The World’s #1 Executive Coaching and Business Coaching Blog (2017-2020)
No, Culture is not “Soft” – Culture Predicts Operating Success
The Stealth Cultural Model
What is Your Cultural Value Proposition (CVP)?
The Stealth Cultural Model offers a compelling, symbolic way to understand the predictive relationships that exist between your organization’s critical talent processes (the 4 D’s), critical “cultural leading indicators” (capability, commitment and alignment—more on these later), intermediate outcomes and ultimate outcomes. The 4 D’s essentially act as the 4 turbo-charged engines that propel the “Stealth” towards its’ target—your organization’s “Future Desired State” and the required leadership competencies required to execute both the current and future business strategy. By way of analogy—if the 4 engines are “well oiled” and functioning at a high level (i.e., optimized) and working together (i.e., integrated), they will propel the “Stealth” (yes, your organization) towards its’ goal.
In practical terms, your organization’s Cultural Value Proposition (CVP) is the holistic sum of the following talent practices (i.e., tools, processes, etc.) in your organization: (1) Demarcation-accurately separating the “A”, “B”, and “C” players (performance management); (2) Diagnostic—obsessively and objectively assessing the skills and capabilities of leaders and potential leaders; (3) Deployment-sourcing, screening and selecting the “best of the best” leaders and future leaders; but also, making sure there are structured “bubble-up” meetings to integrate performance and potential assessments, calibrate capability, determine development options, and identify potential replacement scenarios; and (4) Development—coaching, on-the-job development and training programs. This is the beginning of your CVP.
Beyond this, your organization needs to measure the impact of these four, hopefully “turbo-charged” talent engines, on multiple levels of outcome—such as capability, commitment and alignment levels (cultural leading indicators), intermediate outcomes such as individual and team performance, bench strength, percentage of women and minorities promotions versus percentage in pool, percentage of women and minority successors, retention rate of successors, percentage of key positions filed internally, promotion rate of successors, success rates of those promoted and cost to fill key roles (lagging indicators), and ultimate outcomes such as organizational revenue, profits and operating ratios.
Regardless of the exact words used to capture a given organization’s CVP, one thing is sure, the elements identified in your “Stealth” need to be well thought out, believed in, communicated, executed, and measured (assessed)—continuously. At its core, a great CVP encompasses everything leaders and future leaders experience and receive as they are employed by your organization—including the degree of engagement they experience, their comfort and “fit” within the culture, the quality of leadership, the rewards they experience, etc. A great CVP always encompasses the ways in which an organization fulfills the needs, expectations, and dreams of leaders and future leaders. More than anything, a great CVP clearly connects winning talentpractices to business and operating metrics. A great CVP is the very definition of what it means to have a great culture!
As was discussed earlier, there exists no better way to create the belief in the value of talent, than by demonstrating the connectedness between winning talent practices and operational success. The research is clear and compelling. The Hackett Group’s Talent Management Performance Studies involving hundreds of Fortune 500 Companies and government agencies—gathered both qualitative and quantitative data showing enterprise financial, operational and process payoff’s from having winning talent practices. These studies have been replicated by others—Boston Consulting Group, The Hay Group, PWC, Executive Development Associates, and others. Organizations with the most mature talent capabilities (i.e., the 4 D’s) had significantly greater EBITDA, net profit, return on assets, return on equity, and operational results than those organizations who were immature in their talent processes. Additionally, mature talentorganizations had leaders who believed in the value of the human capital asset, were passionate about investing in building and growing talent, were relentless in their assessment of leaders, individuals and teams.
It is clear that organizations that achieve operating excellence do so because of a sound Cultural Value Proposition (CVP). They select and promote only those leaders and future leaders who demonstrate (as a result of performance and objective assessments) they have the highest probability of being successful; they benchmark and essentially “certify” (as a result of assessments) that leaders and future leaders have the capability, commitment and alignment required to execute strategy; they provide a rich, compelling, engaging and dynamic learning and performance support environment that motivates leaders and future leaders to become the best they can be; and they reward and recognize those who truly execute.
