Podcast: The Importance of Culture

Today’s post is a podcast that I recently provided for the Lead This! organization.

Mergers and acquisitions consistently top the headlines, yet most of them fail. In this recording I explain the pivotal role that organizational culture has in mergers and acquisitions as well as how to strategically use it to foster a healthy organization. Just click the graphic below and enjoy!

 


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Jeff Suderman is a futurist, consultant, and professor who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman Email: jeff@jeffsuderman.com

 

 

What Orange Trees Teach Us About Organizational Success

Some of my most interesting insights are gleaned from real-life. Like orange trees (see The Tale of the Orange and the Lemon Tree)! This week an orange tree taught me another valuable lesson about how we can maintain ongoing organizational success.

We live in an area of the California desert which has an abundance of citrus trees. In February and March these trees blossom. For several weeks our desert air is filled with the cloyingly sweet smell of citrus blossoms. It is one of my favorite times of year.

However, this year I noticed something in addition to the aroma. Amidst the spring blooms, most of the orange, lemon, grapefruit and lime trees are still filled with ripe fruit. While these trees are still bearing the literal fruits of their labor, their work for next year is already underway.

This is a rich lesson about how we can foster ongoing organizational success! It is not uncommon for our organizations to experience a fruitful season. However, only focused organizations experience success on an ongoing basis. If you don’t believe me, perhaps these statistics will convince you.

In 1920, the average company on the Standard & Poor’s stock exchange (S&P) lasted 67 years. By 2o15, this has been reduced to 15 years. This means that an S&P company is now being replaced every two weeks. Analysts estimate that 75 percent of today’s S&P 500 firms will be replaced by new firms by 2027 (The Atlantic).

These sobering statistics remind us that over time, success over time is earned and should not be assumed. So how do organizations facilitate blooms amidst their fruitfulness? Let me answer this question from my perspective as a consultant. Here are three types of organizations that I regularly encounter. Can you guess which one has the best chance to maintain success?

  1. Late Bloomers. When we don’t take time to plan amidst our fruitful season, we eventually realize that we need to catch up. These clients often come to me and ask how they can be successful ASAP. When we neglect doing our work in season, late bloomer must play catch-up. This can be a very vicious cycle. I believe many late bloomers are casualties on the S&P 500 list.
  2. Resistant Bloomers. It is not uncommon to speak with potential clients who are in the midst of a rich harvest. Some of them believe that their current bounty will last forever as long as they keep doing exactly what they have done. These clients usually tell me that they don’t need help as there are still oranges on the tree! However, the pace of change in the 21st century seldom affords us the opportunity to stay the same. There will not be low-hanging fruit forever. As a result, I believe that most resistant bloomers will someday discover that they have become late bloomers.
  3. Anticipatory Bloomers. These clients do their best to run their organizations like a fruitful orange tree. They do the work for the next harvest while there are still oranges on the tree. They work to assess their environment, plan ahead and sow at the right times. It is challenging to blossom and bear fruit at the same time but it can be done. These organizations thrive amidst changing environments.

Unhealthy organizations are those who have failed to prepare their blossoms at the right time. Even organizations that appear healthy will fail if they lack the foresight to look beyond their current harvest. However, healthy organizations will do the hard work required to blossom amidst fruitfulness!

Success does not always breed success in a changing global marketplace. The S&P data reminds us that the things that made you successful in the past may not work in 15 years! So is your organization doing the work required to blossom at the right time?


 

Head ShotJeff Suderman is a futurist, professor, consultant and pracademic who works in the field of organizational development. He works with clients to improve leadership, teamwork, organizational alignment, strategy and organizational FutureReadiness. He resides in Palm Desert, California. Twitter: @jlsuderman. Email: jeff@jeffsuderman.com

Reference:

Lam, Bourree (April 12, 2015). Where do firms go when they die? The Atlantic on-line.

