After decades of being a ‘nice to have’, the idea of a deliberately created corporate culture is finally moving closer to the top of Board agendas. Around the world, an ever-lengthening series of corporate scandals and audit and governance bloopers have raised serious questions about the standing of business in wider society.
The Institute of Business Ethics in the UK recently surveyed 28 large companies in a wide range of sectors to find out what gets reported to the highest echelons of major organisations. They found that 82 per cent of respondent Boards monitored data related to culture.
This is a significant new challenge for business leaders and requires a systemic approach to measuring culture. The most useful information came from external feedback – customers, partners, suppliers and other stakeholders. And so it should, because (although we all want staff to be happy, recognised and rewarded) where culture really makes a commercial difference is outside the business.
Louise Kelly of Grant Thornton in Belfast writes about The Central Bank of Ireland conducting culture reviews at the five main Irish retail banks. These focused primarily on the performance of Executive leadership teams because they are the ones required to set the tone ‘from the top’ and impact the drivers of group behaviour. The studies produced insights into behavioural and structural patterns in leadership, decision-making, communications, group dynamics and mindset that affect the way consumer needs are considered. These banks are now required to deliver action plans to address the risks identified in the reviews. As bank regulation gets tighter, Executive teams will surely roll their eyes at yet another governance requirement. But the people who look after our wealth have real cultural challenges to address. Recently a senior Kenyan banker mentioned to me, in passing, that more than 20,000 internal fraud attempts are reported daily to the Central Bank (that’s the ones they have discovered).
Evaluating corporate culture is a challenging responsibility for all Boards, as custodians of ‘the way we do things around here’. While embedding a desired culture is the responsibility of the Executive, Company Boards have a vital role in ensuring there is alignment between the rhetoric and the reality. Do the promises made in advertising, for example, get delivered at all customer touchpoints?
Professor Edgar Schein, widely regarded as the author of modern understanding of organisational culture, had this to say: ‘The only thing of real importance leaders do is to create and manage culture. If you do not manage culture, it manages you. And you may not even be aware of the extent to which this is happening.’
Chris Harrison leads The Brand Inside in Africa