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Anyone who has studied physics knows that the amount of energy you get out of a mechanical system is
equal to the amount of energy you put into it, minus the amount of energy that is needed to keep the
system functioning. When parts become worn, fall out of alignment and friction increases, the system
falls below its optimum performance and more energy is needed to keep the system functioning. This
additional energy requirement is called entropy. It is a measure of the degree of disorder in the system.
Thus, we can determine the amount of energy available for doing useful work in a mechanical system
from the following equation:
Eo= Ei ‐ En‐ E
Eo is the energy available for doing useful work, Ei is the input energy, En is the normal amount of energy
needed to keep the system functioning when it is operating at high performance, and E is the amount of
entropy in the system.
When entropy is low the energy available for doing useful work is at its maximum and the system
operates at its highest performance. When entropy is high, the energy available for doing useful work is
low, resulting in low performance. Consistently high
performance requires frequent measurement and regular
maintenance. Measurement is required to understand which
Cultural entropy is the amount
parts of the system are creating entropy, and maintenance is
of energy in an organisation
required to reduce the entropy.
that is consumed in
It turns out that this is also true for human systems such as unproductive work.
organisations. The amount of energy you get out of an It is a measure of the conflict,
organisation is equal to the amount of energy you put in, friction, and frustration that
minus the amount of energy needed to keep the organisation exists within an organisation.
functioning. When the degree of disorder in the system is
high, due to factors such as bureaucracy, internal
competition, and blame, the amount of energy that is
available for useful work decreases. We call this “cultural” entropy, because the disorder in the system is
due to behavioural factors that are endemic to the culture of the organization.
Thus, the amount of useful work that employees can produce is equal to the amount of energy that they
bring to their work, minus the amount of energy needed for normal functioning, and the amount of
cultural entropy. In other words, the amount of useful work employees are able to produce is inversely
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proportional to the degree of dysfunction in the system. When the internal dysfunction is high, the
energy available for useful work is low, and you get a low performing organisation. When the internal
dysfunction is low, energy available for useful work is high, and you get a high performing organisation.
In other words, the degree of dysfunction in an organisation is directly related to the level of cultural
entropy.
Thus, we can determine the amount of energy available to an organisation by the following equation:
Eo = Ei ‐ En‐ CE
Eo is the energy available for doing useful work, Ei is the energy employees bring to work, En is the
normal amount of employee energy needed to keep the system functioning when it is operating at high
performance, and CE is the amount of cultural entropy.
To complete this equation we need to add an additional factor
that represents the amount of discretionary energy released by A high‐performance
employees when they are highly motivated by their work. Thus, organisation taps into the
the total amount of energy available for useful work in an discretionary energy of its
organisation is given by the following equation: employees and focuses that
energy in a laser‐like way on its
Eo= Ei ‐ En‐ CE + Ed
vision. Cultural entropy zaps
Ed is the discretionary energy released when employees feel this energy.
highly motivated.
Now let’s take a closer look at each of the factors that make up
this equation to determine what constitutes a high performance organisation.
Energy‐in (Ei)
The energy that employees bring to their work is made up of two parts: The normal energy required for
the employee to effectively do their job and the discretionary energy they have on tap that depends on
their level of motivation. When people are not motivated they expend the minimum amount energy
they can in doing their work. They take long breaks, they surf the internet and do whatever they can to
stop from being bored. When people are motivated, they spend extra hours at work and think about
their contribution even when they are not in the workplace. The output from a motivated person can be
twice as much as output from someone who is not motivated.
People are motivated differently. There are seven unique groups of factors that unleash discretionary
energy in employees: benefits and financial rewards; friendship, collegiality and recognition;
opportunities for achievement or advancement; intellectual and operational challenges; finding
meaning by contributing to implementing an inspiring vision; making a difference; and service to others.
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Amongst all these motivators the most important is “contributing to implementing an inspiring vision”.
