VALUE-BASED

BUSINESS EXCELLENCE MODEL

Prof Dr Mokhtar Abdullah, PhD

profmokh@gmail.com
 PURPOSE
To introduce
Ø A holistic Values-based RIGHT-To-MIGHT (R2M) framework
as a tool for measuring and monitoring performance
excellence of an organisation
Ø Organisational Entropy that can be a restraining element
and a threat to the organisation in achieving sustainable
performance excellence
Ø The R2M framework that provides a step-by-step recipe for
Values-based Organisational Transformation for the
organization to become a Values-based Organisation
 STRATEGIC MANAGEMENT SYSTEM
Talking about organisational MISSION VISION CORE VALUES
S
excellence, any Guru of T STRATEGIC GOALS / OBJECTIVES
Organisational Development or R PLANNING
proponents of Strategic A CRITICAL SUCCESS FACTORS
T
management, would agree that the E STRATEGIES
first step towards realising this G
noble goal is to go back to the I STRATEGIC ACTIONS
C
STRATEGIC MANAGEMENT SYSTEM
(SMS) of an organisation. The SMS M
consists of THREE main elements, A Specific Internal Process
N Objective
namely, Strategic Planning, A
Performance Measurement, and G
KPI
Strategic Execution. On top of the E PERFORMANCE
Human
M MEASUREMENT Balanced
Strategic Planning agenda is the E
Customer Scorecard Capital
Current
formulations of Vision, Mission, and N
Organisational or core Values. While T
Target
vision and mission statements of S
the organisation describe 'where Financial
Y
the organisation is going and how S
T
the organisation is going to get E MONITORING
there', values statement outlines M STRATEGIC
‘the standards of behaviour for EXECUTION CONTROL
getting to where the organisation is ADJUSTMENT
going’.
In an organization, internal as well as external factors can influence the organisation’s objectives. Studies have shown that the
main causes of performance excellence come mostly from ‘within’ the organisation, i.e., the ‘internal’ factors or ‘Critical Success
Factors (CSFs)’ or ‘strategic areas’. While external factors are not within control of the organisation, the internal factors or
CSFs are within reach and more manageable. The organization needs to identify which ‘internal’ factors that cause more harm
to its performance than the others.
The major internal factors or CSFs that determine the excellent performance of an organization include, among other things;
- ‘Leadership’ that is entrusted to steer the organisation
- ‘Strategic Objectives’, if well crafted will help the organization to achieve its destination
- ‘Culture’ that shapes and creates a conducive working environment in the organization
- ‘Change or Transformation’ that constantly happens and need to be managed wisely
- ‘Resources’, both human as well as non-human resources are important assets that need to be managed effectively
and
efficiently
- ‘Best Practices’ that teach an organization of how to be the best-in-class and become a role model for other
organisations
to emulate
- ‘Innovation’ as a business strategy that helps an organization to achieve competitive advantage
- ‘Productivity’ of the workforce is key to long-term success for any organisation
- ‘Well-being’ of the people, if properly taken care of, nurtures loyalty and long-term commitment to the organization
- ‘Relationships’ with stakeholder and customers will assure survival of the organisation
‘Performance or Business Results’, if rightly and regularly measured, managed, and monitored will ensure
sustainability of performance excellence of the organisation

One condition that ensures the performance excellence to happen is that “ALL the Key Results Areas (KRAs) MUST be at the
highest levels for the Organisation to reach the most desired or excellent level.
 Eleven (11) Key Results
Areas (KRA)
Mokhtar et al. (2001, 2003)
Performance
Results
Produ
These Key Results
ctivity Areas MUST be at
Focus Stakeholder
Employee Focus Focus the highest levels
Resou
for the
Manag rce Organisation to
ement Innovation
Best Practices achieve
performance
Strategi excellence
c Ob jectives Change
nt
Org. Culture Manageme

Leadership
• Any organization may face an
uncertain future
• During times of change or Values
Crisis or when extreme challenges
emerge, new strategies are needed
and change in peoples’ behaviors
might be necessary
 TWO PREMISES FOR ACHIEVING
PERFORMANCE EXCELLENCE

1. The right behavior is inherently

shaped by the right values
internalized by the people in the
organization.
2. People with the right behavior
are capable of producing
performance excellence and
transforming an ordinary
organization into becoming a
great or mighty organization
 STRATEGIC MANAGEMENT SYSTEM
MISSION VISION CORE VALUES
S
T STRATEGIC GOALS / OBJECTIVES
R PLANNING
A CRITICAL SUCCESS FACTORS CRITICAL FAILURE FACTORS
T
E
G
STRATEGIES Since behaviours &
I
C
STRATEGIC ACTIONS
Performance are
M determined by
A Specific Internal Process
N
A
Objective VALUES, then
G
E PERFORMANCE KPI institutionalising
Human
(Right) Values
M MEASUREMENT Balanced
Customer Scorecard Capital
E Current
N
T
Target
becomes a
S
Y
Financial strategic agenda
S
T
E MONITORING
M STRATEGIC
EXECUTION CONTROL