The Salary Factor: Increasing Employee Engagement

Employee engagement is a buzzword in management circles. Creating and sustaining high levels of engagement is a result of a symbiotic relationship between employers and employees. Engaged employees are more likely to act in ways that are beneficial to the organization. In turn, employers who are committed to enhancing the well-being of their employees will foster employee engagement and successful organizations.

There are many engagement strategies and most of them focus on the softer issues of management. These include things such as leadership development programs, creating opportunities for staff to provide feedback, training and meaningful annual evaluation processes. Thus far, organizational engagement strategies have largely avoided the issue of salary. However, recent research indicates that we should add salary to our engagement strategy bucket.  “After all, a person’s primary reason for being employed is getting paid!” (Smith).

PayScale, a compensation software company surveyed 71,000 employees to study the relationship between pay and employee engagement. “The study results revealed that one of the top predictors of employee sentiment, including ‘satisfaction’ and ‘intent to leave,’ was a company’s ability to communicate clearly about compensation”. They discovered that salary has direct correlation to engagement levels (Smith).

However, the correlation wasn’t related to the amount of salary an employee received. Instead, the research revealed that the important factor is pay awareness – helping employees understand whether their pay is fair or not. In other words, the conventional wisdom of ‘pay more to keep them engaged’ was debunked. Here is a summary of what the research revealed:

What we believe about pay

This research clearly shows that most employees do not understand market salary norms. As a result, this misunderstanding becomes a means by which we become disillusioned about our work. “Pay is a crucial component of engagement because it’s not just a number; it’s an emotional measure reflecting how valued an employee feels by their employer. And it turns out, how people feel about their salary plays a huge role in how engaged they are in their work” (Smith). This study revealed that, “it is more effective for employers to compensate top talent at market value and discuss how pay was determined than to pay them more than market value and keep company compensation practices shrouded in secrecy” (Smith). Clear communication is critical!

This research teaches us that employers need to:

  1. Equip themselves (and their managers) with accurate data about the fair market price for their jobs
  2. Communicate this information to their employees. In the absence of communication, people will generally assume the worst.
  3. “Remember that how their employees feel about compensation matters just as much as what they’re actually being paid” (Smith).

I believe there is also a dark side to salary transparency for for some employers. While you may provide fair salaries to your middle or lower level staff, what about your C-Suite? If executive salaries are above market value then you have created an expectation that this should be true at all organizational levels.

“When it comes to having a more engaged workforce, you can’t assume that an employee’s perception about pay matches reality” (Smith). How effectively does your organization understand and communicate compensation?


Head ShotDr. Jeff Suderman is an underpaid professor, fairly paid consultant and overpaid pracademic who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

Reference

Dave Smith (Oct. 5, 2015). Most People Have No Idea Whether They’re Paid Fairly. HBR online.

How to Predict Successful Business Mergers & Acquisitions

Mergers and acquisitions (M&A’s) are an important part of our business landscape. In America, about 10,000 of them occur each year. While organizations celebrate these acquisitions, their excitement may be short-lived as statistics reveal that most are doomed to fail. So is there a way for organizations to ensure success as they merge with another?

The Big Picture

Globally, there were about 30,000 M&A’s in 2011. In the United States alone, the volume of M&A activity was 9,923 transactions (2011). These acquisitions were valued at $1.59 trillion (Weber, Oberg & Tarba). This data demonstrates that the ability to predict M&A success is a significant issue.

However, while M&A’s are a popular strategy, they are often unsuccessful. Research studies show that 50% of M&A’s fail (Weber, Oberg & Tarba) and some believe that the failure rate is as high as 70%-90% (Christenson, Alton, Rising & Waldeck). This means that organizations need to become adept at recognizing the key issues which will foster M&A success.M&A Success

Figure 1 outlines 12 factors which have been found to influence M&A success or failure.  However, one of the factors on this list predict M&A success with an accuracy of 96%! What is this key factor?

