Making the case for organisational culture
What makes an organisation a great place to work? Culture is one of the hardest attributes of an organisation to articulate and measure, but also one of the most important and valuable. Positive and aligned organisational cultures can
- motivate staff to perform and engage with their work
- align behaviours to common values and purpose
- share knowledge and insights
- be more productive and responsive
- build trust.
On the reverse side, when toxic, culture can cause significant issues for the business and its staff, leading to
- low performance and morale
- high levels of staff turnover
- significant harm to the organisation and to the well-being of employees.
In times of challenge and opportunity, a healthy organisational culture can make or break the success of a business and of the people working for it. It follows then that leaders should be leading the way on the people aspects of corporate culture. Yet in the many organisations I am acquainted with, I hear staff saying that the senior team or, indeed the board of trustees, are not modeling the behaviours that should underpin the organisation’s values. So why this dissonance?
The Financial Reporting Council (FRC) has come up with a UK Corporate Governance Code aimed at positioning the board as a central element for establishing the culture of the organisation and maintaining the ethics and values thus setting the ‘tone from the top’.
The FRC also identified that in order to be effective any board required dialogue that is both constructive and challenging. The problems arising from “groupthink” have been exposed in particular as a result of the financial crisis. One of the ways in which constructive debate can be encouraged is through having sufficient diversity on the board. This includes, but is not limited to, gender and race. Diverse board composition in these respects is not on its own a guarantee. Diversity is as much about differences of approach and experience, and it is very important in ensuring effective engagement with key stakeholders and in order to deliver the business strategy.
A joint culture project between the Chartered Institute of Personnel and Development (CIPD) has been leading on the people issues theme of work, exploring exactly how boards should consider the culture of their organisations, and crucially the steps which they can take to understand and develop positive working environments. Through their research they have gathered insights into four key themes which are set out in the action points below.
So what are the key action points for your board?
As well as ensuring that the composition of the board is diverse, it should :-
- Champion change from the top: Lead cultural change from the top, and evidence its impact on the business. Ensure that the board is diverse and representative of the organisation and community in which the business operates, while ensuring that all appointments are based on merit.
- Address the reward question: Align measures of performance, reward and culture to address issues of pay and ensure that reward decisions take cultural alignment into account.
- Empower the board’s committees: Empower the remuneration committee to challenge, and act with integrity and independence. Ensure that the board responds to the remuneration committee transparently and with full commitment. Maintain a focus on corporate culture to challenge the board to remain accountable for cultural issues, and highlight potential issues before they arise. Establish a culture committee to oversee cultural risks and opportunities, and hold the board to account on issues regarding culture.
- Protect whistleblowers and those speaking up: Create employee voice and whistleblowing processes that protect employees who speak out about cultural and behavioural issues, and ensure that the board takes effective action to rectify concerns.