ADJUSTMENT
An example of an organisation
that has to change due to a
decline in its operations and has
to lean on core values is TESCO,
one of Britain’s biggest grocer TESCO’s Core Values:
that has been losing market • Understand customers,
• Be first to meet their needs,
share to small groceries that • Act responsibly for our communities
offer better discounts. And, after • Work as a team
1-week of taking over as Tesco • Trust and respect each other
• Listen, support and say thank you
CEO, Dave Lewis says he has • Share knowledge and experience
noticed a lack of morale at the
retailer and warned there would
be management changes by
going back to its core values
store.
 A much worse case than TESCO happened way back in 2001, i.e., the downfall of
Enron, a giant company which was once hailed as one of the country's most
excellent companies of in the US. Enron represents perhaps the most typical
example of how a mighty corporation can go upside down from hero to zero, with
its stock price from $90.75 at the height its operations to only $0.26 when it filed
for bankruptcy.

At the same time, Arthur Anderson, one of the world’s top five accounting firms,
conspired with Enron in perpetrating one of the biggest frauds in corporate
history. The key to the inevitable downfall of both Enron and Arthur Andersen
was GREED. Similar tragedies followed, i.e., the downfalls of other giant
companies such as Worldcomm in 2007, and Lehman Brothers in 2008.

Even in Malaysia, the Annual Auditor’s General Reports consistently published

their findings regarding dishonesty in spending/claims by civil servants, abuse
of authority/power by heads of departments, no sense of urgency or inefficiency
by public servants resulting in delays in many service deliveries and some other
similar cases.
 THE FALL OF MIGHTY
ORGANISATIONS IN 2001
 Jennifer Lopez, Head of
ACCA MALAYSIA –
LESSONS LEARNED “THERE’S A NEED FOR
FROM THE IMPLEMENTATION OF
VALUES-BASED
VALUES-CRISIS APPROACH”

“Full restoration of confidence in

the business sector could only be
achieved when people believe that
business is being conducted fairly
and transparently”
VALUES-BASED ORGANISATIONS (VBO) ARE
MOST SUCCESSFUL

• Our experience in mapping the values of

more than 2,000 private and public sector
institutions over the past 10 years in more
than 60 countries : values-driven
organisations are the most successful
organisations on the planet (Barrett, 2017)
 STRATEGIC MANAGEMENT SYSTEM
MISSION VISION CORE VALUES
S
T STRATEGIC GOALS / OBJECTIVES
As a
R
A
PLANNING
CRITICAL SUCCESS FACTORS consequence,
T
E
G
STRATEGIES each element
I
C
STRATEGIC ACTIONS
in STR. MGT
M SYSTEM
A Specific Internal Process
N
A
Objective (KRAs,
G
E PERFORMANCE KPI Strategies,
Human
Actions, and
M MEASUREMENT Balanced
Customer Scorecard Capital
E Current
N
T
Target
KPIs)
S
Y
Financial has to be
S
T
MONITORING
VALUES-
E
M STRATEGIC
EXECUTION CONTROL
BASED
ADJUSTMENT
 THE VALUES-BASED KEY RESULTS AREAS LEAD TO THE DEVELOPMENT OF
THE RIGHT-TO-MIGHT (R2M) FRAMEWOK
The R2M Framework consists
of:
q Eleven (11) CSFs / Strategic Obj. & strategy Resource Mgt. Productivity Focus
• RIGHTNESS • EFFECTIVENESS • EFFICIENCY
Areas • WISDOM • APPROPRIATENESS • COLLECTIVENESS
q Six (6) Core Values Assigned • HARMONY • OPTIMISATION • NON-EXPLOITATIVE
• UNIFYING • CONGRUENCE • ECONOMY OF SCALE
To Each Strategic Area • SUSTAINABLE • PRUDENCE • FRUGALITY
q Sixty Six (66) Core/Right • OPPORTUNITY SENSING • SYNERGISM • TIMELINESS