The answer is culture.

Organizational culture compatibility is a huge determinant in the success of an M&A. This supports Peter Druckers famous statement that “culture eats strategy for lunch”. The greatest strategy can be derailed by a team that is not aligned.

Research by Cameron and Quinn reveals that 96 percent of the time, successful mergers and acquisitions can be accurately predicted based solely on cultural match As the old adage notes, a house divided cannot stand.

I utilize Cameron & Quinn’s research to conduct cultural assessments which help clients understand their cultural norms. It also provides a blueprint to develop healthy and aligned cultures. As the above research highlights, the insights from this process can also reveal whether the merging cultures are best described as a house divided or one that can be unified.

The importance of culture is a valuable insight for those involved in M&A’s. Investors, bankers, entrepreneurs and business owners can all benefit from the cultural assessment tool as it helps avoid some of the pitfalls involved in failed M&A’s. Please contact me if you would like to explore how this tool can help your organization.


 

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Dr. Jeff Suderman is an organizational culture specialist, consultant and professor who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

Reference

Cameron, K.S,  Quinn, R.E. (2011). The Competing Values Culture Assessment.

Clayton M. Christensen, Richard Alton, Curtis Rising, and Andrew Waldeck The Big Idea: The New M&A Playbook. Harvard Business Review. (MARCH 2011 ISSUE https://hbr.org/2011/03/the-big-idea-the-new-ma-playbook

Straub, Thomas (2007). Reasons for frequent failure in Mergers and Acquisitions: A comprehensive analysis. Wiesbaden: Deutscher Universitäts-Verlag (DUV), Gabler Edition Wissenschaft.

Yaakov WeberChristina ObergShlomo Tarba (YEAR).  Comprehensive Guide to Mergers & Acquisitions, A: Managing the Critical Success Factors Across Every Stage of the M&A . Published Dec 19, 2013 by FT Press. Process . http://www.ftpress.com/articles/article.aspx?p=2164982

Do You Work in an Organizational Anarchy?

Understanding exactly how you come to a decision is a complex undertaking. Understanding how organizations make decisions is even more challenging! However, when you understand how organizations make decisions you can lead more effectively.

Both effective and ineffective organizations make decisions. What is of interest to organizational leaders is understanding whether their decision making processes lead them to make good or bad choices. Organizational anarchy is a term used to describe organizations that have a poor decision-making environment. This model gives us a means of discovering how to avoid bad decisions. Researchers have discovered that organizational anarchies share three common ingredients.

  1. Unclear goals. The organization operates with a variety of inconsistent and ill-defined goals. In lieu of having goals, organizational anarchies are driven by a loose collection of ideas. Lacking a coherent structure, they discover their preferences after they act. They fail to base their choices and actions on intentional goals (Cohen, March & Olsen).
    • The antidote to this anarchy is achieved by goal definition. Clearly defined and consistent goals eliminate ambiguity.
  2. Non-existent or ambiguous processes. In organizational anarchies processes are not understood by members. Instead, they operate on the basis of simple trial-and-error procedures. These procedures are not intentional but rather,  are the residue of learning from the past experience or accidents, and are sometimes pragmatic inventions of necessity (Cohen, March & Olsen).
    • The antidote to this anarchy is achieved through process clarity. How, when and where things should be done decreases these harmful practices and the tendency to recreate the wheel.
  3. Poorly-defined roles. In organizational anarchies employees vary in the amount of time and effort they devote. This creates fluidity or an inconsistent state. When the roles of an organization are uncertain and changing we struggle with accountability and execution (Cohen, March & Olsen).
    • The antidote to this anarchy is role definition.  Determining who is responsible for what combats the tendency to let things slide or wait for someone else to do it.