This is important for two reasons: First, because an inspiring vision focuses employees’ energy in a
particular direction or on a particular outcome, thereby increasing the chances of success; and, secondly
the pursuit of a vision gives employees an opportunity to make
a difference and be of service in a way that brings meaning to
their lives. A motivated person is committed, enthusiastic and
passionate, and taps into his or her own deep levels of Vision‐guided, values‐driven
creativity. organisations are the most
successful organisations on the
However, it turns out that having an inspiring vision that planet. As you lower the
motivates employees is not enough. To fully unleash an cultural entropy, staff
employee’s discretionary energy also requires values‐ engagement increases along
alignment. The lived values of the organisation must resonate with every other positive
with the personal values of the employees. It is fundamentally measure of performance.
important that employees feel at home in the organisation
before they are able to bring their whole selves to work.
In “Built to Last1”, Collins and Porras reported on their research
into what makes a truly exceptional company. They found that long‐lasting, resilient companies had a
clearly articulated vision/purpose and a set of core values that guided them in their decision‐making.
Cultural Entropy (CE)
Cultural entropy is comprised of three elements: factors that slow the organisation down and prevent
rapid decision‐making; factors that cause friction between employees; and factors that prevent
employees from working effectively. Factors that slow the organisation down include: bureaucracy,
hierarchy, confusion, fire‐fighting, and rigidity. Factors that cause friction include: internal competition,
blame, manipulation, rivalry, and intimidation. Factors that prevent employees from working effectively
include: control, caution, micro‐management, short‐term focus, job‐insecurity, risk‐aversion, and
territorialism.
The Cultural Values Assessment (CVA) of the Barrett Values Centre enables organisations to measure the
level of cultural entropy and the degree of values alignment in an organisational culture. To measure
culture, employees are asked to go on line and pick ten values/behaviours that represent who they are
(personal values), ten values that represent how their organisation operates (current culture), and ten
values that represent for them a high performance organisation (desired culture). Both lists of values –
the personal and cultural – are customized for the organisation. The values/behaviours for the current
and desired culture include words such as bureaucracy, hierarchy, internal competition, blame, control
and caution. These are called potentially limiting values and are the values that create cultural entropy
in an organisation.
1
James C. Collins and Jerry I. Porras, Built to Last: Successful habits of visionary companies, HarperBusiness, New
York, 1994.
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The measure of cultural entropy in an organisation is calculated by finding the proportion of votes for
limiting values that employees pick in answer to the question about how their organisation currently
operates. The level of cultural entropy usually falls in the range 5% to 55%. We have found from our
experience of measuring the cultures of more than 2,000 organisations that, when cultural entropy
reaches the upper end of this range bankruptcy, implosion or aggressive takeovers that strip the assets
of an organisation can frequently occur. A description of the impact and issues associated with different
levels of cultural entropy is shown in Table 1.
Table 1: The Impact of Cultural Entropy on an Organization
Cultural Impact and Needs
Entropy
<10% Prime: Healthy functioning.
11‐19% Minor Issues: Requiring cultural and structural adjustments.1
Significant Issues: Requiring cultural and structural transformation2 and leadership
20‐29%
coaching.
Serious Issues: Requiring cultural and structural transformation, leadership
30‐39%
mentoring/coaching, and leadership development.
Critical Issues: Requiring cultural and structural transformation, selective changes in
40‐49%
leadership, leadership mentoring/coaching, and leadership development.
Cultural Crisis: Requiring cultural and structural transformation, a change in leadership,
>50% leadership mentoring/coaching, and leadership development. For private sector
corporations a high risk of bankruptcy, takeover or implosion.
Note1: Cultural and structural adjustment refers to a selective focus on reducing pockets of high entropy
in divisions or departments, or specific entropic values that are found throughout the organisation.
Note 2: Cultural and structural transformation refers to an organisation‐wide programme of whole
system change.i
Where does cultural entropy come from? Why would one organisational culture be more entropic than
another? The answer to these questions is relatively obvious. The culture of an organisation is a
reflection of the values and behaviours of the leaders, and therefore cultural entropy is strongly
correlated with the personal entropy of the leaders. Personal entropy is the driver of all the potentially
limiting values that are found in organisations.
