Build a Unified Culture in Chaotic Environments

How to Build a Unified Culture
In a Chaotic Environment

22
Today’s Presenter:
Ken Gibson
SeniorVice President
(949) 265-5703
kgibson@vladvisors.com
23201 Lake Center Drive, Suite 207 ⬧ Lake Forest, CA 92630 ⬧ 949-852-2288
www.VLadvisors.com ⬧ www.PhantomStock.com

44
We’re happy to provide a copy of today’s slides.
To open or close
the control panel:
Click the red arrow
For questions during
today’s presentation:
Use the question area
on your control panel
Webinar
Q: Are the slides available?
A: Yes, more info will be provided at the end

66
Since1996
VisionLink has been advising business leaders on how to create a
high-performance culture and turn employees into growth partners.
We have seen first-hand the solutions and strategies that work. In
this broadcast, we plan to share what we have learned with you.

77
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It

88
23201 Lake Center Drive, Suite 207
Lake Forest, CA 92630
(888) 703 0080
www.vladvisors.com
www.phantomstock.com
www.bonusright.com
 Headquartered in Lake Forest, CA
 Founded in 1996
 Over 600 clients throughout North America

99
Issues
COVID-19 Economy Turned Business
Upside Down
 Lessons Learned
 Disruptions
 New Discoveries
 Uncertain Future
 Fresh Opportunities

1010
Consensus
Future business is not going to be the same.

1111
Therefore, What?
Cannot assume what worked
in the past will work in the
new economy.

1212
CEO Conversation
CFO Neighbor: “I met all
the qualifications for the
position. I was sure I was
going to get an offer. Then
I didn’t—they went with
someone else.
“If you were hiring a new
CFO, what would you be
looking for?”

1313
CEO Conversation
CEO: “I’d be looking for a
growth partner.”

1414
Why That Response?
Most CEOs struggle
to grow the
business as rapidly
as they want.

1515
As a Result…
What Chief Executives Need Is:
 People with a shared vision
 Individuals who are passionate &
committed
 Employees who will own their roles
and outcomes
 Problem solvers who will accept
accountability
A culture of stewardship and
performance

1616
6 Keys
1. Promote Stewardship
2. Charter Individuals & Teams
3. Focus on Line of Sight
4. Practice Promise-Based
Management
5. Reward Value Creation
6. Build Operational Integrity

1818
Stewardship
A willingness to “own” the
outcomes your role exists to
produce.

1919
The Stewardship Evolution
BecomeDoBelieveKnow

2020
The Stewardship Evolution
BecomeDoBelieveKnow
Stewards
Own
Outcomes
Partnership
Role &
Expectations

2121
Signs of Employee Stewardship
 Assume an ownership mindset in decision making
 Take a strategic approach to their roles
 Focus on outcomes and results
 Protect shareholder interests
 Expect to create additional value before receiving
additional compensation
 Make sacrifices to help the company succeed

2222
Teams and their Members Understand:
 Mission
 Context
 Outcomes
 Resources
 Data
 Reporting
 Accountability

2323
Chartering Conversation
“A chartering conversation…is based on the
premise that genuine commitment is a choice.
Sharing information is still important, but the
focus shifts from “nice-to-know” updates to
providing critical context, so leaders and teams
can craft mutual agreements tied to a common
mission. As a concept, the process of negotiating
a charter prompts managers to be clearer about
what they are asking of their teams, and to listen
more actively to what their teams need from them
in order to deliver.”
(“How to Help Your Employees Own Your Strategy,”
Strategy+Business, February 6,2020, Elizabeth Doty)

2424
Commander’s Intent
The Commander’s Intent is a simple, no-
nonsense statement that appears at the top
of every order, specifying the plan’s goal and
the desired outcome of an operation.

2525
What isYour Commander’s Intent forYour
Organization?

2626
Creating alignment

2727
What is Line of Sight?
The ability of employees to see the
relationship between:
 Company Vision
 Business Model & Strategy
 Priorities
 Roles & Expectations
 Rewards

2828
How Do You Measure Line of Sight?
Have employees to answer five questions:
 What is the company’s vision and
purpose?
 What is the company’s business model
and business strategy?
 What are our organization’s most
pressing priorities right now?
 What is your role in our business model
priorities and what outcomes are you
responsible for?
 How will you be rewarded for fulfilling
those outcomes?

2929
Culture, Engagement & Line of
Sight
Culture
The self-sustaining
patterns of behaving,
thinking, feeling and
believing that determine
how things are done
within a company.
Engagement
A measure of how
committed employees
are to their roles and how
satisfied they are with
their experience within
the company.
Line of Sight
Level of alignment there
is between ownership
and employees regarding
purpose, strategy, roles
and expectations.