Most of us have worked in situations that can be described as an organizational anarchy. In fact, organizational anarchy will describe a portion of almost any organizations activities (Cohen, March & Olsen). However, the model of organizational anarchy presents us with a simple litmus test to examine our decision-making culture. Understanding the ingredients of healthy organizations is not complex. However, they are much more difficult to implement. But drifting into organizational anarchy is a much higher price to pay than the cost of investing in goal definition, process clarity and role definition.


 

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Jeff Suderman is an anti-anarchist, consultant and professor who works in the field of organizational development. He partners with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

Sources

A Garbage Can Model of Organizational Choice. Michael D. Cohen, James G. March and Johan P. Olsen.
Administrative Science Quarterly – Vol. 17, No. 1 (Mar., 1972), pp. 1-25.

The Garbage Can Model of Organizational Choice: An Agent-based Reconstruction. Alessandro Lomim and Guido Fioretti. Simulation Modelling Practice and Theory – Volume 16, Issue 2 (February 2008), pp. 192–217.

 

 

Organizational Culture: Making the Invisible Visible

“Culture eats strategy for lunch”. Peter Drucker

Those who rub shoulders with me regularly have likely heard me quote this more than once. It’s a cornerstone concept in my organizational development work. Patrick Lencioni reframed this same idea when he stated that he would rather lead a unified team with an average strategy than a fractious team with an excellent strategy.

Most organizational leaders understand the importance of having a unified culture. However, I find there is much less clarity in how to facilitate understanding and practice of this culture. This process, something I call cultural transference, is how we help people understand and practice the norms of our organizational culture.

As I observe organizations, I find two the following two strategies dominate how we facilitate cultural tranference:

  1. The Virus Strategy: This implicit strategy is built on the idea of ‘watch me and do as I do’. This approach assumes that culture is strong enough to catch. Somewhat like the cold virus, given enough time, it will spread (and most everyone will catch it).
  2. The Immunization Strategy: This explicit strategy is built by defining culture and then intentionally communicating it. This culture is written down and prescribed to every employee – often with several booster shots.

I have seen the virus strategy work but believe it is risky. While culture can be caught, our environments are equally receptive to hosting different cultural strains. There is low certainty that the right virus will spread to all corners of your organization.

The immunization strategy is much more effective but it also takes more work. When culture is taught (and not caught), we have a higher chance of infusing the right strain into our organizational DNA. It does not guarantee cultural transference, but it creates clarity and provides a litmus test by which we can assess when people are not a cultural fit.

Culture provides us with a sense of organizational identity and generates a shared commitment to beliefs and values that are larger than themselves (Richard Daft). If this is true, culture is not a one-size-fits-all product. Different cultures have different purposes and achieve different outcomes. The goal is to develop a culture that fits your mission and strategic goals. Will you choose to accomplish this through a virus or an immunization strategy? Which of these two strategies do you most regularly encounter?

If you need to develop an organizational cultural immunization strategy please contact me.


Head ShotJeff Suderman is a cultural virologist, a futurist, professor and consultant who works in the field of organizational development. He works with clients to improve culture, leadership, teamwork, organizational alignment, strategy and organizational future-readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

References

Richard Daft (2013). Organization theory and design.

Image Credit

Leading Globally: How Humane is Your Country?

As the world has learned about the tragic earthquake in Nepal we see a tremendous outpouring of generosity and compassion. However, not all nations respond the same to humanitarian needs. This cultural difference can be partially explained by something called our humane orientation.

The GLOBE leadership study defines humane orientation as the degree to which individuals in organizations encourage individuals for being fair, altruistic, friendly, generous, caring and kind to others. The chart below illustrates some of the most common differences between countries with high or low humane orientation scores. At the bottom of this blog you will find a reference chart which provides specific results for the 62 countries in the GLOBE study.

Human Orientation Chart 2

The GLOBE research discovered that societies with high humane scores have citizens who experience economic, physical and psychological well-being. Conversely, countries with lower humane orientation are more economically developed, modern and urbanized. Furthermore, societies which exist in difficult conditions (physically or due to climate) have a higher humane orientation! Difficult conditions help facilitate cooperation and solidarity!

