www.pwc.com/my

Values Driven Organisation

Helping you walk the talk

September 2012

“ Vision without action is daydream. Action without vision is nightmare”

Japanese proverb

PwC

Value as an enabler of growth

A values driven organisation utilises

values as levers to influence organisational culture to enable process excellence. An organisation’s values must be developed through collaboration and consultation with the organisation and must be aligned to the organisation’s strategy and embedded within its operations. Whilst most organisations are typically value driven, there are two critical issues that are often overlooked. The first is if the values are conscious, shared and lived by the organisation whilst the second is if the values are operationalised within the organisation.

Why revisit values

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Research demonstrates that values driven

organisations have superior profit performances of up to 750 times higher than companies without cultures of shared value and adaptability (Kotter and Heskett, Corporate Culture and Performance). The values driven organisation must consciously create the future it desires by aligning the paradigms of people, customers, community and products to develop a consistent ethical basis for decision making. The values bridge people aspirations to the corporate soul. The values stem the tide of disenchantment converting it instead to positive engagement.

At PwC, our model

for a values driven organisation will guide you through your transformation journey from definition and formulation of values, through to the alignment and integration of operationalising values to realise benefits.

Shape

Drives

Influence

Enables

Align to Strategy

Embed in Operations

Typically organisations start with process changes to drive behaviour with limited success

VDO will leverage values to enable greater success in process excellence

Start End

Start End

You need a

high performance

culture

Your recent

products failed to deliver

expected margin improvements

Your talent lack

initiative and innovation

Your

competition is growing faster than

you

Your

operating costs are out

of control

Your

process changes are repeatedly

failing

Your

customers are

disengaged and

dissatisfied

Risk management is

an issue in your

organisation

Your staff

turnover is unusually

high

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We will help define new values or refresh existing ones to better reflect the beliefs and principles of the organisation. Values driven organisations are effective only when the values espoused are collectively determined by the organisation as opposed to simply selected by the leadership. We guide your value development through the quad lenses of people, products, community and customers.

Shaping your values

Typically external facing values of community and customers will include social concerns such as the environment and customer experience. Internal facing values of people and products will include commitment for continuous improvement, leadership by example, ethics and product research. Each paradigm will have a customised set of metrics to guide value formation and definition for the organisation through an inclusive facilitative approach. Values driven organisations tend to have more emphasis on self-prescriptive behaviour based on their values and thus prescriptive governance for human capital management is reduced. A culture of self-governance will be inculcated within the organisation which will drive behaviour to enable the maintenance of a high performance culture.

People

Customers

Community

Products

Vision tells you where you are headed

Mission outlines what you will need to do to get there

Values illustrate how you will get there

Our new tool which gives you a snapshot of where you are and an in-depth analysis of how to get where you need to be.

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Resurfacing Embedding & Sustaining

Strategy Formulation & Validation

Business Case Definition & Analysis

Strategic Planning & Implementation

VISION

Pillar 1

Pillar 2

Pillar 3

Pillar 4

Value 2

Value 3

Value 4

Value 5

Value 6

Metrics Value 1

Metrics

KPI

KPI

KPI

KPI

KVI

KVI

KVI

KVI

KVI

CORPORATE

CORPORATE

INDIVIDUAL

INDIVIDUAL

Tools

Achieved

Partially achieved

Not achieved

Surveys Value Dashboards Continuous Education

Operationalising Values

The alignment of values to strategy will ensure that values will guide strategic initiatives along a clearly defined path. The embedding of values into the operations of the organisation through linkage to KPIs and KVIs will enable management with a tool to shape behaviour to enable cultural change. The use of other tools such as surveys will provide periodic pulse checks on progress and indicate areas for attention. Thus it is possible to make progressive advances to the organisational culture with a view to achieving a clearly defined end state.

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Source: Thomas T., Schermerhorn J.R., Dienhart J.W., Strategic Leadership of Ethical Behaviour in Business, Academy of Management Executive, Vol.18, No.2, 2004.

Sharon Beder, 'Putting the Boot In', The Ecologist 32(3), April 2002, pp. 24-28, 66-7 McLean & Elkind, The Smartest Guys in the Room, 2003. Mall’s sarcastic ‘magic’ remark gets a virtual bashing, Yahoo! News, May 31, 2012.

“A global utilities company scandal grew out of a steady accumulation of habits and values and actions that began years before and finally spiraled out of control.”