3030
Align Company Culture to Business
Priorities
We’ve learned through our work at Katzenbach
that the key to unlocking performance via
organizational culture is to align company culture
to business priorities. This requires the selection of
a “critical few” behaviors that enable the desired
business outcomes. When these behaviors are
coupled with structural and process changes that
support them, the entirety of these changes have
an impact on the employee
experience…Employee engagement should be
regarded as a byproduct of culture evolution
efforts rather than a tangible goal of them.
“Improving Company Culture Is Not About Providing Free Snacks,”
Strategy+Business, July 31, 2017, Alice Zhou
(Ms. Zhou is with Strategy+Business and part of the Katzenbach Center)

3131
Culture, Engagement & Line of
Sight
Culture
The self-sustaining
patterns of behaving,
thinking, feeling and
believing that determine
how things are done
within a company.
Engagement
A measure of how
committed employees
are to their roles and how
satisfied they are with
their experience within
the company.
Byproduct
Line of Sight
Level of alignment there
is between ownership
and employees regarding
purpose, strategy, roles
and expectations.

3232
Adopt a Total Rewards Approach
Compelling Future
Positive Work
Environment
Opportunities for
Personal and
Professional Growth
Financial Rewards

3333
Focus on the Future
 Here’s the short-term
picture
 Here’s our vision for the
future.
 Here’s how we plan to
get there.
 Here’s the role we need
you to perform.
 Here are the resources
you will be able to use.
 Here’s our philosophy
about pay and rewards.
 Here are the specific pay
programs you’ll
participate in.
 Here’s how our pay
programs will work for
you if we achieve our
plan.

3434
4. Practice Promise-Based Management
“Managers cannot
overcome…obstacles to execution by
doing more of the same; instead, they
must fundamentally rethink how work
gets done. Specifically, they must
acknowledge that a company is more
than a bundle of processes or a set of
boxes and lines on an org chart. At its
heart, every company is a dynamic
network of promises. Employees up and
down the corporate hierarchy make
pledges to one another... Employees
also make commitments to colleagues
in other divisions and to customers,
outsourcing partners, and other
stakeholders. Promises are the strands
that weave together coordinated
activity in organizations…

3535
Conversations for Commitment
“A promise is a pledge a provider makes
to satisfy the concerns of a customer
within or outside an organization. For
our purposes, “customer” and
“provider” refer to roles, not individuals,
and these roles can vary depending on
the situation. The CIO, for example, is a
customer when requesting financial
data from the CFO or soliciting a
commitment from a subordinate. But
she is a provider when supplying
technical support to the finance
department or making promises to her
boss.” (Promise-Based Management: The Essence of
Execution, HBR, April 2007, Donald Sull & Charles Spinosa)

3636
The Essence of Promise-Based Management
IT as
Provider
Finance as
Customer

3737
The Essence of Promise-Based Management
IT as
Customer
Finance as
Provider

4040
Core Changes Shift from “Incentives” to “Value
Sharing”
 Took away local measurements
driving management incentive
plans—all paid on same metrics
▪ “We live together and we die
together”
 Aligned everyone behind
company success
▪ “I call it ‘pay the company first.’ ”
40

4141
Pay the Company First
“Basically, up to the company’s
operating profit target, all of
the profits go to the company;
and only after that target is
met, do we start funding the
incentive pool.”
Example: If UL’s target is
$80 million--
 100% of first $80 in
profit goes to company
 The next $20 million
goes to the incentive
pool
 From there on, 50/50
between company &
incentive pool

4242
Pay the Company First
Once value creation is defined,
compensation can follow a formula
for sharing value in a way that aligns
key producers with the company’s
business plan and priorities.
42

4343
Replace Incentives with Value-Sharing
The premise should be to promote value
creation and value-sharing:
▪ “When you help us create value you
participate in that value”
▪ Define value creation around the
shareholders’ most important goals

4444
Shareholder Priority
Sustainable and growing profitability
44

4545
Not Just Profit but Productivity Profit
Productivity profit is that surplus
that can be attributable to the
performance of your people.

4646
Productivity Profit
The Secret to Measuring Value
Creation

4747
Productivity Profit Calculation
Item Amount
Capital Account $20,000,000
Cost of Capital 12%
Capital Charge $2,400,000
Operating Income $10,000,000
Productivity Profit $7,600,000
Total Rewards
Investment
$25,000,000
ROTRI™
Return on Total Rewards Investment
30.4%
(ROTRI™ = Productivity Profit/Total Rewards Investment) 47

4848
Example:
Item Figure
Cost of Capital 12%
*Productivity Profit $7,600,000
Total Rewards
Investment
$25,000,000
ROTRI™ 30.4%
(ROTRI™ = Productivity Profit/Total Rewards Investment)
*Variable Pay
Plans (Value
Sharing) are
financed from
Productivity
Profit
48