Personal entropy can be regarded as a measure of the “degree of disorder” in an individual due to the
presence of limiting values/behaviours. We measure personal entropy through a 3600 feedback
instrument known as a Leadership Values Assessment (LVA).
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Fifteen‐to‐twenty employees go on‐line and pick ten values that most represent the operating style of
the leader they are assessing. The level of personal entropy is calculated by finding the proportion of
the assessors’ votes they ascribe to the leader. Table 2 (a) and (b) compares the level of personal
entropy and top ten values of two leaders (LVA) with the level of cultural entropy and the top ten values
of their organisations (CVA). One leader runs a low performing organisation with high cultural entropy
(Table 2(a)), and the other runs a high performing organisation with low entropy (Table 2(b)). The
symbol “(L)” indicates a potentially limiting value.
Table 2(a): High Entropy Leader, Low Performing Organisation
PERSONAL ENTROPY = 64% CULTURAL ENTROPY = 38%
Leadership Values Assessment (LVA) 14 Assessors Cultural Values Assessment (CVA) 30 Employees
Value Votes Value Votes
Power (L) 11 Short‐term focus (L) 13
Blame (L) 10 Blame (L) 11
Demanding (L) 10 Manipulation (L) 10
Manipulative (L) 10 Caution (L) 7
Experience 9 Cynicism (L) 7
Controlling (L) 8 Bureaucracy (L) 6
Arrogant (L) 7 Control (L) 6
Authoritarian (L) 6 Cost reduction 5
Exploitive (L) 6 Empire building (L) 5
Ruthless (L) 6 Image (L) 5
Table 2(b): Low Entropy Leader, High Performing Organisation
PERSONAL ENTROPY = 9% CULTURAL ENTROPY = 7%
Leadership Values Assessment (LVA) 27 Assessors Cultural Values Assessment (CVA) 27 Employees
Value Votes Value Votes
Continuous learning 11 Customer satisfaction 16
Generosity 11 Commitment 11
Commitment 10 Continuous learning 11
Positive attitude 10 Making a difference 11
Vision 10 Global perspective 9
Ambitious 9 Mentoring 8
Making a difference 8 Enthusiasm 8
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Results focus 7 Integrity 7
Honesty 7 Open communication 7
Integrity 7 Optimism 7
A description of the impact and issues associated with different levels of personal entropy is shown in
Table 3.
Table 3: The Impact of Personal Entropy on a Leader’s Performance
Personal Impact and Requirements
Entropy
<6% Prime: Authentic individual.
Decision‐making not driven by fears.
7‐10% Minor Issues: Requiring leaders to examine how their behaviours and actions are
affecting people around them, their decision‐making processes or their degree of
life/work balance.
11‐15% Moderate Issues: Requiring leaders to examine how their behaviours may be
compromising their relationships with some of their peers and subordinates, and
negatively impacting goals they want to achieve.
16‐20% Serious Issues: Requiring leaders to examine how their behaviours are impacting the
smooth functioning of the group they lead, and its overall performance. Need to focus on
emotional intelligence skills
>20% Critical Issues: Requiring leaders to examine how their behaviours might be
compromising their personal integrity, and their ability to inspire and lead the people
around them to attain high performance. Need to focus on emotional intelligence skills.
Our research shows that the values that contribute to entropy are very similar in most organizations and
in most leaders. The main difference is the degree to which these values are present. The following table
shows the most prevalent potentially limiting values in organizations (measured from CVAs) and in
Leaders (measured from LVAs) at the first three levels of the Seven Levels of Consciousness model.
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Table 4: Most Frequently Occurring Limiting Values in a CVA and an LVA
Level of
Level 1 Level 2 Level 3
Consciousness
Control Blame Bureaucracy
Cultural Caution Internal competition Long hours
Entropy Short‐term focus Empire building Silo‐mentality
Hierarchy
Controlling Being liked Long hours
Personal
Authoritarian Demanding Power
Entropy
Caution Internally competitive Bureaucratic
Entropy and Performance
The results of a study of 163 organisations in Australia carried out by Hewitt Associates and Barrett
Values Centre as part of the 2008 Best Employer Survey in Australia and New Zealand (BEANZ) showed a
strong correlation between the level of entropy in an organisation and the level of staff engagement.