This study provides information about countries that most of us will never set foot on. However, globalization often brings these cultures to our own cities, neighborhoods and classrooms. Effective leaders must understand that we each carry bias about the ideal humane orientation. Furthermore, they learn how to identify and appropriately respond to these different views.

This blog is the final installment in a series on global leadership. You may enjoy reviewing some previous posts: Gender EqualityAssertivenessFuture Orientation, Power DistancePerformance Orientation and Individualism.


 

Head ShotJeff Suderman is a Human Orientation Chart 1professor and consultant in the field of organizational development. He partners with clients to improve leadership, teamwork, organizational alignment, strategy and their Future-Readiness. He resides in Palm Desert, California. Twitter: @jlsuderman

Reference

House, R., Hanges, P.J., Javidan, M., Dorfman, P.W., Gupta, V. (2004).Culture, leadership, and organizations: The GLOBE study of 62 societies. Thousand Oaks, Calif.: Sage Publications.

Live|Die|Repeat: Thinking Like Gen Y/Z

Sometimes, popular culture provides us with unexpected insights about life. This recently occurred during family movie night when we watched Edge of Tomorrow. This futuristic science fiction thriller was not only an entertaining movie, but it helped me understand aspects of how generations younger than my own think (I’m a Gen X’er).

live die repeat

SPOILER ALERT: Content below will spill movie details!

In the movie, Tom Cruise is unexpectedly caught up in a fight against aliens who have invaded earth. However, the aliens are almost invincible and Tom and his partner find themselves regularly being killed only to wake up the next day to relive the same sequence of events. As a result of what they learn from their recurring identical experiences (like the movie Groundhog Day), they get closer to their goal of killing the mother-alien each day. This is more succinctly summarized by the movie tag-line: LIVE. DIE. REPEAT.

MAXIMIZING GENERATIONAL DIFFERENCES

The idea of repeating a task and doing it more successfully a second, third or twentieth time is a fundamental premise of most video games. As a result, ‘do-overs’ are a normal part of life for a generation raised in homes with multiple gaming consoles. Since they think, study, work and live differently, employers need to equip themselves to work with Generation Y & Z employees who enter the workforce with different mindsets. It is critical that we do not label these differences in negative ways. Instead these differences carry both positive and negative components, just like the prevailing set of characteristics that any generation possesses.

At this point in my blog, I typically cite research which supports my insights. However, this weeks research won’t be found in any academic journal or book. Instead, it is based on 38 cumulative years of observations of my three children. As a result of this research, here are a four principles and implications of a Live, Die, Repeat mindset which characterize many who make up Generation Y and Z .

1. Perfection is less important than trying.

The upside: They are willing to fail. Since innovation requires that we try new things, comfort with failure is important!

The downside: They are not perfectionists and often do not expect to get it right the first time. Perfectionist bosses beware!

2. Jumping-in vs. planning ahead is encouraged. Most video games are fast-paced and encourage doing and then thinking (see my recent blog post  Do–>Think or Think–>Do).

The upside: They are people of action.

The downside: Extensive listening is slow death for them.

3. Experimentation is required.How many times did it take to beat the final level of The Legend of Zelda? Many!!

The upside: They are taught to think creatively and try things that may seem illogical.

The downside: The journey may become more important than the destination. 

4. Motivation is intrinsic.Since games teach them to live, die and repeat, the motivation to beat the challenge comes from within.

The upside: They need a deeper reason to do something than “because I said so”.

The downside: Sometimes they simply need to do it “because I said so”.

An important caveat must be included at this point – this generalization is not fully true for every person and every situation. However, the themes of these behaviors are regularly observed in our family.

How does the LIVE, DIE, REPEAT mindset manifest itself in your personal and work lives? What observations would you add?

