2016 - 2017 CULTURE REVIEW
CULTURE REVIEW 2 0 1 6 - 2 0 1 7 July 2016 www.woodformarch.com
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INTRODUCTION
We launched our New Culture in Sptember 2015, already 9 months ago. Wow time flies, but oh what a journey! As predicted, we made an intial plan outlined in our Culture Blueprint, released at the time. When theory met with reality, however, we kept a few things and discarded others and still others changed. SO here we are at the start of a new financial year with new mountains to climb, fresh goals and some exciting opportunities to embrace. The objective of this review is to recognise and mark our progress made, to formalise the changes which have evolved in the last 9 months and to set out a culture plan for FY2017.
2016 - 2017 CULTURE REVIEW
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HOW FAR HAVE WE COME? We couldn’t have hoped to come as far as we have. We have completely confounded the critics. Woodform has kicked the butt of convention! The following are a few examples of the culture that come to mind: 1. The journey of the rising breakeven. As planned we implemented our new bonus system and progressively increased our insentive nett profit breakeven to 14%, then 17% and now we have had it at 20% for 2 quarters. The result, the entire staff have shown their guts and commitment and stuck with us every step of the way (even for the 2 weeks where it looked like they would get nothing!). For FY2016 we increased our nett profit after bonuses from 11% to 18% and we are now on to 20%. Oh boy. 2. All staff are thinking in terms of bonus pool profit and loss. We all talk about, “This is coming out of the bonus pool, do we really need it?” or “How can we get more onto the bonus pool?” This has resulted on decision making being in the hands of the Woodformers, right where the information is. 3. We have drastically increased the sense of ownership among the entire team. We are developing a team of leaders who are focussed on the outcome – which ultimately is what the bonus pool is. We have ideas flowing, management decisions being made, decisions being challenged by others also from a management view point and the Woodform is being developed through a motivated team of self – actualizes. 4. The staff are happy. We have done some staff engagement surveys and one Woodformer even said that they preferred to come to work than having their week-end. Poor soul! 5. Spontaneous innovation is occurring in every department. We have the moulding team redesigning their production line, the painting team have altered their shed, put in a new sander and are putting in a drying oven to speed up production. Customer service are practising first contact resolution and the sales team are looking closely at their big rocks. These are only a few examples.
6. We have put the fun back into work. The table tennis is keenly competitive and the table soccer is starting to gather interest. The Customer Happiness Team are keenly measuring the emptiness of their inboxes and everyone is watching the scoreboard. 7. The silos are gone. We have complete interaction between all Woodformers no matter what their position. Communication and teamwork are here to stay. They have to. We have the same goals and the shared desire to win. 8. We had an awesome team road trip which opened everyone’s eyes as to the importance of our project outcomes. We also learned about how to run an Obeya (operations room) to increase visibility in the business. 9. The team decided to invest in a world class coffee machine – which we are all enjoying. 10. Everyone has a far greater sense of culture awareness. Helped along by the presenter we had – Mike Clark – who taught us about complaints and excuses being below the line. 11. Everyone now looks at the bigger picture, the outcome, the long term and investing into the future. 12. We have implemented the Obeya room to create clarity of vision across the entire business process for daily discussion. This entirely done by the indicative of the employees. 13. We now have a Team of Champions who led the Team of Teams following the teaching of General Stanley McChrystal. This is an essential Leadership Development exercise. 14. The Team of Champions are being coached by a Gazelle Coach on the methods of Scaling Up. 15. Morning Stand-up Meetings provide a tight feedback loop for all staff members so that “stucks” can be brought to the surface quickly and workload can be spread.
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... HOW FAR HAVE WE COME? When we started we quoted the saying, “Culture eats strategy for breakfast.” What we have proven is that, culture development is a strategy and it is an essential ingredient in the great game of business. The following are the principles that we said we would implement at the start. I have added my comments on how we have done on them:
1. Remove the hierarchy (up/down barriers) and replace it with a sphere of relationships. Done, although we have a team of teams rather than a sphere of relationships as we originally planned. This is far more functional.
