Board Directors: Do you have your arms around organisational culture?

In this series, I am sharing some key take-aways from a recent roundtable presentation for the Australian Institute of Company Directors on the board’s role in leading organisational culture.

In the first post of the series, I outlined the discussion we had at AICD at a roundtable of 20+ directors and senior executives, some of whom are experts in People and Culture leadership of very large organisations. I dove into what the research says directors should know and do when it comes to the governance of culture. I also shared links to guidelines from AICD and The Governance Institute.

Here, we go further into the challenge that governing culture represents… and the risks of not wrapping your arms around all that culture is.

Why Culture should matter to boards more than ever

ESG, Climate Change, AI, innovation, geopolitical and economic uncertainty… with this rate of change, “change management” is every organisation’s challenge now – and that means culture is central to strategy.

When it comes to risk, culture is at the centre too… Your employee, customer and stakeholder expectations have changed and are demanding more of organisations and their leaders. At AICD’s recent panel discussion on Stakeholder & Shareholder Activism, it was clear that boards and their organisations can’t afford to wait for a crisis to ‘do’ culture – the people, reputational, legal and financial risks are too great to not have a proactive approach in place.

We have seen this most recently with the ‘Right to Disconnect’ – changes in legislation that reflect the contemporary world of work, put in place precisely because the already existing psychosocial safeguarding guidelines were not being adequately enforced in organisations.

Remember too that ‘Your culture is visible… and it’s online’ (the title of a Director Download that I presented for AICD way back in 2018, when directors were still getting their heads around Facebook’s impact!). Social media, Google reviews and sites like Glassdoor give us stark insights into exactly what customers and employees think about brands and their connected organisation cultures.?

Of particular interest to the guests at the AICD Culture Governance roundtable was a study in the Sloan Review that rated the top 5 elements of a toxic culture as seen by employees leaving reviews on Glassdoor: DISRESPECTFUL, NON-INCLUSIVE, UNETHICAL, CUTTHROAT, ABUSIVE (in that order of frequency).

The Challenge of culture governance

“By nature, culture is complex and organisations are dynamic and this makes the practice of governing organisational culture too complicated for simple prescription.”

- AICD’s guidelines for Governing Organisational Culture (2020)

Modern board directors know that steering a strong culture is fundamental to business success and therefore to their role as stewards. Yet, in my experience, a great many directors struggle to wrap their arms around this big thing we call organisational culture.

Boards still struggle with an organised approach to culture:

• Directors are unclear on how culture connects to the rest of the organisation (e.g. how does culture work with strategy, brand and value-building for customers).
• Lack of culture expertise on the board, through committees, or lack of a strong strategic capability among ‘Culture’ staff informing the board (e.g. HR is focused on one or two key areas, like recruitment and employee engagement, and are not across the business, its strategic priorities, and where culture fits with that).
• Data in board packs are long and hard to make sense of, or not adequate.
• Culture is not prioritized on the board agenda, but glanced over – unless there’s a problem or major change with high stakes. It’s often not about building and achieving or even preventing, but reacting.

Why Culture is so hard to pin down

There are the approaches… Rules of power, rules of belonging , Diversity, Equity & Inclusion, values-centred, leadership styles…

There are the elements or ‘windows’ into culture… Employee engagement, recruitment & onboarding, employee lifecycle, management 360s, team dynamics, personality psychology, ethics…

There are the culture ‘types’… high-performing, competitive, collaborative, purpose-driven…

Then there are the questions… What even is culture? Can it be changed? Who changes it? Top-down or bottom-up? (P.S. While you, board director, might have very clear views on the right answers to these questions, let me tell you that other directors, and your organisation’s leaders and managers, will differ greatly in their views! It’s what the research shows and certainly what I have seen reflected in my work across all the levels of organisations.)?

With so many definitions, so many approaches, so many ways to measure and to lead (or not lead) culture… it’s no wonder this always-shifting, never ‘done’, living thing made up of complex interactions is so hard to wrap your arms around, in order to be its steward!

Your role: The modern director’s checklist

This is not the 1950s… not the 20th century at all… gone are the days of directors sitting around making decisions without consulting the people they affect.

Nowadays, initiatives such as the ‘Youth Collective’ at The Body Shop are cropping up to bring stakeholders (in this case, young people’s) voices into boardroom! While that might seem like an extreme approach, directors are now more likely to be actively involved in listening to, engaging with and representing stakeholders.

In last week’s post I offered a range of resource links to help directors think about their role in governing culture. Roundtable participants also received a take-away sheet of PRO-ACTIVE and RE-ACTIVE tasks the director should undertake to uphold this responsibility – happy to share with interested readers.

In the next instalment of the series, I will discuss what it takes to ‘see the whole puzzle’of culture as a board director, rather than take the classic narrow-discipline or single-assessment approach. I will share some of the top ways of examining and leading culture, including what I believe are the most effective approaches.

In this series:

In the next article, we put the puzzle pieces together on Culture:

• A range of frameworks for examining culture
• Global best practice
• My favourite framework… Brand-Culture connection – how we use this with organisations to get practical, and to connect everything and everyone
• Building a 'Culture Governance Planner' for your board – a way of bringing all the key puzzle pieces of culture on one page, including considering risk factors, key metrics and blind spots in your organisation

Stay tuned for the next instalment of take-aways from my AICD roundtable presentation .

Author: Julissa Shrewsbury I Director, New Work Consulting