Values altogether

Performance
Leadership Culture Best Practices Employee Focus
Results
• TRUTHFULNESS • COMRADESHIP • EXEMPLARY • FAIRNESS
• TRUSTWORTHY • PARTICIPATING • ADVANCEMENT • CONSULTATION • PROFITABILITY
• SINCERITY • CARING • MUTUALLY BENEFICIAL • MUTUAL TRUST • EMPLOYEE
• SENSE OF DIRECTION • TRUST • UNIVERSAL • ACKNOWLEDGMENT ENGAGEMENT
• COMMITMENT • RESPECT • ACHIEVABLE • ALTRUISM • COMPETITIVENESS
• COMPETENCE • QUALITY • TRANSPARENCY • EMPOWERMENT • PROMINENCE
• STAKEHOLDER
SATISFACTION

Change Mgt. Innovation Stakeholder Focus

• MEANINGFULNESS
• GOOD INTENTION
• ADVANTAGEOUS
• OPENNESS
• RECEPTIVENESS
• APTNESS
• USEFULNESS • RESPECTFULNESS
• GENUINENESS • NON-DISCRIMINATORY
• ETHICAL • MUTUAL INTEREST
• VALUE-ADD • RESPONSIVENESS
• ENTERPRISING • INTERDEPENDENCE
• COMPETITIVE • SOCIAL RESPONSIBILITY
ADVANTAGE
 EXAMPLE OF VALUES-BASED
CUSTOMER SATISFACTION INDICATORS

Customer
Satisfaction with
For example, Values-based Product/ Service
Conventional Quality
Customer Satisfaction is
KPI
defined as the conventional
Customer Satisfaction plus
some other values-based
indicators. In the illustration Values-based
above, The Values-based ‘Respect’ for
Customer’s Rights Customer
Customer Satisfaction has to Value-based
include two other values- Satisfaction
KPI
based indicators, e.g,,
‘Respect for Customer’s
rights’, and ‘Responsive to
Customer’s complaints’. ‘Responsive’ to
Customers’’Complaints
Value-based
KPI
 EXAMPLE OF VALUES-BASED LEADERSHIP INDICATORS

FORBES Magazine, in its issue of Dec 12, 2012 has highlighted Top 10 Qualities that
make a GREAT leader. Six (6) of the 10 values are; Inspiring, Communicative,
Confident, Able to delegate, Positive attitude, Intitutive
These six ‘conventional’ values are ‘GOOD Values’ but they may not necessarily be
the RIGHT Values, why?. If we look at the downfalls of giant organisations like Enron,
their downfalls were not because of their leaders not having these good leadership
traits, but because they were NOT resilient enough to the internal threats (like
greed, abuse of power etc.), and also because they were not complemented or
glued by the right values such as Trustworthy, Truthful, etc.

With the right values leaders should be able not only resist to internal & external
threats, but also they should be able to attract and motivate people, sustain
performance excellence, and create most admired workplace.
 EXAMPLE OF VALUES-BASED LEADERSHIP INDICATORS

CONVENTIONAL complemented by VALUES-BASED

Inspiring Truthful
GOOD Trustworthy
Communicative RIGHT
VALUES Sincere/Honest
Confident
LEADERSHIP
VALUES
Able to Delegate Visionary
Positive Attitude Committed
Intuitive Competent
Source:
FORBES Not resilient to ..
Magazine • Internal threats (greed, These values-based qualities may be more
“Top 10 abuse of power etc. – able.…
Qualities e.g., ENRON and • To resist the internal & external threats
that Make a • External threats (debts, • To sustain performance excellence
Great competitors etc,) • To attract / motivate people
Leader” • To create most admired workplace
Dec 12,
2012
THE PROPOSED R2M FRAMEWORK WAS
THE RESULTS OF ALMOST 20 YEARS OF
RESEARCH WORKS 2017

2003
R2M
2001
VBTPEM
RIGHT-TO-MIGHT

VALUE-BASED

TPEM
TOTAL
TOTAL
PERFORMANCE
EXCELLENCE
PERFORMANCE MODEL
EXCELLENCE
MODEL
INNOVATION AWARDS FOR THE R2M-RELATED
FRAMEWORKS
A STUDY OR SELF-ASSESSMENT USING THE R2M FRAMEWORK:

COMPANIES:
Six (6) GLCS in MALAYSIA: P, G, M, S, T & N (due to confidentiality
issue, actual names were not allowed to be disclosed)

RESPONDENTS:
EMPLOYEES OF THE GLCS (N = 390)
 OUTPUTS OF THE SELF-ASSESSMENT
1. Values-based Performance Excellence index ( 0 – 100) derived
from mapping on the ratings by the respondents using
measurement scale (0-10) on ‘VISIBILITY’ of behavior or practices
related to the core values in the model.