7. Total transparency and trust with company financial information and every part of the business, so that every Woodformer is completely in the picture. Done, we just need to do a lot more of it. The bonus calculator is coming.
2. Remove departments or silos and replace them with work cells and teams. Done
8. Provide forums for everyone to have input. Done
3. Remove wages and replace them with salaries so that everyone is focussed on outcomes not hours (not 60 hour weeks though!). Done and it has worked amazingly well. 4. Change the bonus structure so that it aligns perfectly with profitability and the success of the company is shared with everyone. Done. 5. Start a workers council to be a voice of the workers. We did start a council, but found that it wasn’t as functional as we might have hoped. Our team of teams and daily stand-ups have replaced this and the voice of the workers is being clearly heard. 6. Provide training opportunities for everyone. Done, however we need more training that is strategy and outcome aligned.
9. Use peer accountability for performance appraisals through 360 degree reviews. We have done one, but are now adopting the decentralised tiny questions approach. We need to work on this. 10. Live our Core Values. We now have new core values based on the word Enrich. We need to make it more front and centre of our meetings. 11. Encourage Candidness, frank open feedback to each other within our team collaboration which is objective and free of spite. This has come a long way, but we still have further to go. Having daily stand-ups helps enormously as team mates can help with stucks etc.
2016 - 2017 CULTURE REVIEW
WHERE DO WE WANT TO TAKE OUR CULTURE IN FY2017? So where to from here? We have actually not long been on this journey and although our progress has been significant our road ahead is still long. We need to be better at holding one another accountable, working as a perfectly synchronised team of professionals and creating our “Tesla”. We need to go for our goal of having a team of 60%+ A – Players by the end of 2017. This will require empathy combined with brutal honesty and a bit of soul searching by all of us. I asked a number of Woodformers what they would like to see improve in our culture and got a number of interesting answers.
• A sincere greeting in the morning because we are glad to be back at Woodform • Less behind the back criticism and more face to face feedback (this hurts more at the time but hurts less than hearing the sniping’s later). If a team member has an issue, do they know? Have you actually told them? • We need to work more on the self-organised team principles so that work is levelled out and outcomes are consistent • More popcorn chicken for morning tea • More alcohol! (I think we will go easy on this one) • Network our culture with other business’ (Central Steel Build and Dorset would be good ones) • Grow a stronger sense of ownership • Have less us and them between the office and the factory • Have more team activities that bring us all together like road trips, cross training and morning tea activities • We need to be more clean, lean and efficient
These are interesting points worth merit. We certainly could add to them as a team and possibly it is worthwhile using our new survey mechanism to do this. To carry this forward we have decided to adopt the Start, Stop, Keep method of strategy in order to move forward into FY2017.
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START 1. The Powerscore job scorecard method of performance evaluation, so that everyone know exactly what success looks like in their position and what they need to do to get there. Bring out the A-Player in everyone. 2. Use the Tiny pulse feedback mechanism for employee engagement measurement and intelligence. 3. More active cross-training including cross team training. 4. Practice the methodology outline in The Five Dysfunctions of a Team book to build trust and understanding. 5. Do a companywide DISC analysis exercise so that everyone understands themselves and understands their team mates. This also helps with job-fit. 6. We need to implement the use of regular one on ones and have feed forward sessions, particularly between the Champions and their team members – as taught by Marshall Goldsmith. 7. Actively talking and training about self – organised work.
STOP 1. The Partners Committee has faded out. It was another round of meetings which we could do without. The employee feedback now flows through the Stand Up meetings, TGIF’s and to the Champions from their teams. 2. The Council has also faded out. The Team of Champions has really replaced this function and it is far more actively involved in tangibly pushing the business forward with the help of our coach. 3. The Sphere of Relationships has now been replaced by the Team of Teams.
2016 - 2017 CULTURE REVIEW
KEEP 1. The bonus system which is working so well for us. This is now reduced down to just 2 levels.