 


Family photo cropped.docx

I provide consulting solutions which help organizations achieve their mission. Organizational improvement occurs by developing leaders, fostering organizational alignment and blending strategic planning with foresight. The sample group for this article are proudly displayed in this recent family photo.

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Are you Do–>Think or Think–>Do?

The ability to understand the unique ways people think, act and learn allows us to be more effective in our work and personal lives. As I consult, one of my favorite filters to help me do this is determining whether people demonstrate a preference for thoughtfulness or for action. I have dubbed this the ‘do–>think or think –>do’ test.
This concept was developed while listening to a presentation by Robert Moran (Brunswick Group or @robertpmoran). As he discussed an organizations strategy, he used think/do or do/think to define the two strategic options of the company. I have borrowed and extended this principle as it also applies to human and organizational behavior.
Think of some of the people that you interact with regularly (including yourself!) and ask yourself which one of these two categories fits best:
1. Do–>Think: These people are action oriented and like to get their hands dirty. They get to it and are comfortable working with an imperfect plan. Once things are underway or completed, they assess what they have learned and how to improve it.
Example: As I taught a board game game to a group of people this weekend, Ryan interrupted me two minutes into the rules and asked, “can we just begin playing and learn it as we go?” He demonstrated a strong do–>think tendency.
2. Think –>Do: These people prefer to begin by thoughtfully considering what needs to be done. They consider options, line up their priorities and then systematically work their way through them. They are not afraid of action, they just want to spend time on the best ones.
Example: I am teaching some on-line Master’s level courses this fall. The think–>do students in my class are sending me emails in the first week asking for clarification on paper requirements (and also sending in a draft for review prior to submitting the final paper).
We fluctuate between both of these modes of operation each day. Certain circumstances lend themselves more naturally to each of these styles. For example, contrast the difference between the development of a five-year strategic plan versus assembling your child’s new toy. Or perhaps at the height of your busy work season you may not have time to think/do. Sometimes circumstances will dictate our preferred method.
However, I believe that each of us also has an innate bias. I need to tackle large problems with time to think and ponder. In contrast, some industries move so quickly that they often need to be more do/think (think of technology and apps). This filter has helped me understand that I need to shift my preferred style at times in order to work more effectively with the do–>think people or to get work done on a tight timeline.
Here are some ways to apply this principle:
  • Assess the members of your team and identify their tendency.
  • Discuss this model with them and ask them to identify their own tendency? Is it the same as your observation?
  • Identify the person you often conflict with at work. Could your conflict stem from a different do–>think or think–>do orientation?
  • Review whether you identify the style which is different than your own as ‘wrong’ or ‘different’?
  • Determine how having different styles will help you and your team.

There is no single filter that helps you understand a person perfectly. However, the do–>think or think–>do is one tool which is easy to use and often provides you with quick insights about how to best work with a person.


 

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Do Your Organizational Values Have Legs?

I love it when organizations have clearly defined values. I love it even more when you see those values exemplified in practice. However, the opposite also occurs!

A friend recently told me about a less-than-positive experience during her new employee orientation. She works as a nurse and was hired by a well-regarded hospital. Their orientation blended new staff from every department and role. boxed lunchIn this particular orientation, there was a new cohort of medical doctor interns. At the catered lunch, my friend took a lunch box from one of the two tables in the room. As she took the lunch, she was told that these lunches were only for the interns and that she needed to take her lunch from the other table. Attendees observed that the interns received a higher quality lunch and a clear hierarchy was silently established.

For an organization touting the values of respect, integrity and professionalism, there was a gap between what was stated and what was practiced. Shane Atchison purports that organizations which post their company values all over their walls have serious culture problems. In other words, a company’s values need to be lived, not talked about. While it is easy to point a finger, there are few of us who have not done the same thing over our lives.

Which value is the most difficult to practice in your organization? Where do you have opportunity to tighten the gap between what you preach and what you practice? If you don’t know, I’ll bet your employees do!