4949
Result: Unlimited Earnings Potential
Item Figure
Cost of Capital 12%
*Productivity Profit $7,600,000
Total Rewards
Investment
$25,000,000
ROTRI™ 30.4%
(ROTRI™ = Productivity Profit/Total Rewards Investment)
*Variable Pay
Plans (Value
Sharing) are
financed from
Productivity
Profit
49

5050
Special Offer
The Productivity Profit Workbook
Request your copy on the final survey.

5151
Build Accountability into Your Pay Design
Accountable Pay

5252
Articulate a Clear Pay Philosophy

5353
Compensation Philosophy Statement
 How value creation is defined.
 How value is shared—and with
whom.
 Market pay standards.
 How guaranteed pay and value-
sharing will be balanced.
 How short and long-term value-
sharing will be balanced.
 When or if equity will be shared.
 How merit pay is defined.
What do you want pay to
communicate about what’s
important?
A written statement of what the
company is willing to “pay for.” Tie it to
value creation.

5454
Old School
Defensive
Wealth Creation
Wealth Multiplier
54
Pay Philosophy Evolution

5555
Wealth Multiplier
Let’s Secure Growth Partners
Philosophy
Share economic value. "If you create financial value, you will
participate in a generous portion of it."
Cost or Investment?
Compensation is allocated to produce the highest possible
return for both shareholders and contributing employees.
Salaries
We use data for benchmarking, but our pay philosophy drives
where we want to be vis a vis market pay.
Bonuses
Bonuses (value sharing plans) are tied to crucial metrics,
recognize personal contributions, and are not capped.
Long-term Incentives
(quasi-equity)
Viewed by top performers as the most meaningful part of their
rewards program.
Results
If you want to be able to attract and retain the best talent in
your industry and have them adopt a stewardship mindset
regarding shareholder goals, this is your system.

5656
The Need for Pay Agility
Create a rewards strategy that
is flexible and combine it with
an operational structure that is
enduring.

5757
Flexible but Enduring
 Look at compensation
strategy as you would an
investment portfolio.
 Individual pay
components are your
“asset classes.”
 As things change, adjust
weighting of each asset
class.

5858
Start With Pay Strategy Alignment
The role of each pay component in
relation to others within the
comprehensive compensation strategy is
coordinated and clear.

5959
Eight Components of Pay
Benefits
 Core benefits
 Executive benefits
 Qualified retirement plans
 Supplemental retirement plans
Compensation
 Salary
 Performance incentives
 Sales incentives
 Growth incentives
Incentives should be in the form of value sharing.

6060
Salary
Performance
Incentives
Sales
Incentives
Growth
Incentives
Core Health
& Welfare
Plans
Executive
Benefit
Plans
Qualified
Retirement
Plans
Nonqualified
Retirement
Plans
Salaries
Competitive with market standards?
Tied to strong performance management process (merit)?
Managed within a flexible but effective structure?
Performance Incentives
Tied to productivity gains?
Clear, achievable and meaningful?
Self-financing?
Sales Incentives
Challenging yet achievable?
Reinforcing the right behaviors?
Differentiating your offering?
Growth Incentives
Linked to a compelling future?
Supporting an ownership mentality?
Securing premier talent?
Core Benefits
Responsive to today’s employee marketplace?
Allocating resources where most needed?
Evaluated to eliminate unnecessary expense?
Executive Benefits
Flexible enough to address varying circumstances?
Communicating a unique relationship?
Reducing employee tax expense?
Qualified Retirement Plans
Giving employees an opportunity to optimize retirement values?
Operated with comprehensive fiduciary accountability?
Avoiding conflicts and minimizing expenses?
Nonqualified Retirement Plans
Optimizing tax-deferral opportunities?
Aligning long-term interests of employees with shareholders?
Structured to receive best possible P&L impact?
An Aligned
Compensation
Strategy

6161
The Compensation Dilemma
Sample
Position
Salary Short-
TermValue
Sharing
Total Cash Flow
Impact
Plan A $110,000 $11,000 $121,000 $121,000
Plan B $100,000 $30,000 $130,000 $130,000

6262
The Value Creation Solution
Sample
Position
Salary Short-Term
Value
Sharing
Long-Term
Value
Sharing
Total Cash Flow
Impact
Plan A $100,000 $5,000 $20,000 $125,000 $105,000
Plan B $100,000 $0 $30,000 $130,000 $100,000
Plan C $80,000 $10,000 $40,000 $150,000 $90,000

6363
Market a Future
Build a Sense of Partnership

6464
Make the Future Relevant
 Here’s our future.
 Here’s how we’re
going to get there.
 Here’s the role we
picture for you.
 Here’s how we
encourage you to
grow and contribute.
 Here’s our philosophy
about pay and
rewards.
 Here are our specific
pay programs.
 Here’s how our pay
programs will work for
you if we achieve our
plan.