8. Keep developing real time data that is displayed on Dashboards and Scoreboards Company wide.
2. The TGIF meetings where we can all meet and get a company update. We also all get a chance to speak up.
9. Developing our work area so that we achieve our “Tesla�.
3. Having team celebrations and events where we all get together.
10. Living and talking our core values, ENRICH. 11. Developing our Team of Teams so that they are taking ownership for their roles.
4. A strict meeting schedule to encourage structured collaboration. 5. Playing games and having fun in the workplace. 6. Salaries instead of wages. It is only the outcome that matters, not how many hours it took you to get there. 7. Developing the Obeya so that more people are involved and the data actually becomes more meaningful.
12. Training and developing professionally. 13. Our BHAG which is serving us so well and especially our mission to go international. 14. We need to maintain our discipline with the meeting schedule to collaborate effectively.
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CORE VALUES
ENRICH EXECUTION
NIMBLE
RESPECT
INTEGRITY
CONTINOUS
IMPROVEMENT
HAPPINESS
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2016 - 2017 CULTURE REVIEW
THE WOODFORM BONUS SYSTEM Our unique profit sharing system is like the catalyst of the culture, being calculated directly to the ultimate outcome of successful business practice. The bonus pool is accumulated from all nett profit above a breakeven of 20% of sales. So if the business makes 25%NP, 5% will go into the bonus pool. Every Woodformer has either 1 or 2 bonus shares and the bonus pool currently has about 44 shares. The following shows a bonus calculator example:
Bonus Calculator Level
The goal of the bonus system is to get everyone involved in increasing sales, making a good gross profit, executing orders cleanly and efficiently and leveraging overhead expenses against revenue. In this way we are creating a team of entrepreneurs. We love to hear the cry, “This is coming out of the bonus pool!� This awareness helps to contain costs and keep the team focussing on the outcome.
Total Income
1.0 16,000,000
100%
Raw Cost of Goods Incl Waste Other Trading Costs Cost of Materials
6,800,000 1,120,000 8,000,000
43.00% 7.0% 50.0%
Manufacturing Costs Manufacturing Wages Capital Equipment Cost Total Manufacturing Costs
320,000 576,000 224,000 1,120,000
2.0% 3.6% 1.4% 7.0%
Total Cost of Goods Sold
9,120,000
57.0%
Gross Profit
6,880,000
43.0%
Total Expenses
2,880,000
18.0%
Operating Profit Staff bonus pool
4,000,000 800,000
25.0% 5.0%
Incentive Breakeven
20%
Number of Months
12 41.5
Number of Shares
Total Bonus Amount
$ 19,277
Per Week $ 371
Sales Percentage of Sales Column
Gross Profit Expenses = Company Profit
Company Profit Incentive Breakeven = Bonus Pool
The Ultimate Goal
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THE TEAM OF TEAMS Rather than having a traditional Organisational Structure with its up-down hierarchy and little boxes, we prefer to have an organic structure of self-organised interrelated teams. This provides for far better communication and encourages ownership.
DASHBOARD
The dash board is the top to bottom health check of the business giving everyone the visibility of potential trouble spots.
2016 - 2017 CULTURE REVIEW
ACTION PLAN 1. Q1 needs to be the quarter of the Powerscore. With the help of Rob K our coach we must get this launched and going. 2. We have already started Tiny pulse to some extent but we need to present it to the whole team and actively promote it to gather a lot more substantive feedback. 3. Create a training register and then brainstorm a method of implementing the further training. 4. Get all team leaders to listen to the 5 Dysfunctions and practice it as a team of Champions first. After this we can then roll it out among the teams.
In the above strategy, the items in the STOP section we have already stopped. The items in the KEEP section we already have but we must either keep developing them or we must stop them. The things we need to concentrate on are the START items.
5. Companywide DISC. Send out a link to the test to all Woodformers and set them a short deadline. Program a couple of days for interviews. Create a companywide spreadsheet. Present the findings to the team and decide on changes if any to roles. 6. Make sure that everyone has their one on ones programmed into their calendars and we gather this feedback to the Champions Meetings. 7. Self-Organised work. Read the books, decide on some actions, present to the team.
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