- McLean & Elkind (2003), The Smartest Guys in the Room

Can be managed through “prescription” and process

changes

Can be managed through “self-prescription”, process and cultural

changes

Government fines and penalties

Administrative and audit

Legal and investigative

Remedial education

Corrective actions

Government oversight

Customer defections

Loss of reputation

Employee cynicism

Lost employee morale

Employee turnover

Government cynicism

Government regulation

Level 1 Costs

Level 2 Costs

Level 3 Costs

Less damaging costs

Least understated

Gets more executive attention

More damaging costs

Most understated

Gets less executive attention

As the digital age progresses, businesses jump onto the social media bandwagon in the hopes of getting a wider reach. But knowing how to use a social media platform is not enough – businesses have to embed and portray the right culture and identity at the risk of harming their brand and reputation

A prominent sportswear apparel came under fire for its child labor practices and poor working conditions. By the late 1990s, this company had become synonymous with sweatshop labour, and the damage to their reputation was beginning to show in their account books.

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Visibility of Cost

High Low

Fin

an

cia

l Im

pa

ct

Th

ou

sa

nd

s

Bil

lio

ns

Cost of ignoring values and culture

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How we can help you

Value definition

and validation 1

Value alignment to strategy and

embedding to operations

2

Value implementation

and benefits realisation

3

Re

su

rfa

cin

g V

alu

es

Our Offerings What We Do

We help you by assessing the relevance of current values and facilitating the exploration of new values through an inclusive approach that aims to obtain the support and collaboration of the organisation for new ways of working. We involve the organisation with developing value themes and initiatives and work with stakeholders to assign owners for key initiatives.

We guide your organisation in defining your concept for value transformation. This will include identifying the benefits of a values driven organisation be it financial or non-financial. Our research team will draw on our global thought leadership and subject matter experts to investigate new value paradigms or refresh existing ones whilst carefully identifying industry trends and analysing shifting global trends. Our guidance extends to developing comparative analysis of your organisation to benchmark against industry and competitors. Our facilitative approach of guiding the organisation utilising proven methodology aims to align prioritized values to strategy and develop high level implementation plans to operationalise your values to achieve your vision.

Su

sta

inin

g &

Em

be

dd

ing

V

alu

es

We facilitate and guide the implementation of a value framework to monitor, manage and influence culture in the organisation to achieve business outcomes. Values defined by the organisation are embedded into operations by way of scorecards and dashboards that link performance indicators to value indicators. The tools provide for a mechanism that can influence and shape organisational culture allowing for a highly adaptable and change ready organisation.

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Value definition and validation

1

How we can help you

• Engage the organisation with defining and refreshing organisational values • Identify best in class features of values driven organisations and tailor to individual requirements • Obtain consensus from across the organisation on shared values and beliefs • Deploy organisation wide change management communications • Validate identified values with relation to value to organisation and impact to market

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Client What we did

Medical University We performed focus group interviews with internal and external stakeholders to analyse their strengths and weaknesses and identified opportunities and threats in the current and potential future industry environment. We then mapped the industry critical success factors (strategic canvas) based upon the Medical University against their peer group and best practices. By using the Blue Ocean concept, participants were forced to think out of the box and challenged the 5-year strategy to the next level. As a result, a refined ambition was developed for the coming 5 years. This ambition was translated into strategy maps with key value drivers and key activities supporting the organisation’s strategic focus. Implementation plans were also drawn up to align the organisation, processes, systems and people to execute the refined 5-year strategy.

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How we can help you

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Value alignment to strategy and embedding

to operations

2

Client What we did

Media Company PwC facilitated the development and validation of the company’s 5-year business plan through workshops that were conducted with senior management. The workshops were conducted to agree on the overall strategy and assess the viability of each business plan to determine implementation priority. Concepts such as the Blue Ocean Strategy was shared to stimulate participants to strategise how the company can create uncontested market space and win out the competition. Strategy canvases were also developed and presented to discuss on the strategy and positioning for the company’s core product offerings. In addition to the overall strategic business plan, a Human Resource and Technology blueprint were also developed to support the implementation of the strategy.