6565
Employee Value Statement
Year 1 2 3 4 5
Targeted
Results
100% 100% 100% 100% 100%
Salary $160,000 $166,400 $173,056 $179,878 $187,177
STVS $64,000 $66,560 $69,222 $71,991 74,871
LTVS
(EOY)
-- $74,000 $186,000 $311,000 $448,000
401(k)
@7%
$17,120 $36,123 $57,169 $80,428 $106,086
Total
Cash
$224,000 $232,960 $242,278 $251,970 $262,048
Wealth
Accrual
$17,120 $110,123 $243,169 $391,428 $554,086
Total
Value
$241,120 $567,083 $942,407 $1,342,636 $1,767,343

6666
“Employees have a positive experience
in the workplace when they observe
authenticity in the way company
owners and leaders deal with the
people employed by them and there is
operational integrity in all aspects of
the business. This creates a high trust,
high confidence culture where
individuals are not distracted by
concerns about their place in the
organization. Over time, that kind of
culture creates its own momentum
because the employees become the
enforcers of the organization's
performance standards, not just the
company leaders….

6767
Allies or Adversaries
“Sooner or later, your people will decide
either to become your allies or your
adversaries. They can help you achieve
your goals or they can sabotage them.
If they choose to do the latter, they will
probably leave, but not before doing
significant damage. And once they go,
they will share the negative experience
they had with your company with
anyone who will listen; some of whom
may be the very people you want to
recruit.“(3 Reasons You Must Pay Attention to Employee
Engagement, VisionLink blog, June 13, 2019)

6868
The Trust Dividend
Strategy x Execution=Results
(Strategy x Execution) x Trust=Results
(Source: The Speed of Trust, FranklinCovey, February 5, 2008,
Stephen M.R. Covey)

6969
The Cost of a Low-Trust Culture
"The low trust environment is a result of
violating principles--not only individually, but
organizationally. Leaders are missing the
solution because they are not looking at the
systems, structures, processes and policies that
affect day-to-day behaviors. They are focused
on the symptoms instead of the principles that
promote trust.
"This misalignment creates symbols that
represent and communicate underlying values
to everyone in the organization. A symbol can
be either negative or positive; from a 500-page
employee handbook, to a newly appointed CEO
who refuses to accept a pay raise because it
might send the wrong message to
workers.“(The Speed of Trust, FranklinCovey,
February 5, 2008, Stephen M.R. Covey)

7070
Skills vs Attributes
Skills
Skills direct behavior for a known
situation. When we get involved in an
unknown or unpredictable situation,
skills don’t apply.
Skills show competency in “how to.”
Creativity
Strategy
Operations
Management
Attributes
Attributes direct our behavior for
unplanned or unknown situations.
Inherent to our nature. We show up
with them. All of us have all the
attributes, it’s just a matter of what
adaptability we have. They inform our
behavior—they show us how we’re
going to show up to a situation.
Patience
Courage
Honesty
Commitment
(Source:Author Simon Sinek interview with Retired Navy Seal Commander, Rich Diviney, LinkedIn)

7171
Operational Integrity is a Byproduct of…
 Promoting Stewardship
 Chartering Individuals & Teams
 Focusing on Line of Sight
 Practicing Promise-Based
Management
 Rewarding Value Creation
These things accelerate trust. Trust
lubricates all organizational channels
and accelerates results.

7272
6 Keys
1. Promote Stewardship
4. Practice Promise-Based
Management
5. Reward Value Creation

7474
 Digital platform for
building short and
long-term value
sharing plans
 Efficient plan design
process
 Affordable plan design
cost
 Effective plan launch
material
 Superior ongoing plan
management

7575
Take advantage of a one-half hour
consulting call with a VisionLink
principal at no charge.
Indicate interest on final survey.
Request Consultation & Take Survey
Request a copy of our
slides, report,
complimentary consultation
and BonusRight demo.
We value your input.

7676
Free Report
How Employee Engagement Happens
Request your copy on the final survey.

7777
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It

7979
Ken Gibson
(949) 265-5703
ThankYou!

8080
Post Webinar Intro
5 Minutes:
 Who We Are
 What We Do
 How We Do It

VisionLink’s Focus: Help Business Leaders Build and
Sustain a High Performance Culture
Accelerate performance through pay strategies that
transform employees into growth partners.

If you do that…
• Quality of talent will improve.
• Employee engagement will expand.
• Performance will be magnified.
• Business growth will be accelerated.
• Shareholder value will increase.

8585
Ken Gibson
(949) 265-5703
ThankYou!

Build a Unified Culture in Chaotic Environments

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Build a Unified Culture in Chaotic Environments

Similar to Build a Unified Culture in Chaotic Environments (18)

Recently uploaded

Recently uploaded (20)

Build a Unified Culture in Chaotic Environments