A strong CVP foundation leads to: (1) Capability-in which leaders and future leaders possess the,“Can Do” to execute at extraordinary levels; (2) Commitment-in which they possess the, “Will Do”; and (3) Alignment-in which they possess the, “Must Do”. Great organizations excel in creating the belief that their leaders and future leaders have the “can do” (i.e., the skills, the talents, the behaviors) to execute; the “will do” (i.e., passion, motivation, drive) to execute; and “must do” (i.e., an overwhelming sense of connectedness to the culture, mission, strategy and values of the organization) to execute. To put in different words, a strong CVP is the foundation for any organization to build and sustain a culture in which leaders and future leaders become continuously more capable, committed and aligned. In fact, organizations that excel in promoting and developing leadership talent—with a focus and unwavering commitment to optimizing these “cultural leading indicators”—as indicated earlier—achieve impressive operating results.
Identifying & Developing Leaders and Future Leaders: A Critical Element of Your CVP
Current succession planning processes in the global corporate environment today are insufficient to do the job. The gap between those in senior executive positions and those prepared to move into them is widening by the day. And just as Boards and senior executive teams are beginning to recognize the problem, they are running into new demographic and workforce challenges that make the leadership crisis all the more challenging, especially in the United States, Europe, and Far East. By some estimates, up to 40 to 70 percent of any organization’s management population is currently eligible to retire. While aging thins the ranks of senior executives, other forces have contracted the pool of those available to take over the reins. In the United States, for example, changes in many organization’s pension systems are making it easier for executives to leave senior positions, while downsizing during the 1990s and 2000’s have deprived many organizations access to some of the best and the brightest. Therefore, the succession planning debate is not only about the numbers; the quality and state of readiness of those who will take over leadership is also at issue.
A number of big and successful companies have taken action to upgrade their succession planning practices and address their leadership pipeline issues. Three companies that have made significant progress are GE, P & G, and IBM. Many others, such as FedEx, Office Depot and Navy Federal Credit Union have launched major projects to improve their succession planning practices. The record is mixed across, however. In general, many large companies and most mid-sized and small companies are struggling with succession challenges. Most of America’s federal agencies and in fact most of other nations’ governmental entities are in the same boat. Most are struggling with these issues. There is little question, considerable work remains to be done.
Succession planning is about identifying and developing your best talent (present and future) and preparing them to assume higher-level roles or other key roles. Succession planning and management can also be interpreted as an organizations’ intelligent approach to dealing with the inevitable loss of key talent they may be experiencing now or that they project in the future (based on workforce plans). Organizations with succession plans have created intelligent contingencies for successfully combating their present and future losses. Organizations without succession plans have no choice but to react to the inevitable losses they encounter with panic and reactiveness, resulting in ineffective succession decisions. Ultimately, as the Stealth Cultural Model predicts, when organizations are not intelligent about deploying their top talent, individual and team performance suffers and operating results decline—significantly.
Succession planning is needed for several reasons. One key reason is that the current workforce is aging rapidly. Given the large number of baby boomers nearing retirement, all organizations must prepare for these losses. Compounding this problem are the indisputable generational realities all organizations are facing and the resulting talent gaps, both in sheer number and quality (i.e., readiness) associated with those who are Generation X. Not only do organizations need to prepare for a mass exodus of older workers, they must prepare for life with fewer workers in general. Furthermore, many baby boomer executives have the talents and capabilities that many high-potential and emerging leaders do not yet possess. If these talents are not transferred effectively to younger leaders and future leaders, they will become lost forever.
One thing is sure: The attraction and retention of key talent for every organization is no longer a nice-to-have. The Stealth Cultural Model clearly provides all organizations with a predictive path for achieving breakthrough operating results by successfully executing the four D’s—Deployment, Diagnosis, Development,, and Demarcation. Clearly, any organization that uses an intelligent approach to optimizing their four D’s—by definition—improves their chances of both attracting and retaining the key talent required to propel their organization to greatness. >No, Culture is not “soft”. Culture predicts operating success!