ADVANCED HUMAN CAPITAL

Ankura’s Approach to Promoting a Performance Culture

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Yet, too often, culture remains in the somewhat murky realm of philosophy and intention. To be sure, intentions matter; no organization can shape its culture without clarity about what it seeks to become, including a commitment to values and principles. But values, principles, and other aspirational statements are insufficient. Culture, metaphorically, is the operating system of an organization.

Much as a computer operating system governs the functioning of all other software, an organization’s culture is the underlying network of beliefs, structures, systems, policies, rituals, norms, and protocols that, together, cause employees to behave as they do.

For example, are employees internally preoccupied, or focused externally on clients and customers? Are they combative and territorial, or do they seek true collaboration across boundaries and functions? Are they rooted in protecting status quo stability, or are they free to take calculated risks and innovate? Are they passive and defensive, avoiding trouble and blame, or are they proactive in driving change and taking accountability for results? Ultimately, culture determines these behaviors and these behaviors, as cultural norms, are central to productivity, performance, and sustainable results.

Ankura has been on the forefront of serious and large-scale culture shaping initiatives with hundreds of organizations, from FORTUNE 100 giants to fast growth startups to forward thinking mid-market companies. Our consultants and experts have witnessed, and contributed to, the evolution of such efforts for decades.

Our approach treats culture as an invaluable corporate asset that must be defined with precision and measured period-over-period as with any corporate assets of significant value.

This rigorous measurement system, called Diialog™, enables company management teams to identify and address the most significant opportunities and barriers, whether structures, policies, processes or behaviors, for creating the strategically-required culture.

“ Though 93% of executives say they are attuned to company culture and have taken steps to strengthen it, 69% don’t actually measure culture.”

– Oxford Economics

INTRODUCTIONCompany culture matters. There is a body of empirical research that proves this point beyond reasonable doubt, and today this assertion is rarely challenged in the modern economy. Increasingly, executives recognize that it is among the most significant sources of competitive advantage (or disadvantage) and among the hardest to replicate. They understand that a strong culture is a magnet for talent and a key determinant of employee retention and productivity. Most importantly, they recognize that culture is central to strategy execution; it strongly influences the behaviors required to win in the marketplace. Whether the challenge is a post-merger or acquisition integration, or simply the need to drive significant change due to a shift in strategy, success depends upon an organizational culture intentionally designed to most effectively execute company strategy.

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RemoveStructuralBarriers

AlignLeadership

SustainableCultureChange

However, installing a measurement system is only the beginning. Culture shaping needs to be thought of as a highly coordinated change process. Ankura’s approach is rooted in our deep experience in managing large-scale change initiatives.

While our approach rests on a foundation of measurement and analysis that enables the precision removal of cultural barriers, this data-driven approach, by itself, is insufficient. Just as important is the ability to enlist the leadership team, especially the executive team, in a process of change leadership and alignment.

The executive team cannot simply sponsor culture change, it must take an active part in the change. It can’t simply give its permission, it must actively lead the transition.

Senior leaders cast a shadow seen by all, from how they engage people to how they make decisions. To create the dynamic culture required to execute their business strategy, they must lead the culture change process as well as begin to behave as though this culture already exists. Ankura’s approach is designed to drive results in both of these related and intertwined elements of successful culture change.

Culture Change: Two Essential Pathways

HOW WE HELP

HUMAN CAPITAL ANALYTICSProgressive human capital finance methodologies that enable client organizations to deploy and develop workforce assets to drive operating profit

ORGANIZATIONAL CULTURE TRANSFORMATIONShape an organizational culture that enables strategy execution

EXECUTIVE COACHING AND LEADERSHIP ADVISORYImprove executive team decision-making, create greater strategic and operational alignment and change agility

ORGANIZATIONAL DESIGN AND STRUCTURERedesign the organization to reduce costs and increase agility and strategic alignment

HUMAN RESOURCES FUNCTIONAL TRANSFORMATIONReimagine the HR function as a strategic force in the talent-first economy

M&A HUMAN CAPITAL INTEGRATIONClear strategies and practical solutions to effectively hedge M&A and PE human capital risks and drive value across the entire investment life cycle

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The ASPIR Culture Improvement ProcessThe two essential pathways are executed through our ASPIR culture improvement process. We work collaboratively with clients through all phases of cultural change, providing our expertise, tools, and methodologies to accelerate results. The ASPIR process provides a proven roadmap for doing so.

Assess

We begin with a comprehensive and highly flexible cultural assessment identifying the differentiating characteristics of the business-required culture (future state) as it is defined primarily by the executive team, as well as the current, actual culture (current state) as defined by employees throughout the organization. When Diialog™ is the assessment system of choice – in some situations interviews, focus groups and/or existing organizational assessment data may, instead, be used – the current and required culture are profiled in stark, quantified relief, including comparisons to other constructive benchmarks. Importantly, Diialog™ identifies, in priority order, the impact issues that lay in the gap and, when addressed, will deliver the greatest ROI. The Diialog™ culture management system is much like a GPS device. It pinpoints the destination as well as the driver’s current position, and it provides turn-by-turn directions that dynamically adjust during the journey. Metaphorically, for the culture journey, Diialog™ ensures the smoothest, most efficient journey toward the business-required culture “destination”.