(See Figure 1).
In the same study, we found that in organisations with employee engagement in excess of 65% and
entropy below 10%, revenue growth exceeded 35% over a three‐year period. Organisations with
engagement scores in the range 40%‐65% and entropy greater than 22% had a three‐year revenue
growth of only 7%.
When we dug deeper into the actual values that differentiated the high performing companies
from the poor performing companies we found that the biggest differences were in the employee
experience.
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Figure 1: Engagement/Entropy Correlation among 163 organisations in Australia
In Table 5, we compare the value jumps for the companies with the lowest entropy, with the value
jumps for the companies with the highest entropy. A value jump is the difference in the number of votes
a value gets in response to the question employees are asked about how their organisation currently
operates (current culture), and the values they believe are necessary to create a high performance
culture (desired culture) in a CVA.
In other words, an increase in votes for a particular value indicates that people want the organisation to
place more emphasis on this value. For example, in the low entropy organisations, the votes for
“employee fulfilment” were 51% greater in the desired culture than the current culture, whereas in high
entropy organisations the votes for this value in the desired culture of were 622% greater than in the
current culture.
Table 5: Value Jumps in Low and High Entropy Organisations
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In the low entropy organisations, the votes for “employee recognition” were 1% less in the desired
culture than in the current culture – indicating that this is a value the company had mastered. In the
high entropy organisations, the votes for this value were 298% more in the desired culture than in the
current culture.
These five values, all of which are related to the employee experience in the organisation, were the
most significant differentiating factors between high and low performance.
Energy‐out (Eo)
Let us now return to the equation that determines the amount of energy available to an organisation
and summarize what we have learned.
Eo is the energy available for doing useful work, Ei is the energy employees bring to work, En
is the normal amount of employee energy needed to keep the system functioning when it is
operating at high performance, CE is the amount of cultural entropy, and Ed is the
discretionary energy released when employees feel highly motivated.
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From the above we can see that high performing organizations take care of the health and well
being of their employees, focus on reducing cultural entropy by working on the personal and
professional development of their leaders, and seek to motivate their employees through values
alignment and an inspiring vision.
Conclusion
The amount of employees’ energy available to organisations is significantly influenced by two cultural
factors. Firstly, the level of values alignment and vision alignment increases the discretionary energy
that employees bring to their work, resulting in high levels of engagement and commitment, and
secondly, leadership development, both professional and personal, can significantly reduce the level of
cultural entropy in an organisation.
All these factors – cultural entropy, values alignment and mission alignment – are lead indicators of
operational and financial performance and can be easily measured using the Barrett Values Centre’s
Cultural Transformation Tools. In order to maintain your culture it is recommended that you map the
values of your organisation at least once a year, and that the leaders measure their level of personal
entropy at least once every two years.
Finally, it is important to recognize that unless leaders are committed to their own personal
development then the culture will not change. Culture only changes to the degree that the
leaders are willing to work on their own values and behaviours.
Anecdotes from working with Cultural Entropy in Nations
In August 2008 the Barrett Values Centre mapped the personal values of the people of Iceland, their
perception of the current culture of the nation, and their aspirations for the nation. We found the
cultural entropy in Iceland to be highly elevated at 54%. In my interview for the television evening news
on September 6th, 2008, I stated that the findings of our research showed that there were significant
leadership issues in the country, and that if the country were an organisation it would be going bankrupt
very soon. Two weeks later this is what happened.
In August 2007 we measured the values of Latvia. The cultural entropy was 54%. In October of that year
there were street riots and the Government was dissolved.
In February 2001 we measured the values of Argentina using a very small sample of business men. The
level of cultural entropy was 60%. In October of that year Argentina declared itself bankrupt.
i
Richard Barrett, Building a Values‐driven Organisation: A Whole System Approach to Cultural Transformation,
Butterworth‐Heinemann, Boston, 2006.
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