cultures and executive teams Our 3-step program uncovers obstacles to execution and performance by focusing on critical misalignments among leaders and between the organization and its values • Step 1: Identify Opportunities (Assessment) • Step 2: Build Executive Insight (Acceptance) • Step 3: Take Action (Results) Our tools and consultative services align your values, executive team, and strategy with your culture-in-practice in service of growth and performance • Values Realignment: Clarifying then aligning your values within the C-Suite (and beyond) • Culture Change: Leading successful change and building an effective culture • Partnership Building: Resolve team- and individually-based conflicts© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 15
  16. 16. Thank You for Listening Please contact Douglas Klein, our chief leadership advisor, at dklein@sirota.com or call directly at 914-922-2530 with any questions about our service offering© 2012 Sirota Consulting LLC (Sirota Leadership Advisory division) 16

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