EVANZ Conference 2013 The link between culture (“Fluffy Shit” and “Warm Fuzzies”) and Productivity and Profit (“the re

1. EVANZ Conference 2013 The link between culture (“Fluffy Shit” and “Warm Fuzzies”) and Productivity and Profit (“the real stuff”)

2. Today's outline Background engagement “the outcome of good culture” and disengagement Talk through our change & insights Leave you with some personal reflection & answer your questions

3. Would you like these results? 37% improvement in absenteeism 25% lower turnover 48% decrease in H&S incidents 28% less shrinkage (loss) 10% increase in customer metrics 22% improvement in productivity 21% improvement in profitability

4. What engagement isn’t Fluffy Shit & Warm Fuzzies – I don't think so – its about being good to those that deserve it and tough on those that need it If any of your leaders think culture is “fluffy shit” they’re part of the problem and they’re costing your business -most people leave their boss not their company-

5. What engagement is A measure of whether your team want to give you their “discretionary effort” to help your organisation achieve its goals The chasm between someone being “Great” versus “Just OK” A reflection of the culture and how effective the leaders are

6. What do engaged staff look like? Demonstrate a high level of passion, enthusiasm and energy Their behaviours help the organisation to be successful Take a personal interest in the success of the organisation Always looking for a better way Readily volunteer for new projects Hold a sense of loyalty towards the organisation Speak positively about the organisation thereby strengthening the organisations reputation and employment brand Defend the organisation (internally and externally)

7. Disengaged people look like? The organisations detractors Openly speak poorly of the organisation and its leaders Just going through the motions Always finding the problem not the solution “Sorry – not my job” Quit yet stay = very undesirable in the workplace (toxic)

8. The worst statistic of all... Research shows more than 60% of the disengaged say they don’t plan to move on in the next 12 months Disengaged people are going to stay (if you let them)

9. What drives engagement? Having leaders worth following A sense of fairness and equity A personal understanding of : What’s required (What must I do), What's the purpose (Why is it important to do), and The skills and knowledge to do it (capable, competent and confident)

10. Our Culture & Engagement • 2007 – our current HR manager was employed • Findings around that time were: • largely disengaged team • no sense of loyalty and high incidents of dishonesty • lack of sense of pride and purpose • Blame culture • limited training opportunities • high turnover

11. Culture & Engagement History • 2008 - 2011 • HR Manager got commitment by management to conduct engagement survey (Best Workplaces Survey) to seek insights • change in style of HR began (from internal police to business and culture development role) • management team having recognised the need for change tasked the HR Manager to solve the issues (however no significant increase in resources or budget) • group profit reduced by approx 50% over 4 years (in part GFC)

12. Culture & Engagement History • 2011 • still lacking major traction on culture change • largely the HR team led change “people issues were the HR teams domain” – lack of ownership • HR Strategy was right but execution reflected the wider organisation culture (head office led – top down) • Good ideas still met with cynicism and suspicion by many • Performance reviews had been conducted but behavioural measures didn't exist • Culture change across the business was required (“this is not just an HR team issue”)

13. Mission Critical downsides Culture / People (2011 review) • Toxic – actively disengaged “Too many in these categories, we’re not dealing with or getting rid of” • Non-performance management (lack of consequences) • Lack of skill and ability at manager level “we’ve employed Supervisors, we need Leaders” • Getting to the 497th person – we don't have a method to reach him/her • Achievement not rewarded on par or ahead of tenure (annual pay rate increases, 10/15/20 year clubs & no performers club) • We tolerate / accept dead wood – “Are we waiting for God” • Silos – especially in business planning and decision making, “not involving key people in key decisions is impacting on key decisions and engagement/ownership of the issue” • Appraisal system not working, not measuring key outcomes – “managers are not doing their job to put pressure on people to perform”

14. The review’s results and change strategy were shared widely with all staff.... “Thanks for telling us how shit we are”

15. Previous Top Down Structure CEO Head Office Team (HR, Marketing, IS, Finance & Accounts, Operations Support, Warehouse) On Premise Operations Manager Off Premise Operations Manager On Premise Venue Managers Off Premise Retail Managers On Premise Staff Off Premise Staff

