It’s a good, positive company culture which encourages healthy day-to-day attitudes, ethics, behaviours and “ways of doing things around here” in an organisation. Importantly, it sets the foundations for real, tangible business growth.
The pandemic has been a major disruption that has demanded urgent focus in recent years, but the issue of company culture remains an area of risk and opportunity for company directors. While COVID may continue to demand time and attention it is timely to focus on company culture to consider whether it will enable or constrain long term growth.
Boards are the custodians of company culture
Effective boards recognise their responsibility as custodians of culture – keeping, protecting and nurturing the good things, the ‘assets’, in company culture, as well as shaping the culture to remove the harmful or less valuable elements. They also have the awareness to address where the culture is not appropriate and must change for the business to be ‘fit for the future’. Importantly, these boards enact their role in culture by inspiring it, ensuring alignment, demonstrating authenticity by both reflecting and demonstrating the behaviours implicit in the culture, while guiding, encouraging and assuring themselves about it.
Three categories of directors on the issue of culture
Directors have different attitudes when it comes to company culture. We have identified three populations on the boards that we work with:
- The ‘Jurassics’. They view culture as the latest management trend which will pass like others; for example, mindfulness and total quality management.
- The ‘restless’. They acknowledge the value of culture, but just don’t understand or know what to do, or how to deal with culture as a board.
- The ‘effective enablers’. These are directors that not only recognise the importance of culture but are enthusiastic in actively engaging in shaping and directing it.
The four pillars of culture that engender business success
The pandemic has demanded four key success factors for effective boards – adaptability, resilience, courage and candour – which remain relevant today and for the foreseeable future. They must recognise these are the core pillars of company culture moving forward.
- Agility and adaptability. These are critical factors for evolutionary success and are now demanded of boards and businesses as they navigate their way through the uncertainty, volatility and complexity of the COVID age. To deliver this it’s vital boards promote an entrepreneurial spirit which will help unleash the potential of their people to provide new ideas to help take the business forward. As part of this, boards must encourage a curiosity and fearlessness to inspire creativity, innovation and continuous improvement. It’s through leading by example, by demonstrating diversity of thought and ideas in the boardroom, that the rest of the business will have the confidence to follow suit. However, it’s important to recognise that it’s only those boards that have diversity across demographics, skills, experience and thinking styles which will have a true diversity of thought.
- Resilience. As we build back better and orientate for growth in the recovery, the capacity to bounce back from setbacks is a prized cultural attribute which is in demand. To deliver resilience an organisation must have robust, transparent and visible leadership, engaged and empowered employees, and strong brand trust, both internally and externally.
- Courage. It’s important that directors are courageous in confronting reality. This requires them to have a healthy scepticism, but avoid the corrosion of cynicism. In fact, a culture of courageousness must run throughout the organisation. This will see everybody within the business having the opportunity – and responsibility – to speak up, to do the right if sometimes difficult thing. To achieve this there must additionally be a culture of psychological safety to encourage people to speak up and protect those that do.
- Candour. Finally, an open culture where bad news comes more quickly to the board than good news is critical for effective governance and leadership by the board. Only then can boards quickly focus on and solve challenges before they potentially become bigger issues, which can easily happen if they are not picked up early.
Ignorance is damaging
By ignoring culture boards face the consequences of a poor company culture. This can lead to a major disconnect between the behaviour that was promised and what was actually delivered by the business, along with bad practice which will damage the reputation of the organisation. With no attention paid to it a poor company culture will flourish – with the subsequent damaging practices and harmful outcomes. This is provoking governments and regulators around the world to make directors legally liable for the culture within the companies they lead.
Boards today must step up and become ‘effective enablers’ when it comes to culture and consider how fit theirs is for the future. It’s only by fostering a culture of adaptability, resilience, courageousness and candour that they will ensure their organisation bounces back as the pandemic eases, putting them in a position to drive long term growth. To achieve this broads must remember to support and demonstrate the culture they shape at all times, to help provide assurance around it. If they don’t, the culture they nurture will not be effectively adopted throughout the organisation.
Those boards that need advice on improving their company culture, effectiveness and wider governance processes should contact our highly experienced team.