Performance (80 – 100) (60 – 79) (40 – 59) (0 – 39)

Status Excellent Good Moderate Poor

2. Average score of each of the sixty six (66) core values in the R2M
 EXAMPLE: MEASURING THE CORE VALUES
Core Value Value-based Indicator Questionnaire Measurement Scale
(11-point Likert Scale)

Truthfulness The degree to which every
(of Leadership) action taken based on truth
(agreed principles) without fear
or favour
Trustworthiness The degree of reliability in
(of Leadership) accomplishing tasks as
planned / scheduled / budgeted
by the organisation.
Our leaders take risks for every
decision taken without fear or
favour in order to assure
business/organizational
success.
Our leaders will ensure that
whatever tasks assigned will be
accomplished as planned /
scheduled / budgeted by the
organisation.
0-2 – Not Visible
3-5 – Somewhat Visible
6-8 – Visible
9-10 – Most Visible
0-2 – Not Visible
3-5 – Somewhat Visible
6-8 – Visible
9-10 – Most Visible

Respect The degree to which members
(for People) respect individual differences
Openness The degree to which people in
(about change) the organisation are
comfortable sharing opinions
and receiving feedback from
each other
People’s ideas are respected no 0-2 – Not Visible
matter what position they hold 3-5 – Somewhat Visible
or at which level they sit. 6-8 – Visible
9-10 – Most Visible
Members are willing to listen to 0-2 – Not Visible
justifications and reasons 3-5 – Somewhat Visible
behind changes initiated by the 6-8 – Visible 23
management
9-10 – Most Visible
 THE RESULTS OF SELF-ASSESSMENT USING THE R2M FRAMEWORK
Organisational
Organisational Capability Results
Focus
The findings highlight THREE important piece of
OBJECTIVES & RESOURCE PRODUCTIVITY information …
STRATEGY MANAGEMENT FOCUS A. The performance of Each of 11 Strategic Areas
§ Rightness 54.4 § Efficiency
61.7 (CSFs);
Effectiveness 47.7
Wisdom 67.7
§ B. The Level of INTERNALISATION OF CORE/RIGHT
§ § Collectiveness
§ Harmony § Appropriateness § Non-exploitative
§ Optimization 44.0 VALUES IN EACH STR. AREA ACROSS THE 6 GLCs.
§ Unifying § Economy of
§ Efficiency C. WHICH core values considered as PROBLEMATIC
§ Sustainable Scale
§ Opportunity-
§ Prudence
§ Frugality that influenced the poor performance of each Str
§ Synergism Area / CSF
sensing § Timeliness 45.0 PERFORMANCE
RESULTS - None of the str. areas or CSFs achieve excellent
LEADERSHIP level (all below 70)
CULTURE 66.7 - FIVE Str. Areas or CSFs achieved low scores
60.1 BEST PRACTICES EMPLOYEE FOCUS Financial
50.9 62.2 50.7
§ Revenue/Cost
Saving
(between 50 and 60) and SIX (6) CSFs scored
between 60 and 70:
§ Comradeship § Exemplary 49.7 § Market Value
§ Truthfulness § Fairness 48.0 - 4 Areas or CSFs (Culture, Resource Mgt, Innovation
§ Trustworthiness § Consultation § Advancement Non-Financial
§ Sincerity § Caring 48.7 § Mutually § Consultation 42.7
§ Customer/Stakehol and Employee Focus) experienced low scores due
§ Trust § Mutual Trust to very poor levels of TWO core values.
§ Sense of Direction Beneficial der Satisfaction
Respect 44.7 § Acknowledgment
§ Commitment § § Universal
§ Altruism
§ Image/Reputation - For Employee Focus, lack of ‘Fairness’ and lack of
§ Competency § Quality § Achievable § Loyalty/Retention ‘Consultation among people’ contribute to low score
§ Empowerment
§ Transparency
of this CSF
- For Culture, lack of ‘Respect’ was most glaring
- For Innovation, lack of ‘Genuine ideas and
CHANGE INNOVATION STAKEHOLDER
creaticvity’ and Innovative products that are ‘Not
MANAGEMENT 53.5 FOCUS
51.4 62.1 Competitive Enough’ might be the reasons for the
§ Meaningfulness § Beneficial § Respectfulness low score
§ Good Intention § Genuineness § Non-discriminatory - For Resource Mgt, it’s quite obvious ‘Improper
§ Beneficial 46.7 § Ethical 43.0 § Mutual Interest
§ Responsiveness Planning and Deployment of Resources’ and
§ Openness § Value-add
§ Togetherness § Enterprising
§ Interdependence ‘Utilisation of resources that are NOT fully
§ Social optimized’ ‘could be behind the low figure.
§ Timeliness § Competitiveness Responsibility
47.0 - For Change Mgt, most of the employees perceived
that the change or transformation programme may
not be ‘Beneficial’ to them.
VALUES-BASED ORGANISATIONAL TRANSFORMATION
 Value-based Indicators
VALUES-BASED PERFORMANCE EXCELLENCE RESULTS & CATEGORY
(80 – 100) (60 – 79) (40 – 59) (0 – 39)
Excellent Good Moderate Poor