• Prioritise organisational values identified • Facilitate alignment of organisational values to strategy • Develop tailored value driven framework • Engage organisation to evaluate embedding options for operationalising value framework • Develop and assess suitable business cases

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Client What we did

A Market Regulator PwCAS was engaged to review and improve business processes within the organisation, with the aim of improving effectiveness, efficiency and institutionalisation of key processes. Two key areas were selected i.e. Performance, Planning and Management (which includes Key Performance Indicators) and Human Capital Management. The engagement involved reviewing existing processes, conducting discussions with key stakeholders, and improving/developing new policies and procedures. In addition to the policies and procedures developed, several new frameworks (e.g. a scorecard framework and a succession management framework) were also developed. Several 'roll-out' sessions were held to communicate the changes made and address any concerns. The engagement resulted in several new policies and procedures being developed and executed. Throughout the engagement, PwCAS worked closely with an internal team, to ensure that the project would be sustainable (after PwCAS's formal involvement). The organisation now has an internal team that is not only monitoring the progress of policies and procedures developed, but are also undertaking new initiatives to improve processes within the organisation.

Value implementation and benefits realisation

3

How we can help you

• Develop and implement roadmap for value framework implementation • Develop roadmap of benefits to be realised • Develop key value indicators and align to performance framework • Operate and review values driven organisational framework through continuous organisation wide engagement

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Naresh Alagan Manager Email: naresh.alagan@my.pwc.com Direct line: 60 (3) 2173 0971 Mobile phone: 60(12) 546 1057 Fax: 60 (3) 2173 1288

Experience Naresh works within PwC Consulting’s Strategy, Sustainability and Transformation practice in Kuala Lumpur. He has developed and implemented strategy frameworks including governance and benefits management for clients within the financial services, education, telco and airline industries. Naresh has proven expertise in building sustainable revenue growth, identifying profitable opportunities, developing strategic focus and applying consultative techniques to deliver winning business solutions. He has improved stakeholder value for organisations such as Westpac Banking Corporation, Bankers Trust, Swiss Banking Corporation, NRMA Finance, Rothmans, Lend Lease, University of Sydney, Raidnet Australia, Commercial Metals Company, Malaysia Airlines MRO and Bursa Malaysia (Malaysian Securities Exchange).

Qualifications • Bachelor of Law (Honours) • Bachelor of Business (Accounting) • Master of Management • Master of Business Administration (MBA) • Certificate in Global Strategy and Operations Management • Certificate in Legal Practice • CPA Professional Program • CPA Public Practice Program • Lawyer – Supreme Court of NSW Australia • Accountant – CPA Australia

Our Team Thought Leadership

This survey explores CEO confidence in their company’s growth prospects, and how they’re building local capabilities and creating new stakeholder networks in new markets. We spoke to 1,258 CEOs based in 60 countries, and carried out a further 38 in-depth CEO interviews.

This report was prepared in cooperation with the Economist Intelligence Unit and discusses the outlook for six retail and consumer products sub-sectors in Asia.

15th Annual Global CEO Survey

Strong & steady: 2011 Outlook for the retail and consumer products sector in

Asia

Driving enterprise performance

This paper introduces and explains several emerging developments in enterprise information management (IM) that will likely pave the way for dramatic advances in the next two to five years. Big data mining, discovery, unwritten knowledge, security, social machines, cloud and mobile enhancements, and the emergence of “The Participative Web” are some of the developing areas which will have significant impact for individuals and organisations.

Qualifications • PhD in Social Sciences • Master in Social Sciences (German Diploma)

Dr Jens Ballendowitsch Associate Director Email: dr.jens.ballendowitsch@my.pwc.com Direct line: 60 (3) 2173 0600 Mobile phone: 60 (12) 323 0890 Fax: 60 (3) 2173 1288

Experience Jens has extensive experience in the areas of Employee, Customer Engagement and Organisational Change. He has led consulting engagements in various GLCs, MNCs and large local companies in Malaysia, Germany and Australia.

Jens has significant expertise in data architecture and dissemination strategy. In addition to this, he has significantly developed thought leadership in the areas of human governance and is an active speaker and researcher in this area.

Let us help you build your value proposition today

This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers Advisory Services Sdn Bhd, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2012 PricewaterhouseCoopers Advisory Services Sdn Bhd. All rights reserved. "PricewaterhouseCoopers" and/or "PwC" refers to the individual members of the PricewaterhouseCoopers organisation in Malaysia, each of which is a separate and independent legal entity. Please see www.pwc.com/structure for further details.

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