16. Customer Focussed Structure On Premise Customers Off Premise Customers Leadership expected across all levels On Premise Staff Off Premise Staff On Premise Venue Managers Off Premise Retail Managers On Premise Operations Manager Off Premise Operations Manager Support Office Team (HR, Marketing, IS, Finance & Accounts, Operations Support, Warehouse) CEO Commercial Board PLT Trustees WLT Trustees

17. One Key Insight Head Office became Support Office “People Support a World They Help Create”

18. Where did change come from? “The Agents of Change”

19. From …………… To High levels of staff disengagement and low levels of engagement High levels of engagement • Drivers of shift: • Values & Behaviours • Internal Communication – Facebook etc. • Excellence Awards “West’s Best” • Leadership Development opportunities • Increased staff training • Effective talent recruitment and management brought in house • Revitalised performance review system with meaningful measures • Awareness that poor performance will not be • Tolerated • Single vision / Vision updates / New brand • Story-telling – Our West – identity

20. From …………… To High recognition of performers and high levels of achievement Non-performance managed out Focus on the recognition of tenure without equivalent recognition of performance Perception that non-performance accepted / tolerated • ‘10/15/20 year club’ dinner disbanded in favour of performance recognition • Excellence Awards (including People’s Choice) • Monthly Values awards • PRDs and online CSB performance review system • Remuneration review = fairness • Measured Tier 1 / Tier 3 departures

21. From …………… To Property reinvestment plan Venues rationalised and modern on-premise profitable (reduction in losses) Unprofitable or declining venues lacking investment and drive • Total hospitality loss reduction programme “losses are no longer acceptable” • Suburban bar model – ability to experiment and try new models • Hard decisions made = Closure of some venues as part of strategy – without losing engagement or confidence by sharing facts and figures • The real financial story was told to all staff (profit, margins etc in simple terms and diagrams)

22. What Did This Achieve? Where’s the R.O.I?

23. “Nice” Awards Most Improved Large Workplace Engagement rose almost 7% - the largest jump they’d seen since the survey began Dale Carnegie International Leadership Award

24. Positive Outcomes • EBIT (pre-tax profit) = 350% of what it was in 2011 • EBITDA (profit less depreciation) more than 200% of pre strategy figures • Free cash flow is 15x what it was in 2011 • Staff turnover was almost 50% ; last month = 17% • Productivity - results are being achieved with 25% less staff • 70% change in store managers, 75% change in hospitality managers, 30% change in executive team • Some trophies in the cabinet – external endorsements are important for our brand as an employer of choice

25. Our Key Drivers • Single vision / New strategy and new brand = “all noses pointing in the same direction” Our West & “giving back” = identity/pride • Values & Behaviours were developed by them, adopted by us, then measured, discussed and celebrated (monthly awards) • Internal Communication – Values nominations, Facebook page, Vision updates, birthday cards, thank you & well done cards. • dropped the tenure awards dinner and 10/15/20 year clubs in favour of the Excellence Awards Dinner “West’s Best”, • Leadership Development opportunities and training for all in leadership roles (including 360 behavioural assessment) • Effective talent recruitment & management brought in house • Performance review system with meaningful measures – 50% weighted on “how you do the job”

26. What we learnt along the way... Be relentless about your purpose and your message of change Over communicate x10 Motivation = Communication Seek solutions from others (your job is get the good ideas flowing)

27. Self Reflection Am I a leader worth following? Are those that lead in your organisation people you’d like to follow?

28. If I was you from today... Be aware many will not tell the boss directly what they really think but commit to finding out Get out if you’re not up to leading change – only do it if you can commit to doing it well – assess those around you Have the courage to seek out underlying issues & then initiate change and empower them Set aside the noise of the detractors and the dark side Believe that “culture is critical” and make sure others know

29. “Culture without strategy is aimless, however Strategy without culture is powerless” - Robert Burgelmann simonw@thetrusts.co.nz www.thetrusts.co.nz