We welcome the interest in culture. But boards should understand their limitations and avoid obvious pitfalls. From our own experience – working with boards and on “culture change” initiatives – this is what we have learnt:
1. SECTOR AND FUNCTION WILL LIMIT WHAT YOU CAN DO
Cultures are strongly shaped by the material realities of work. Academic work, for example, grants high levels of autonomy but output measures are not straightforward. This produces workplace behaviours, relationships and values that are quite different from, say, some types of selling work – which is often individually competitive and has more measurable targets.
In this sense, the cultures of elite universities on the one hand – or consumer goods companies’ sales forces on the other – will each have significant similarities no matter what the cultural ambitions of their respective governing bodies or boards, so understand your limits.
2. CULTURES CAN’T BE EASILY UNDERSTOOD FROM THE OUTSIDE
It’s hard to understand a culture without spending time with those at the coal face. It is therefore unlikely that the subtleties of individual cultures will be detected by non-executive directors who spend six days a year attending board meetings (and a few others reading board papers or attending sub-committees), who combine this with a portfolio of other board positions and responsibilities, and who often live in another country.
In board governance surveys, the extent to which NEDs interact with or understand the reality of executive experience or the workplace/commercial reality outside the boardroom is regularly critiqued. Inevitably, their ability to comprehend, let alone influence, culture is compromised.
This is unlikely to change without a radical rethink of the NED role. Ironically, under current arrangements, excessive involvement leaves NEDs open to charges of interference and loss of objectivity.
3. ATTITUDE SURVEYS DON’T MEASURE CULTURE
Most academics agree that deep, underlying, taken-for-granted and shared assumptions are at the core of culture. These are not directly accessible, but you can sense these assumptions by observing day-to-day behaviours. This, of course, was the method of the social anthropologists. It was known as participant observation – and we regularly recommend it.
Busy NEDs without the time (or sometimes inclination) can be seduced by attitude surveys. But that is exactly what they measure: individual attitudes. Never confuse this for a measure of culture. At best, attitudes give us a clue about culture – but with varying degrees of reliability. Cultures can neither be managed nor surveyed.
4. BOARDS WITHOUT OBJECTIVES ARE UNLIKELY TO SHAPE CULTURE
It is a remarkable fact that most boards do not set themselves specific annual objectives. Raise this with board members and they will often argue they are unnecessary since they are embedded and assumed in a whole series of board obligations, mandates, governance requirements and director responsibilities.
Yet it seems difficult to see how any board can address the long haul task of culture change without setting stage point objectives and associated measures.
5. BOARDS THAT DON’T PRACTISE WHAT THEY PREACH LOSE LEGITIMACY
Whilst it is true that many boards are now much more aware of their role in acting as exemplars for company culture, some familiar weak points remain. So, finally, here are two key questions about board practice for those who wish to establish the “right” culture.
First, given that culture is “all about people”, how well is the human resource function represented on your board? Second, if reward systems and incentives help shape desired behaviours and values (and so culture), to what extent is the remuneration committee setting an appropriate example?
The significance of culture is undeniable. But the case for making it a top level priority is unlikely to be advanced by naïve assumptions about what boards – as currently constituted – can actually achieve.
Source : https://www.managementtoday.co.uk/5-inconvenient-truths-corporate-culture-hold-back/any-other-business/article/1592412