Everyone, it seems, talks about the importance of corporate culture, specifically a single company's culture and its value in setting the firm apart from its competition. But really, what is corporate culture? Culture has been defined as a set of mindsets, accepted assumptions, norms of behavior, beliefs and values that influence levels of engagement and trust in discussions and decisions.
Importance of Corporate CultureWhile creating, maintaining and 'enforcing' a firm's culture is a shared responsibility between the C- Suite Executive Team and the Board of Directors, Boards should play a particularly active role in this process. This Board, by design, is removed from the day-to-day operations with its attendant crises and requirements for immediate decisions. It would not be surprising to find that senior management doesn't spend a great deal of time pondering its firm's culture. On the other hand, the Board can, and should, take advantage of their longer-term perspective and their removal from the day-to-day operations, which often don't allow management the time to focus on cultural development. Boards, 'above the fray,' must play an active role in defining the culture. The Board also has an excellent opportunity to lead by example by living up to the cultural standards the company has defined and desires to integrate into its working world. It seems a natural function of Boards, in increasingly complex global business environments, to focus attention on external opportunities and threats ' strategic initiatives, financial results and risk management. And there is certainly pressure to treat these issues as the real work of the Board. Indeed, most would define these outward-looking functions as a Board's key responsibilities. And yet an inward focus is where culture will be found, examined, developed, implemented and monitored. The internal operations of the company are where employees of the firm live and work together, guided by the values they share. Many would argue that here is where the real success of the company will be established. How then should a Board play an active role in the company's culture and, at the same time, allow the CEO and the management team to run the operation? The first responsibility of the Board in this regard is to learn about the very nature and function of corporate culture and its benefits and then develop its own process for interacting with management on cultural issues ' one that strikes the right balance between oversight and calling the shots.
Steps For the Board to TakeWith these general observations in mind, what specific steps can Boards take to improve an organization's culture?
- Recognize the Value of Corporate Culture
- Demonstrate Leadership
- Bring the Voice of Culture to the Boardroom
- Incentivize Cultural Success