Corporate culture is characterized by the implicit, unwritten standards, that generate expectations of how individuals in the corporate world, are expected to behave. It is mirrored in what individuals do every day, in what is cherished, emphasized, and neglected. Culture is also how businesses develop and safeguard value through people.
Intangible assets such as talent and culture, are currently estimated to account for 52% of a company’s market value, with some organizations accounting for as much as 90%. For these reasons, culture supervision is becoming an increasingly important problem in the boardroom, and understandably so.
The board is responsible for overseeing the numerous factors that constitute culture. Management is responsible for defining and embedding the correct culture for the organization in everyday operations, but the board must oversee and hold management accountable for how it is defining, aligning (to purpose and strategy), embodying, and reporting on culture.
Accordingly, a major board responsibility is to accelerate the talent agenda and activate culture as a strategic advantage.
1. Oversee the definition and alignment of culture with strategy.
Many CEOs struggle to define and implement the correct culture for their company. A corporate culture that is clearly aligned with the mission and strategy of a company enables and accelerates that strategy. When there is a lack of alignment, culture can drag the organization down. It is difficult to achieve new goals with old methods of operation. As a first stage, leaders should take the time to determine the cultural traits required to both realize and involve their people in the strategy.
2. Establish internal and external accountability for how culture is conveyed and lived.
Everyone in the organization contributes to the culture. Everyone is responsible for how they present themselves every day. It only takes one event or, in certain cases, one person to upend harmony, cause a wave of employee turnover, impair client relationships, or have an influence on the share price. Organizations must clearly identify the appropriate behaviors, manage performance in relation to those behaviors, and reinforce them through incentive systems. They should also be aware of, and address, the challenges of creating a cohesive, “borderless” culture in a global organization, where desired cultural attributes may conflict with local norms (e.g., speaking up in a culture where hierarchy and politeness reign) and language barriers may exacerbate difficulties.
3. Keep an eye on how culture and talent metrics are measured to keep track of how culture is changing.
To effectively control culture, boards must first identify and monitor the measures that best reflect a company’s culture’s health and strength. Culture is measurable; there are numerous methods for measuring it directly and/or indirectly.
4. Create a vision of intentional culture shifts to keep up with strategy shifts.
When strategy changes, culture must adapt. Consider a corporation that was previously focused on efficiency but is now moving its focus to innovation. The whole DNA of that organization has been constructed around formal structures and defined responsibilities, including its recruitment tactics, operational and incentive structures, and incentive structures. However, its future success will be determined by its ability to adopt an entrepreneurial, nimble posture and provide people with autonomy and creative freedom. To be successful, new ways of working, as well as new workplace attitudes and behaviors, must be practiced on a daily basis.
5. Question the board’s culture
The board sets the ultimate tone at the top in terms of corporate culture, not only in terms of how the board prioritizes and controls the company’s culture, but also in terms of the board’s makeup, dynamics, and culture.
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