By Maretha Prinsloo on June 26, 2018
The following case study was conducted in a multi-national manufacturing company with head office in Switzerland and operations in Europe, Asia, and North and South America. However, the processes and principles that were applied are applicable in organisations of any size.
A due-diligence evaluation of the executive and organisational performance indicated that the core organisational challenge was associated with its culture, which closely resembled that of the broader industry-sector within which it operated; characterised by inadequate governance and compliance standards. Given the entrenched nature of business development practices in the industry, a fundamental approach to the cultural transformation of the organisation was required.
The solution involved the appointment of a new CEO and HR Director; a review of the executive leadership of the organisation; an evaluation of the organisational culture and its long term social and environmental implications; and the development of executive leadership capability and awareness. Aspects involved included the assessment of senior leadership; an evaluation of job-related competency requirements; an analysis of organisational practices; the optimisation of people-job matching at executive levels by focusing on the “right person for the right job at the right time”; and the personal development of the executive leadership.
Given the emerging possibility at the time of a merger/acquisition opportunity, the organisational effectiveness and its potential impact on the long-term sustainability of the industry as a whole, were important considerations in the design of the transformational solution.
In order to fully understand the various local cultural milieus and the local and global work requirements of the existing executive talent, a structured assessment and evaluation strategy was deployed on 300 executives across regions in Asia, Europe, North and South America. This holistic assessment strategy included an evaluation of the business-related factors and job analyses. The complexity and competency requirements of the executive positions were assessed by means of the Contextualised Competency Mapping (CCM) process as provided by Cognadev.
In addition to the normal annual performance appraisals that were conducted at executive levels in the organisation, specific psychological characteristics of the executives were assessed:
- cognitive preferences and capabilities;
- value orientations and worldviews;
- motivational drivers;
- personality and team role preferences.
The assessment battery comprised the following instruments:
- Cognitive Process Profile (CPP)
- Value Orientations (VO)
- Motivational Profile (MP)
- Myers-Briggs Type Indicator (MBTI)
- Belbin Team roles.
Supervised assessments were conducted globally by Cognadev. All executives received individualised feedback on their assessment results aimed at enhancing self-insight. Feedback sessions included the discussion of job-related performance issues. Competency reports were compiled for all participants.
After the assessment phase was completed, developmental initiatives were then implemented.
Although the executive team had been performing at a satisfactory level globally with the organisation showing adequate growth and profitability across regions, the assessment results indicated development areas that needed to be addressed.
Given the fact that time was of the essence, it was decided to restructure executive positions where necessary and to allocate executives to roles that best suited their personal profiles. Two thirds of the executive were subsequently moved to newly structured roles.
The psychological assessment results further informed the design of appropriate development programmes and business coaching initiatives which were undertaken by a leading European business school. In addition, the results of the job analyses and the competency reports were used by the HR Director of the company for the joint purposes of job structuring/refinement and people placement. His primary aim was to optimise person-job matching to achieve a sense of “flow” for the executives involved, as this was expected to optimise job effectiveness, job satisfaction and engagement at the executive level.
In collaboration with the organisation, the developmental initiatives undertaken by the business school comprised structured lectures and personal business coaching sessions. This systematic approach involved behaviour-based leadership interventions aimed at self and business awareness, self-empowerment, self-transcendence and the acceptance of accountability in pursuit of business, social and environmental goals.
Given the potential impact of organisational culture and the associated values and behaviours of the executive, a focus on culture and values formed a core component of the transformational initiative. It involved the identification of the core values of the organisation including those of people development, integrity and customer excellence. Efforts at embedding these values throughout the organisation involved the operationalisation of the broad values in terms of their behaviours.
This information was then incorporated into a performance appraisal system which was deployed among employees within all levels of the organisation, assessing criteria such as:
- “lead self”, which refers to owning the desired values;
- “lead others”, demonstrated by acting as a role model and continuously promoting organisational values;
- “lead the organisation”, demonstrated by the alignment of business practices and decisions with the organisational values.
Throughout the entire process, the HR Director monitored the impact of the initiative on the organisational culture as well as the morale at both executive and operational levels of the organisation; taking feedback from the executives on the impact and effectiveness of the various components of the solution.
The executive assessment and development strategy spanned approximately three years. On completion of the project, the performance of the executive teams in the various regions was again formally evaluated. Another due-diligence exercise was conducted to assess the broad impact of the organisational transformation process and its contribution to the organisation’s financial value in particular, this latter being especially important given the upcoming merger/acquisition opportunity.
A marked difference was found between the results of the two due-diligence procedures that were conducted within the 3-year time frame. The transformational initiative was gauged to have contributed to a significant improvement in the performance of the executive team and the organisation as a whole. This translated into an increment of approximately €3bn to the net asset value of the organisation, which had a significant positive impact on the value of its shares and, therefore, the final acquisition consideration of the organisation.
2. Human Capital
Additionally, the impact of the executive development initiative was observed in executives reporting greater self-actualisation and job satisfaction, and giving positive feedback on the effectiveness of the business coaching. The enhanced executive performance was verified by 360-degree feedback results in which the majority of executives received increased performance scores. The modal location within bell-curve representations of executive performance moved significantly toward higher levels of performance and effectiveness.
3. Business Unit Performance
All the business units showed a compelling degree of enhanced business performance. The CEO of the organisation publicly attributed this to the transformational initiative, led by HR, which had focused on the organisational culture and values as well as the assessment and development of the executive.
4. Organisational Governance
The previously identified organisational culture of inadequate compliance and governance was replaced by one more conducive to robust and enduring organisational success. The negative financial effect of unethical business practices (calculated as amounting to approximately a third of all organisational expenses) was substantially reduced without impacting on the turnover or market viability of the organisation.
The ROI of this organisational transformation project which primarily involved executive assessment and development exceeded all expectations. Not only did it result in employee engagement and effectiveness at the strategic levels of the organisation, it also benefited employee morale and contributed to a culture of compliance and ethical business practices that led directly to a significant increase in the financial value of the company.