Dimension Value-based GLC

Indicator
P G M S T N OVERALL

LEADERSHIP Truthfulness 52.00 52.00 50.67 61.00 49.33 46.67 51.33

Trustworthiness 69.33 60.67 69.33 73.00 57.00 53.67 62.00

Sincerity 64.33 60.33 65.33 78.33 60.67 59.33 63.33

Commitment 68.33 64.00 70.67 77.00 65.33 63.00 67.00

Sense of Direction 56.33 52.00 51.33 67.33 56.67 48.00 54.67

Competency 65.00 54.67 69.33 73.67 62.00 50.00 60.33

Overall 62.89 57.22 63.43 71.99 59.07 53.71 60.12

 Value-based Indicators
PERFORMANCE EXCELLENCE RESULTS CATEGORY
Excellent Good Moderate Poor
(80 – 100) (60 – 79) (40 – 59) (0 – 39)

For ‘Culture’ and ‘Change Mgt’, we can Dimension Value-based GLC

notice that … Indicator
P G M S T N OVERALL
- None of the GLCs achieved excellent
performance, almost all at ‘moderate CULTURE Comradeship 51.33 39.67 39.00 54.00 47.00 42.67 46.00
levels’ across the core values
Consultation 49.67 47.33 44.33 63.33 47.67 42.33 48.67
- For ‘Culture’, GLC N performed the
worst, followed by GLC G. Even Caring 64.33 45.00 51.33 62.33 55.33 44.33 53.33
though GLC P performed better than
the rest, its performance was still at Teamwork 65.00 56.33 52.67 64.00 57.33 53.00 58.33
moderate level. Respect 47.00 39.00 48.67 55.67 44.67 41.00 44.67
- GLC G performed the worst compared
to other GLCs for both ‘Culture’ and Quality 64.33 48.00 50.00 55.67 52.67 45.33 52.67
‘Change Mgt’. This GLC performed
very poorly due to a lack of ‘Respect’ Overall 57.63 46.10 47.69 59.14 50.97 45.53 50.89
among people, ‘Good Intention’
regarding change or transformation
agenda was not well received by the CHANGE Meaningfulness 58.00 42.67 51.33 60.33 55.00 47.33 52.00
MANAGEMENT
people, they considered the change or Good Intention 49.67 37.33 52.67 55.00 60.67 45.00 49.33
transformation are not ‘Beneficial’ to
Beneficial 49.67 36.33 41.67 57.67 50.67 45.33 46.67
them, and ‘Timeliness’ of the change
was also disputed. Openness 57.00 48.67 61.00 64.00 62.33 51.00 56.33
- GLC P seemed to perform better than Receptiveness 56.00 42.33 50.00 57.00 56.67 48.33 51.67
the others with the scores for Culture
of ‘Caring’, ‘Teamwork’, and ‘Quality’ Timeliness 53.33 38.33 43.00 59.67 59.67 44.33 50.00
were ‘Good’, respectively. However,
other core values were only at Overall 54.65 42.78 50.00 58.91 57.67 46.80 51.41
‘moderate levels’.
 THE ROLES OF R2M FRAMEWORK –
MEASURE PERFORMANCE EXCELLENCE &
DIAGNOSE RESTRAINING FORCES INHIBITING EXCELLENCE

Using the proposed R2M framework we are not able to observe the
performance excellence of the strategic areas or CSFs but also which Str areas
that are performing POORLY due to PROBLEMATIC core values

The root causes of the problematic core values need to be investigated as

they may be just SYMPTOMS of a bigger problem in the organisation

Striking a balance between the pursuit of excellence and recognising the

presence of obstructing forces will help organisations to achieve sustainable
organisational excellence
 RECAP:
VALUE-BASED INDICATORS
PERFORMANCE EXCELLENCE RESULTS

Coming back to the findings, there must be some explanations behind the poor performance of those GLCs.

Actually there two possible explanations for this, either we look from the perspectives of
- Chaos Theory
- Organisational Entropy (adopted from Thermodynamics Theory)

Both theories were based on the basic premise that an Organisation is a SYSTEM.

