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The social life of ideas
Representing ‘how things are done’, organizational cultures are important drivers of employee behaviour, particularly when employees must be relied upon to act on their own initiative in a way that is consistent with the company’s objectives. What is the link between culture and innovation?
Louis Gertsner, former CEO of IBM, believed that “culture is everything”. For him, creating the right culture setting was the key to the successful transformation of IBM in the 1990s.
In 1993, the same year Gertsner took over as IBM CEO, IBM’s mainframe was losing market share to the disruptive technology du jour – personal computers. IBM posted a US$8 billion loss with shares trading at just US$12.
But Gertsner took the challenge head-on. He stripped the executives of their corporate uniform, broke up the large bureaucracy into smaller business units, transformed Big Blue’s culture to focus on customer value, and repositioned IBM as a consulting and system integration business.
By the time Gertsner retired in 2002, shares climbed to US$90. IBM has also consistently topped Fortune’s World’s Most Admired Companies in the information technology industry from 2006 to 2012.
Hence it makes business sense to manage organizational culture. But the task is not for the faint-of-heart. Nor does it merely involve a cosmetic sleight-of-hand. Efforts to change organizational culture often face three significant obstacles.
Firstly, culture is challenging as it is intangible. Secondly, changing the behaviour of one person is a hard enough task; imagine having to create a consistent set of new behaviours throughout an entire organization. Finally, people resist change – the culture snaps back to old habits if initial changes are not sustained.
Find out how to combat these challenges, and succeed at culture transformation, in our whitepaper, The social life of ideas
Talent Q’s Dimensions and Elements were developed by Roger Holdsworth, a pioneer in the field of psychometric assessments. They measure personality and ability using the latest adaptive testing technology. Talent Q assessments gather data quickly, efficiently and with minimum investment. And they report in ways which can inform a range of talent decisions: screening and selection, matching people to jobs, coaching and development, identifying high potentials, leadership development and team building.
When in-depth assessments of behavior are too difficult or costly to carry out, Talent Q provides a cost effective and reliable way to predict performance:
• In a global telecoms organization, those predicted by Dimensions to be in the top 50 per cent of performers generated 14 per cent more sales than target and 11 per cent more than lower performers.
• Pharmaceutical sales professionals predicted by Dimensions to be higher performers achieved 7 per cent higher sales against target.
A banking organization found that a lack of robust and valid screening early on in their large scale graduate recruitment process was leading to a high rate of line manager interviews and assessment centers.
They remodeled their process to include the Elements ability tests followed by Dimensions personality assessment linked to a telephone interview. As a result, line managers saw fewer but better candidates, and the organization achieved:
• a reduction in total costs from £2.9 million to £1.8 million (across 28,000 applicants)
• a significant reduction in HR and line management time required
• investment redirected to attracting the best candidates.
Find out more about how Talent Q could benefit your organization.
Global business leaders are over-reliant on a single leadership style, demotivating employees and holding back organizational performance as a result, according to new research from global management consultancy, Hay Group.
The study is based on an analysis of Hay Group’s Styles and Climate data, covering 95,000 leaders in over 2,200 organizations across the world.
The study finds that while good leadership is synonymous with flexibly tailoring the approach to suit the situation, one third (36 per cent) of leaders have mastered none or only one leadership style, compared to a quarter (26 per cent) who are able to adopt a range of four or more styles.
As a result, working environments across the world are suffering, with over half (55 per cent) of leaders creating demotivating climates. By contrast, just 19 per cent of leaders are fostering high-performance workplaces.
In addition, two thirds (66 per cent) of Asian leaders create demotivating climates – the worst of any global region – where just one quarter (24 per cent) have mastered four or more leadership styles. A majority of Asian leaders (48 per cent) have been found to be using the ‘coercive’ style of leadership.