Shape

Simultaneously, the top bands of leadership, especially the executive team, are engaged in a process of synchronization and alignment ensuring clarity and strong agreement on the organization’s vision, values, strategic direction, and success narrative as well as the leadership framework and expectations required to execute them. This is accomplished through a series of dynamic sessions in which the executive team:

• Embraces the strategically required culture and commits to making culture shaping an executive priority.

• Defines the governance structure of the ongoing culture shaping imperative, including their active and on-going involvement in it.

• Develops and commits to the leadership framework which defines the behaviors and practices of successful leaders in the business required culture.

THE ANKURA DIFFERENCEOur professionals believe em-ployees are every organization’s most valuable asset. The work-force is typically a company’s first or second largest operating expense and controllable cost. When engaged properly, the workforce is the most potent source of corporate value cre-ation. Human capital leadership and management is a fast-evolv-ing and highly differentiating capability in the contemporary economy.

Ankura is improving human cap-ital performance by engaging its clients with a decidedly more rig-orous, financially-oriented pro-cess with capabilities that signifi-cantly improve the return on the human capital investment.

Shape Plan RefineAssess Implement

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Plan

The executive team drives on-going execution through a Culture Action Team comprised of both line and HR executives and facilitated by Ankura’s culture experts. This team is responsible for the culture planning process. Its first accountability is the creation of the initial Culture Change Plan focused on both immediate change and long-term sustainability. As the Plan is implemented it is also refined and recalibrated to ensure the culture progressively assumes the characteristics of the required culture and shakes the negative characteristics of the current culture. The Culture Action Team directly involves all relevant stakeholders in the development of the plan with a strong emphasis on communications and change execution.

Implement

Implementation of the culture plan takes many forms, including implementation of key initiatives to address both the structural and leadership elements of culture change. Ankura’s approach is rooted in our deep and nuanced experience gleaned from managing scores of culture improvement initiatives during the past 30 years. Our approach includes a defined process for engaging the entire organization in both informing and driving critical cultural initiatives. While many key stakeholders are involved in the planning process, it is during the early stages of implementation that the entire organization in involved in shaping the plan and cascading the process. Implementation is as much about change execution as it is about driving specific initiatives.

Refine

Ankura’s approach is designed to drive observable and measurable change quickly. In today’s dynamic environment, speed matters. Ultimately, however, sustainable results require a longer-term view. It is in the refine stage that each initiative, as well as the entire process itself, is carefully monitored and measured to ensure success. Ultimately, this phase includes one or more culture remeasures, or pulse measures, to ensure the critical initiatives, now in motion, are achieving the desired outcomes without unintended negative consequences. A full remeasure, typically taken one year after the baseline measure, reveals how much gain has been achieved and defines the new actual culture vis-à-vis the executive-defined required culture.

While executives now widely acknowledge the importance of culture, many remain skeptical about the efficacy, and cost, of initiatives designed to change it. They are bombarded with language about the long-term commitments required to have any real hope of success and are offered too little in the way of evidence that such efforts will pay off. To be sure, serious culture change initiatives take time and focused attention. Ankura’s proven approach not only achieves the results sought by executives, but because it is rooted in precision measurement, which identifies the priorities with the greatest ROI, it delivers improvements faster and more efficiently.

© 2020 Ankura Consulting Group, LLC

ABOUT US Ankura is a business advisory and expert services firm defined by HOW we solve challenges. Whether a client is facing an immediate business challenge, trying to increase the value of their company or protect against future risks, Ankura designs, develops, and executes tailored solutions by assembling the right combination of expertise. We build on this experience with every case, client, and situation, collaborating to create innovative, customized solutions, and strategies designed for today’s ever-changing business environment. This gives our clients unparalleled insight and experience across a wide range of economic, governance, and regulatory challenges. At Ankura, we know that collaboration drives results.

GERARD F. MCDONOUGHSenior Managing Director

gerard.mcdonough@ankura.com+1.704.968.8918 Direct

DAVID M. LYNNManaging Director

david.lynn@ankura.com+1.410.703.4628 Direct

Gerard McDonough is Senior Managing Director of Ankura’s Advanced Human Capital area of expertise and has dedicated himself for three decades, to improving business results through people. He developed the firm’s proprietary Human Equity Value™ methodology, and has expertise in the disciplines of enterprise-level culture-shaping, organizational design, merger and acquisition integration, change execution, and executive-level leadership and team development. Frequently, his work involves helping private equity portfolio companies identify misallocated human capital costs and remove barriers to performance, including the full range of structures, policies, and systems that govern, influence, and reinforce workforce behavior. His work measurably increases company intrinsic value through improved human capital management.

David M. Lynn is a Managing Director of Ankura’s Advanced Human Capital area of expertise with global experience in organizational culture, executive assessment and development, M&A integration and strategy execution, working with Fortune 500, as well as dynamic mid-cap, companies. His focus for 30 years has been to accelerate business performance through people. His experience includes leading enterprise-wide business strategy, culture shaping, organizational design and executive team development initiatives with organizations such as Barings LLC, Skyworks Solutions, JPMorgan Chase, Superior Energy Services, and eviCore Healthcare. His work includes accelerating value creation and mitigating risk in private equity portfolio companies.