A pre-condition for sustainability?

When last did you, in your busy life as CEO or as member of a senior leadership team, push back to reflect upon what really defines your organisation’s culture; what makes your business unique and drives your team’s approach to work in your business? And, if you had reached a conclusion, would the majority of team members concur that, that such a conclusion is indeed their everyday experience of their world of work?

Corporate Governance is fundamentally about enterprise sustainability â€" in the interests of key stakeholders: shareholders, customers, suppliers, employees and, ultimately, the economy.

Being CEO is a tough job! The CEO’s effectiveness and that of the leadership team, is measured against the yardstick of sustainability, with all its contributory elements.

We, at DRG Outsourcing, regard enterprise performance measurement as being derived from two primary sources: How your customer measures you and how your shareholder measures you? The sustainability
of such measurement findings is dependent upon a diversity of contributory elements amongst which, for example, are:

• Product quality
• Service quality
• Value for money
• Innovation
• Share value and dividend yield trends
• Asset performance

Sometimes the less obvious elements may include:

• Statutory compliance
• Environmental best practice
• Enterprise culture

Purposeful Enterprise Culture

Deliberately conceived, implemented and rigorously maintained enterprise culture frameworks are, in the DRG Outsourcing experience, a rarity. Despite vision, mission and ‘our values’ statements being prominently displayed in reception areas and notice boards, these are rarely lived by or practiced as non-negotiable norms guiding everyday business activities. Similarly, performance management practices tend to be an event, a corporate ritual, rather than an embedded leadership practice.

We would argue that a purposeful enterprise culture is an essential tool in the quest for competitive advantage.

Characteristics of a Purposeful Enterprise Culture

It starts with the CEO and the senior leadership team, where emphasis is placed upon leadership, not management

The entire team, at all levels and in all functional areas, is fully engaged in the business of the business. Evidence of engagement includes:

• A clear understanding of the origins of enterprise performance measurement, the customer and shareholder expectations and how their respective roles contribute to delivering to such expectations
• A clear understanding of their respective roles’ influence on the enterprise value chain and business processes within; how their roles leverage the effectiveness of this chain or …a focus on results, not activities
• Team members who take ownership and hold themselves accountable; ‘If I were the owner I would … or would not…’
• Most importantly, the enterprise is self-managed; the CEO and senior team are free to focus on strategic issues safe in the knowledge that dayto-day business operations arein good hands. Trust forms the foundation of the leadership style!
• Implementation of an effective enterprise culture is hard work. It is a conscious leadership process where compromise undermines credibility. The return on the effort so invested flows through as it becomes embedded as ‘the way we do things around here’ and its impact becoming discernible in the results.

Mergers and Acquisitions

Nowhere does the consequence of delinquency in attention to the culture element become more apparent than when two or more business entities are integrated. It is a well-researched and documented phenomenon that most such integrations either fall short in delivering to the outcomes of synergies put forward in the business case made for them, or diminish the enterprise value of merged entities. Rather
than the blending process that it should be, the reality becomes a toxic mix of conflicting agendas and behaviour! The focus on results is compromised.

Why is this so?

In the first instance, the business cultures of the entities to be combined are likely to be divergent. The feasibility study or, due diligence process justifying the integration tends to focus upon aspects such as financial synergies, product line or service offering expansion, optimisation of assets, geographic location
and similar arguments; with the role that the human capital element plays in the process, as an afterthought.

In the second instance, human nature being what it is, there is a strong likelihood that perceptions of a dominant versus a subservient partner come into play: a winner and a loser; influencing the behaviour of what should have become a fresh, new and energised team. Egos rather than rationality play a role. There will be role confusion, scores to settle, points scoring, resistance to change, ‘told you so’ moments when avoidable unintended outcomes become apparent and so on. Rival parties will dance around each other rather than engage. Previously effective entities dissolve into a dysfunctional culture detracting from focus on the customer and shareholder expectations.

How could an effective merging process proceed?

Experiences ‘in the field’ suggest that the implementation process be informed by both a wellconceived (with the objective of the integration always as a guiding principle) and a wellplanned, deliberate process, for
example:

Getting the base right (know and fix the gaps from the start):

• Conduct a comprehensive human capital practices audit within each entity to discover gaps to be addressed
• Conduct an enterprise culture/employee engagement assessment within each entity to identify those indicators, both positive and negative, which may influence the integration process
• Craft a unique strategic plan for the proposed integrated entity
• Determine the organisation structure in support of the strategic plan
• Identify the best talent, irrespective of which entity they currently serve, to be deployed within the new structure
• Define the preferred cultural characteristics for the new organisation
• Determine a new baseline common to the entities to be integrated in terms of employment practices, policies, pay and benefit levels, etc.
• Determine cost implications and an implementation plan. Addressing such matters proactively will contribute minimise the risk of unintended consequences detracting from a smooth integration process

Implement

• Communicate, communicate, communicate! The key to getting it right first time! Minimise the potential for rumour and speculation to emerge â€" the ‘background noise’ clouding what should be an air of positive anticipation
• Cautionary announcements, briefing groups, workshops, individual counselling
• Provision of channels for team members to make suggestions and express concerns
• Proceed according to a formal plan with milestones
• Do the hard stuff early: Casualties, those who cannot be accommodated in the new structure, need to be managed fairly and humanely
• Conduct regular briefings and discussions on progress; encourage participation in addressing deviations from plan and intent
• Keep stakeholders informed
• Celebrate successes

Sustain and Build

• Assess stakeholder satisfaction with the performance of the renewed organisation
• Conduct a culture and engagement assessment; address deviations from the required norms

Introduce an Engagement Leadership Process which comprises

• The establishment of a performance-enabling environment: Identify opportunities for removing of factors interfering with results delivery (often traditional ‘way of doing things’) paired with introducing ways of leveraging results delivery (simpler and smarter) and, most importantly, introducing or perfecting effective leadership practices
• Introduce a formal results commitment process (as opposed to performance management system), which is founded upon role clarity, business awareness, measurement, accountability and self-management
• Ongoing self, peer and leader assessment
• Recognition and reward

Our definition of a Purposeful Enterprise Culture: Highly Engaged People Taking Self-Inspired Action … For
Results! 

DRG Outsourcing (Pty) Ltd
Tel: +27 (0) 31 - 767 0625
Fax: +27 (0) 31 - 767 3280
david@drg.co.za
www.drg.co.za