Without explaining the details of these theories, my analysis seem to favour the second option, that is,
THERMODYNAMICS ENTROPY as it’s more relevant to the values-based approach.

In Chaos Theory (first suggested by Poincare, 1900 & Levin, 1960), organisations or businesses are considered
as complex, dynamic, non-linear, co-creative and far-from-equilibrium systems. Their performance cannot be
predicted by past and present events and actions. In a state of chaos, organisations behave in ways which are
simultaneously both unpredictable (chaotic) and patterned (orderly).
 VALUE-BASED INDICATORS
PERFORMANCE EXCELLENCE RESULTS CATEGORY
(60 – 79) MODERAT POOR
(80 – 100)
EXCELLENT GOOD (40 – 59)
E (0 – 39)

Dimension Value-based GLC

Indicator
P G M S T N OVERALL
CULTURE Comradeship 51.33 39.67 39.00 54.00 47.00 42.67 46.00
Consultation 49.67 47.33 44.33 63.33 47.67 42.33 48.67

Caring 64.33 45.00 51.33 62.33 55.33 44.33 53.33

Teamwork 65.00 56.33 52.67 64.00 57.33 53.00 58.33

There must be good Respect 47.00 39.00 48.67 55.67 44.67 41.00 44.67

explanations behind all Quality

Overall
64.33

57.63
48.00

46.10
50.00

47.69
55.67

59.14
52.67

50.97
45.33

45.53
52.67

50.89
these!!
CHANGE Meaningfulness 58.00 42.67 51.33 60.33 55.00 47.33 52.00
MANAGEMENT
Good Intention 49.67 37.33 52.67 55.00 60.67 45.00 49.33

Can be explained either Beneficial

Openness
49.67
57.00
36.33
48.67
41.67
61.00
57.67
64.00
50.67
62.33
45.33
51.00
46.67
56.33
by Receptiveness 56.00 42.33 50.00 57.00 56.67 48.33 51.67

• CHAOS THEORY? Timeliness 53.33 38.33 43.00 59.67 59.67 44.33 50.00

or Overall 54.65 42.78 50.00 58.91 57.67 46.80 51.41

• THERMODYNAMICS
ENTROPY?
 Entropy as a Measure of Change in a System from
Order to Disorder

The idea of ENTROPY comes from a principle of thermodynamics dealing with energy.
It refers to the idea that everything (incl. a system) in the universe eventually changes from order to
disorder, and ENTROPY is a measure of that change.
As a system becomes more disordered (high entropy), its energy becomes more evenly distributed
and less able to do useful work, leading to inefficiency.

In the organizational context this concept of entropy is known as ‘Organisational Entropy’ which are
typically related to problems such as inefficiency, bureaucracy, silo-mentality, apathy, lack of pride
etc.

Interestingly, all these kind of problems are values-related problems. Then any kind of values-related
problems are most likely due to the absence of right values in the organisation. This entropy-oriented
approach might be the best explanation for the poor performance of most of the six GLCs.
 Entropy as a Measure of Change in a System from
Order to Disorder

• ENTROPY - from thermodynamics theory

dealing with energy.
• Everything (incl. a system) in the universe
eventually changes from order to
disorder, and ENTROPY is a measure of
that change.
• As a system becomes more disordered
(high entropy), its energy becomes more
evenly distributed and less able to do
work, leading to inefficiency.
EXAMPLE OF ENTROPY: HOME

High Entropy Low Entropy

A disordered An ordered
system/environment system/environment
EXAMPLE OF ENTROPY: ENVIRONMENT

High Entropy Low Entropy

Dirty Clean
Beach Beach

A Disordered An ordered
System/environment system/environment
 To have a clearer understanding of organisational
entropy, it is “the amount of energy consumed by
unproductive/inefficient/ unnecessary work by
employees that cause inefficiency, bureaucracy,
ORGANISATIONAL silo-mentality, apathy, lack of pride etc. in an
organization.
ENTROPY The existence of opposing forces; the forces
supporting excellence (created by CSFs) and
restraining forces (caused by entropy) will affect
performance of organizations, depending which
forces are stronger than the other. If the restraining
forces (entropy) are left unchecked then the
performance will decline, up to a certain point that
the performance is either growing up, or continue to
be stagnant or face slow death/extinction.
 u The amount of energy consumed by
ORGANISATIONAL unproductive/inefficient/ unnecessary
ENTROPY work by employees in an organisation.

es If
Forc
ani
ng Organisational
tr
Re s Entropy is left
‘Unchecked’
as
lt s Ar e
R esu
Key
 FORCE FIELD ANALYSIS (BY KURT LEWIN)

