3 ways boards can play a proactive role in company culture

A proactive approach to culture from HR in partnership with leaders will give Boards confidence that culture is actively managed

A proactive approach to culture from HR in partnership with leaders will give Boards confidence that culture is actively managed, and that the intended business outcomes can be achieved, writes Jerome Parisse-Brassens

Boards are increasingly asked to monitor and report on the culture of their organisations. All over the world, we are seeing regulators putting pressure on businesses to ensure organisational culture is being managed. So, what can boards do?

The role of the Board is to make sure that:

  • Culture is actively managed by the CEO and the leaders
  • Cultural risks have been identified and acted upon
  • Culture is monitored and measured on a regular basis.

1. Culture is actively managed by the CEO and the leaders
The board must see that the right target culture has been identified. By right, I mean a culture that is aligned with the strategy so that it can support the achievement of the business outcomes. A mistake that is commonly made by organisations is to design their culture based on what they perceive are the gaps, as opposed to clearly identifying the behaviours and mindsets required for successfully delivering on the business’ objectives. A description of the target culture needs to include behaviours that are observable in an objective way. A simplistic list of values is not sufficient.

“A mistake that is commonly made by organisations is to design their culture based on what they perceive are the gaps”

The board will also need to ensure that the business has an accurate picture of its current culture. A generic quantitative measurement tool won’t provide this. To form a true picture, the evaluation must include qualitative analysis, which captures the patterns of behaviour people believe is expected of them, including examples of the behaviours, symbols and systems of what they believe leadership really values (which may be different from what leaders say they value).

Finally, the board will need to check that there is a strong culture plan in place. The plan will realign behaviours, symbols and systems, and include culture goals, priorities, annual targets and initiatives.

What this means for HR teams is that the board will be asking for evidence that the steps for managing culture are in place. Be ready to describe the current and target cultures in detail, and facilitate the development of a detailed plan for the year, which can be endorsed by the board.

2. Cultural risks have been identified and acted upon
Cultural risks have two sources: systemic pressure points, and strengths overused.

Systemic pressure points
Failures of behaviour that lead to reputational disasters usually occur when people are under strong performance pressure and/or are concerned about their own income/job security. At these moments, each organisation reveals its weak pressure points. It is the responsibility of management and the board to know where these are and to manage them with rigour. The HR teams play a critical role in this regard and should ensure the risks have been identified and mitigated. A culture audit will be the best tool to conduct this analysis.

Strengths overused
A cultural strength, underpinned by strong values, can cause major problems if not balanced by other values. For example, a culture that only encourages strong drive and individual performance can lead to the problems recently faced by many of the banks. Culture and HR teams will need to monitor the relative strengths of cultural attributes.

“A culture that only encourages strong drive and individual performance can lead to the problems recently faced by many of the banks”

3. Culture is monitored and measured on a regular basis.
Engagement scores are often used as proxy for measuring culture. This is a mistake. Engagement and culture are interlinked, but different. Engagement is a measure of how happy people are at work, the likelihood that they will stay with the organisation and give it their full commitment. Culture is a measure of how people think and behave. It is critical that HR teams are aware of this difference and do not reinforce the confusion by avoiding communicating about both concepts simultaneously. A good way of doing this is to alternate engagement and culture surveys every second year.

The Board should ask to see a culture dashboard with measures of business outcomes that the culture is trying to improve and measures of behavioural shifts.

Finally, the way in which the board is behaving will contribute to the culture of the organisation. It is essential that the board is aware of the target culture and aligns its behaviours and its systems with the target.

HR is often seen as the “guardian” of culture and will be challenged by the board about actions taken or not. A proactive approach to culture in partnership with leaders will give the board confidence that culture is actively managed, and that the intended business outcomes can be achieved.

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