The Next Era of Manufacturing

For our new industry spotlight series, we are harvesting insights from applying the Denison Model to selected industries to uncover the secrets of how successful cultures deliver maximum operating performance.

Denison Consulting knows that a strong company culture drives financial success in every industry and sector. Based on our 25 years of experience working with over 8000 clients and 5 million employee participants around the world, we have a vast amount of data, analytics, and expertise that provide actionable insights into creating cultures that deliver lasting performance success.

Recognizing the strategic value of culture – which in our definition encompasses the impact of leadership and organizational effectiveness – is just the first step for CEOs and other senior executives. The critical next step is to link these directly to operational and financial performance; however, this is where most culture initiatives break down – they are launched with limited operational rigor and generally low expectations for improving performance. However, we have seen the direct linkage between culture and performance over and over again.

This plays out across all industries. As shown in the graphic below, the companies with weaker cultures shown in the Denison Model results on the left had declining EBITDA and Revenue, whereas the thriving cultures saw significant performance improvement in both.

Specifically in the Manufacturing industry, our research highlights a striking 38% profit gap between Manufacturing companies with strong cultures and those with weak ones.

In our first industry spotlight, The Next Era of Manufacturing, we will share our insights from applying the Denison Model, our proprietary data, and advanced analytics to the Manufacturing industry to uncover traits of top cultures that drive profitability and operational performance.

Denison’s Global Benchmarking database shows that every successful culture in the Manufacturing industry requires Strategic Clarity, Team Orientation, and Empowerment. Employees who are clear on the direction of the company and how they fit into the company’s success, who are part of an effective team, and who are empowered to own their working outcomes produce a much stronger culture, are more productive, and generate higher levels of performance.

Yet, there is a critical gap in these areas between top and bottom-quartile companies. Manufacturing companies in the Top 25% score an average of over 80 on the Denison Model in Strategic Clarity, Team Orientation, and Empowerment, while companies in the bottom 25% score an average of under 15 points – a gap of over 70 points on each.

The good news is that lower-scoring cultures can learn from the top-quartile performers to lay out a roadmap for success. While there is no magic wand for improving Strategic Clarity, Team Orientation, and Empowerment, Denison has seen significant progress in these areas with the following actions:

• Executive Leadership Setting and Communicating Clear Direction and Engaging Directly with Plant Workers, Fostering a Sense of Alignment, Importance, and Empowerment
• Hiring and Developing Plant and Product Line Leaders that Embrace the Linkage Between Performance and Collaboration, Empowerment, and Coordination Across Functions
• Establishing Organization and Management Systems (i.e., organization structures, KPIs, goals/objectives, and processes) that Drive Team Orientation with Clear Linkage to Performance Success

Throughout our series, The Next Era of Manufacturing, we explore and highlight key insights from experience and expertise that show how effective cultures drive performance success in Manufacturing companies. Our topics will include:

Labor Shortage: Leveraging Culture in Your Talent Strategy to Improve Operations
Did you know that once hired, nearly a third of new employees leave within their first year if the company lacks a strong culture? We address the critical gap in skilled labor and strategies to attract and retain talent.

Culture Decline: A Leading Indicator of Rising Costs of Quality
Manufacturing companies with weak cultures incur scrap and rework costs about three times higher than those with strong cultures. We discuss the primary cultural factors that drive the cost of quality in most Manufacturing companies.

Optimizing the Cost of Safety and Performance
We explore the financial and human impact of safety measures and how to optimize them. We’ve seen that facilities with weak cultures experience five times as many LTA cases and six times as many recordable cases compared to facilities with strong cultures.

Culture, Digital Transformation, and the Future of the Manufacturing Process
We found that failing to integrate digital transformation strategies with human capabilities creates risks like increased operational errors, resistance to change, and underutilization of new technologies, representing sunk costs in your transformation investment. We outline ways to engage employees in your digital transformation efforts to create the intended performance success.

Leadership That is Both Performance and Culture Competent
Performance is non-negotiable, and leaders who are culture-competent plus operationally proficient are differentiators for their company’s success. Our analysis shows that one of the most potent competency combinations of leaders is Visionary Thinker + Open Communicator. These leaders have much more productive teams with stronger cultures.

Strategic Risks from Historical Blind Spots
Our analysis shows that ensuring people make the connection between the strategy and their performance goals and objectives is often assumed to have occurred. This adds risk to the strategy’s success. We outline ways to minimize this blind spot and risk.

The Next Era of Manufacturing is about harnessing the operational benefits of culture.

In this era, leaders in the Manufacturing industry will cultivate success by connecting cultural, organizational, and leadership insights to operational performance trends. Our goal with this research is to provide you with the tools and insights needed to transform your company. Together, we can navigate the complexities of the Manufacturing industry and create success.

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More about Denison Consulting.

By integrating culture with operating performance, we enable leaders and organizations to deliver lasting performance success. At Denison Consulting, we go well beyond the engagement and satisfaction of your workforce. We believe successful cultures should be measured by successful performance. That’s why we created the Denison Model.

8,000 clients globally. 5 million survey participants. 25 years of experience and expertise. Advanced analytics and AI. Actionable insights that deliver improved performance.
That’s Denison Consulting.

Contact us, and let’s discuss your performance journey.