The job of leadership is to contain the restraining effects caused

by entropy, while pursuing the driving forces that are supporting
excellence. In this case a quality tool called ‘Force-field’
analysis (introduced by Kurt Lewis) can be used to assess the
strength of the opposing sides .
In the FORCE-FIELD analysis, each restraining force will be
matched by a corresponding driving force in order to ensure an
equilibrium or winning situation for the excellence side.
 FORCE FIELD ANALYSIS (BY KURT LEWIN)

ORG. ENTROPY KEY RESULTS AREAS

Hindering Excellence Sustaining Excellence

Empowerment for employees to

Slow Down Decision Making

STRENGTHENING
DAMPENING
make informed decision
Bureaucratic, Hierarchy, Confusion,
Rigidity etc.

Cause Friction between

Comradeship and teamwork
employees
Blame, manipulation, rivalry,
intimidation etc.

Prevent employees from Innovative ways in accomplishing

working effectively tasks
Control, caution, Territorialism etc.
 EMPLOYEE ENGAGEMENT VS ORGANISATIONAL ENTROPY

A study by Barret Values The level of

Centre displays a employee

Employee Engagement
reverse or negative engagement
relationship between declines with the
org. entropy and
increasing level
Employee Engagement.
The higher the entropy of organisational
level, the lower the entropy
employee engagement
level.

Org. Entropy
DETECTING THE
PRESENCE OF - NON-VISIBILITY OR LACK OF
ORGANISATIONAL VISIBILITY OF THE
CORE/RIGHT VALUES
ENTROPY – Two
possible ways … Since org. entropy can become a stumbling
block to excellence agenda, then it’s natural
to make sure its presence is made known.
There are two ways of identifying the presence
of entropy; By assessing
1. ‘NON-VISIBILITY’ of the Right Values
2. VISIBILITY of undesired or bad values

In the case of TESCO, its CEO, Dave Lewis, was

able to notice undesired value, i.e., ‘lack of
morale’ among the employees
Measuring Organisational Entropy based
on ‘Non-Visibility’ of Right Values

1. Calculate the proportion of lack of visibility of each core

value
2. Calculate the average of the proportions of ‘Non-
visibility’ of all the right values associated with a particular
Strategic Area.
3. The Entropy of the Strategic Area = Average of ‘Non-
visibility’ of all the right values associated with the
Strategic Area
 Measuring Org. Entropy Level
Entropy-prone interval based on ‘Visibility’ of
the RIGHT Values

Highly Not
The non-visibility of right Visible Visible
Not Visible Highly Visible
values becomes the basis of
assessing the org. entropy. Scale 0-2 3-5 6-8 9-10
From the rating on a scale
of 0 to 10, the Entropy
score is transformed into a Transformation
score of 0 to 100. Using the
level of entropy and
corresponding categories Entropy Score : 0 - 100
we evaluate the occurrence
of potential org entropy wrt Entropy Trivial Noticeable Signific Serious Critical
each core value and CSF. Status ant

Entropy 0-9 10 - 19 20 - 29 30 - 39 ≥ 40
Score
HOW USEFUL
ORGANISATIONAL
ENTROPY TO
ORGANISATION?
an empirical parameter;
By identifying the presence of
entropy, this will help top - to indicate when a
management to formulate
improvement plan for rectifying ‘restructuring’ might be
weaknesses in internalisation of core
values as well as the associated CSF.
This can be done through
appropriate.
‘restructuring’ process that involve key
personnel at leadership level in the
organisation.
 Entropy Scores, Levels and Corrective Actions
Entropy Score Entropy Level Corrective Action
≥ 40 Critical Requiring Structural and Cultural
Transformation, Changes in Leadership,
requiring Leadership Coaching, Mentoring
and Development
31-39 Serious Requiring Structural and Cultural
Transformation, Changes in Leadership,
requiring Leadership Coaching, Mentoring
and Development
20 - 29 Significant Requiring Structural and Cultural
Transformation and Leadership Coaching
10 -19 Noticeable Requiring Cultural and/or Structural
Adjustment
< 10 Trivial Healthy Functioning
We take for illustration the KRA – Culture’ with 6 core values. Self
assessment showed that the top most ‘non-visible’ values (as perceived by
the employees of the 6 GLCs) were ‘Respect (15.5%)’ and ‘Comradeship
(14.9%)’. Respect here implies “People’s ideas are respected no matter what
position they hold or at which level they sit”. While ‘Comradeship’ means
‘The bond among friends is so strong that they are willing to sacrifice their time,
money, and materials for their friends’ well-being”.

