I met with the Chairman of a large membership-based company last year. One of the questions I asked was, ‘Who owns the company’s culture?”
His answer was, “The Board”.
Boards can foster long-term shareholder value by deepening their understanding of their company’s culture and placing it on the Board agenda. This ensures management is forging a culture that is aligned with the company business strategy.
Truthfully, I am disappointed when Boards do not have culture as an agenda item. Culture plays such a significant role in positive business results. This also goes hand in hand with company values, of which I have previously written about.
Typically, most Boards do not apply the same rigour to culture as they do to strategy, risk or CEO succession planning. According to a McKinsey article, “organisations with top quarter cultures post a return to shareholders 60 percent higher than median companies and 200 percent higher than those in the bottom quartile.”
Boards everywhere should take an active position that recognises the crucial role culture plays in any organisation, rather than leaving this to the CEO and executive.
A company culture can make or break even the most insightful strategy or the most experienced executives.
Good culture produces innovation, growth, ethical behaviour and customer satisfaction – it cannot be replicated or copied. Sadly, it seems many Boards struggle to understand what this responsibility means for them. This changing landscape comes at a time of shifting corporate dynamics, where organisations that foster good culture are the ones that attract (and keep) top talent.
How do you ensure that your organisation is focussed on creating good culture?