Compared to the global average of 55, leaders in India are far from the ideal workplace environment, with 70 per cent of leaders found creating a demotivating climate for their employees. Both Brazil and China were found to have performed better in this aspect. The research also showed that 2 in every 3 Indian leaders (62 per cent) opt for the ‘coercive’ leadership style, compared to just 37 per cent globally.
Mohinish Sinha comments, “While the ‘coercive’ leadership style works well in a crisis or during a period of significant change, its overuse may lead to an erosion of innovation. It is the ‘coaching’ style of leadership that is most preferred in the Asian context – 81 per cent of the most high-performing organizations had leaders using it as a dominant style. We find a ‘coaching’ leader focuses on building long-term capability, even at the expense of short-term performance.”
Accountability is not something new, but it is something that organizations don’t always do a good job at. Hay Group has years of experience in doing this - we know jobs, we know capabilities, we know accountability.
Essentially, accountability is about improving the effectiveness of your organization and building a solid foundation to achieve and sustain high performance. It is NOT about creating a large scale blueprint or faddish designs. Instead, the focus is on improving the effectiveness and efficiency of:
As a result, when we talk about accountability, what we really mean is an organization that focused on the “right” things, be it from top to bottom, or left to right in the organizational structure. At the same time, the culture of accountability is one that empowers wisely, but balances it with true responsibility. In an accountable organization, people know what is expected of them. They know how their contribution fits into the big picture, and why their contribution is measured the way that it is. Simply put, we are looking at an organization that expects high performance from all its members – an organization that has embedded clarity of purpose, focus, roles, relationships, results.
When we talk about organizational performance in this context, there are many external factors that impact it, but it is the internal root causes of performance that organizations have most control over. Maximizing an organization’s effectiveness really entails looking at three things:
When these three factors truly become part of the organizational fabric, you can say that you have created an “accountable organization” and can really deliver outstanding results.
Hay Group’s approach to driving accountability and delivering value involves work around the 3Cs:
These are the three principles we have distilled from our research and experience with organizations. Think of this as the infrastructure of your HR processes. Just like the infrastructure of a city, if it is not solid things can go wrong. What it comes down to is keeping your people focused on what really matters with a clear alignment to organizational goals.
Make sure there’s no need to cut corners or get too creative, by designing do-able jobs, with the right amount of decision authority. Where there are interdependencies and concurrent accountabilities, spell these out with tie-breakers and crystal clarity so that the right decisions are made quickly, with the right input. And you need to do this with not just individuals but with teams and all organizational units.
Goldman Sachs. HSBC. American Express. Citigroup. JP Morgan Chase.
Over the years, these and other blue-chip financial services companies have earned a place among the top 20 Best Companies for Leadership. In fact, there has been at least one financial services company among the top 20 every year Hay Group has conducted the study – until this year.
That may not be entirely surprising. Firms are still struggling to engineer their recovery from the most severe financial crisis in a generation. As part of the aftermath, government control and regulation have been substantially strengthened around the world, particularly in Europe and North America. At the same time, virtually all firms have tightened their internal risk management processes.
In the face of these difficulties, sector leaders and observers are divided as to the best way to navigate through the turbulence, and position financial organizations to take advantage of opportunities when the climate improves. Some believe the current situation is an extreme instance of a normal dip in the long-term business cycle. Others, including the financial services team at Hay Group, believe that both the rules of the game and the game itself have changed fundamentally and irrevocably. In this view, the way forward requires fundamental changes in the way companies do business.
Results of the 2011 Best Companies for Leadership study suggest that the financial services firms are now lagging behind the top companies in all these dimensions:
There is some good news, however: in their leadership development practices, financial services organizations do rank higher than the survey average. For example, financial services companies rank significantly higher than all companies in the survey in actively managing a pool of successors for mission-critical roles, and in giving people at every level the opportunity to develop leadership capabilities. These practices create a foundation that resourceful leaders can build on.
Firms with such leaders will be best positioned to prosper when economic climates return to more positive and uniform growth – and undoubtedly the organizations that will lead the industry back into the ranks of the Best Companies for Leadership.