In this study, it is ‘Noticeable’ that “Ideas or opinion given by the people are
not given due consideration by the top management”. The same goes with
‘Comradeship’ that it’s noticeable that “the bond between friends is not
strong enough that they are not willing to sacrifice their time, money
and/or efforts for their friends’ welfare’.
In this case ‘Cultural and/or Structural Adjustment’ can be adopted for
corrective actions on internalisations of both core values.
 Organisational Entropy/
Undesired Practice:
1. Ideas or opinion given
by the people are not
Culture given due consideration
by the top
15.5
16 14.9 management
2. The bond between
14 friends is not strong
11.6
12 enough that they are
9.3 not willing to sacrifice
10
their time, money
Entropy
8 6.2 and/or efforts for their
(% Not Visible)
5.4 friends’ welfare
6
Level: Noticeable
4 Corrective Action: Cultural
The bond among and/or Structural
friends is so strong 2
that they are willing to
Adjustment
sacrifice their time, 0
money, and materials People’s ideas are
ip
d

ty
n

k
h

ec
ri n

or
tio
oo

respected no matter
es

ali
for their friends’ well-

sp
w
Ca
rh

ta

Qu
am what position they

Re
ra
ul
he

being.
ns

om
Te
ot

hold or at which
Co

C
Br

level they sit.

Now we take another CSF – Change Mgt’ with 6 core values. Self
assessment showed that the top most ‘non-visible’ value (as perceived by
the employees of the 6 GLCs) was ‘Good Intention (13.7%)’ . ‘Good
Intention’ here implies “Top management has made it clear about the good
purpose of new agenda or policies introduced by the organization.”.
However, in this study, it is ‘Noticeable’ that “Little communication was
done about the changes made by the top management”. In this case
‘Cultural and/or Structural Adjustment’ can be adopted for corrective action
on internalisation of this core value.
 Change Management
13.7
14
11.9 Organisational
12 Entropy/
9.7 Undesired
10 8.8 Practice:
Little
8
Entropy
5.8 communication
(% Not Visible)
6 5.2 done about the
changes made by
4 the top
management
2
Level: Noticeable
0
The purposes of changes

al
n

ss

y
l

made in the organisation

fu

el
tiv
io

ici

ne
ng

m
nt

are communicated to

p
f

en
ne

Ti
ce
ni

te

Op
ea

Be

Re
In

employees at all levels.

M

od
Go
 IMPLEMENTATION OF
VALUES-BASED (R2M) Self- Transformation
TRANSFORMATION Assessment
1. MEASURE BASELINE
PERFORMANCE
2. DETECT THE
PRESENCE OF
ORGANISATIONAL
ENTROPY
3. RECTIFY VALUES- &
ENTROPY-RELATED
PROBLEMS
4. TRACK PROGRESS
OF PERFORMANCE
EXCELLENCE
AGENDA No Are the
Desired
Results
Met?

Enhance organisational Best Practices to maintain Organisational Excellence Yes 48

 HOW VALUES-BASED TRANSFORMATION
OPERATES IN ORDER TO SUSTAIN
ORGANISATIONAL EXCELLENCE
Transformed
Organisation

Performance
Excellence

Er a
dic
Values-based
e
anc

ate
Organisation
Enh

Right
Values Entropy
 WHY VALUES-BASED ORGANISATIONS …?
(Barrett, 2017) ‘Values-Driven Organisation’

• a living, breathing culture of shared core values among all employees

Highly Motivated & • employees find alignment between their personal values and the
Productive organization’s values
• a unified and motivated workforce and characterized by high
Employees productivity and employee commitment , low absenteeism, better
teamwork, low attrition rate

Shaped by Guiding • a culture shaped by a clear set of guiding principles for decision-making,
actions and a sense of community
Principles • purpose remain stable over time

• Management and leadership set examples for their organisations and

live the values they preach
Exemplary, Robust & • Strongly held value-systems rarely change yet remain flexible to handle
changes in strategy or outside influences
Agile • Organizations can gain a reputation as great (most admired) places to
work.
 A wise man adapts himself
to circumstances, as water
shapes itself to the vessel
that contains it.

CONCLUDING REMARKS …
- Chinese proverb

• The Pursuit of Organisational Excellence MUST be Values-centric

• Awareness on the Omnipresence of Organisational Entropy MUST be an
important agenda for organisations
• Core Values MUST become the central focus in addressing both the
performance excellence and organisational entropy
• The use R2M Business Excellence framework may help the organisations to
adopt a comprehensive approach to managing performance excellence and
organisational entropy
• The R2M framework provides a basis for an effective values-based
organisational transformation