The Defense Logistics Agency Leveraging Corporate Culture To Improve Bottom-Line Performance

1. The Defense Logistics Agency Leveraging Corporate Culture To Improve Bottom-Line Performance DoD’s ONLY Logistics Combat Support Agency . . . Supporting the Military Services & Combatant Commanders for Over 40 Years

2. The DLA Enterprise FY02 Sales/Services: $21.5B FY03 Sales/Services: $24B (est) Scope of Business • #78 Fortune 500 - Above Lockheed Martin • Tops in Top 50 Distribution Warehouses • 1312 Weapon Systems Supported • 132.3M Annual Net Barrels Fuel Sold • $13.5B Annual Reutilizations/Disposals • 23.3M Annual Receipts & Issues • 22 Distribution Depots • 4,000 Contracts/Day • 30,000 Requisitions/Day • Supply: $18.7B Annually • Land/Maritime/Missiles: $2.3B • Aviation: $2.7B • Troop Support: $7.8B • Energy: $5.9B • Distribution: $1.4B • Other: $1.4B Foreign Military Sales • Sales: $719M annually • Shipments: 670M annually • Supporting 24 Nations People • 21,000 Civilians • 488 Active Duty Military • 618 Reserve Military • Located in 48 States/28 Countries

3. CORPORATE STAFF Business Units DSC Richmond, VA - Aviation Defense Distribution Center, New Cumberland, PA DSC Columbus, OH - Maritime/ Land/ Missiles Energy Support Center Ft Belvoir, VA DSC Philadelphia, PA - Troop Support Other Service Areas Defense Automation & Production Service Defense National StockpileCenter Defense Logistics Information Service Defense Reutilization & Marketing Service DLA Europe DLA Pacific Defense Logistics Agency

4. What We Want DLA To Be Tomorrow… FY 04-09 Characteristics: Light and Agile Smaller Footprint Knowledge Based Integrated Processes Service Oriented Collaboration with Customers Proactive Transformation Plan: Business Systems Modernization Strategic Distribution Competitive Sourcing Shift to Commercial Practices

5. Business Systems Modernization • Incorporating Commercial and Best Practices Via Commercial off-the-Shelf (COTS) Based Tools • Replacing 30-year old Legacy Information System with State of the Art Technologies • Major Reengineering Effort … From Functionally Stove-Piped Segments to Cross-Cutting Enterprise-Wide Processes Projected FY 04-09 Savings = $399M

6. Why Worry about Culture?

7. Culture As A Barrier Culture can be a major barrier to the implementation of an organization’s strategic objectives

8. Ignoring the underlying cultural foundations means that the same old patterns will continue to show up

9. PMA, OMB & OPM Integrate Culture into Performance Goals • President’s Management Agenda -- Strategic Management • of Human Capital initiative integrates aspects of culture. • Office of Management and Budget (OMB) Scorecard -- • Government needs toSustain High-Performing Workforce • that is Continually Improving Productivity. • Office of Personnel Management (OPM) Scorecard -- • Performance Goals: • Agency Fosters a Climate that Values Diversity. • A Culture of Learning and Growth Exists. • Strategic Awareness.

10. What is Culture ?

11. Culture: A Definition The shared set of assumptions, beliefs, values, and behavioral patterns of a group that guide that group’s perceptions, judgments, and actions

12. is like the operating system of the organization. It guides what people think and how they act and feel Culture

13. Kumbaya Culture is not just an espoused list of values developed by a group of executives at an offsite The IDEAL you desire may be very different from the REALITY you live

14. LEVELS OF CULTUREFROM TANGIBLE TO DEEPLY EMBEDDED AND UNCONSCIOUS • Artifacts—concrete, visible expressions and overt behavior patterns • Norms--behavioral expectations • Conscious, values , beliefs , assumptions and ideology • Unconscious values , beliefs, assumptions and ideology

15. How DLA is Addressing Culture • First, we ensured Strategic Alignment: • Strategic Plan Goal 3: Create and Manage a Customer-Focused Corporate Culture • Balanced Scorecard: Learning and Growth Quadrant LG-2: Create and Manage a Customer-Focused Culture LG-2A: Leadership Assessment: Modeling the Desired Culture LG-2B: Employee Perceptions of the DLA Culture • Second, we identified the desired aspect of corporate culture • necessary to accomplish strategic goal (customer-focused). • Finally, we assessed the current culture based on the desired • culture and have “Culture Champions” conducting • organization development activities to close gaps.

16. DLA adopted a performance-based culture model/assessment/360-degree leader feedback tool containing the desired aspects of culture necessary to accomplish its strategic goal of Creating and Managing a Customer-Focused Corporate Culture

17. Denison Culture Model

18. Objectively Measuring Culture

19. Employees assess the existing culture • Strategic Direction and Intent - Clear strategic intentions convey the organization's purpose, make it clear how everyone can contribute and "make their mark" in the industry. • This organization has a clear mission that gives meaning and direction to our work. • This organization has a long-term purpose and direction. • The strategic direction of this organization is unclear to me. • This organization has a clear strategy for the future. • Our organization's strategy is leading other firms to change the ways that they compete.

20. "Culture Champions" and Leaders Close the Gaps • Appointed Agency-/Activity-level “Culture Champions” helped publicize the desired aspects of culture and are helping their leaders to implement suggested action steps for tangible performance. • Transformation activities include organizational development and training needs necessary for culture change.

21. Cultures are Not Homogeneous Functional or Departmental Hierarchic Site Geographic/Regional Old/New Divisional

22. Culture and Leadership

23. “Culture and leadership are two sides of the same coin and neither can be understood by itself.”Edgar Schein Culture and Leadership

24. Employees work together in teams Employees are given a great deal of autonomy Risk taking and creativity are encouraged There is an atmosphere of trust Change is embraced Employee empowerment is high Organization is customer-focused Social relationships are encouraged Procedures are flexible and informal NOT! What Employees See What Senior Management Believes

25. Denison Leadership Model AdaptabilityPatterns…Trends… Market Place Translating the demands of the business environment into action “Are we listening to the marketplace?” MissionDirection..Purpose..Blueprint Defining a meaningful long-term direction for the organization “Do we know where we are going?” InvolvementCommitment..Ownership..Responsibility Building human capability, ownership, and responsibility “Are our people aligned and engaged?“ ConsistencySystems…Structures…Processes…Defining the values and systems that are the basis of a strong culture “Does our system create leverage?” Every Leader Needs to Have Skills in These Four Areas! These Four Concepts are Used to Define Leadership Skills

26. When it comes to establishing or changing a culture the leader sets the tone