Controls vs Culture: Why Both Matter in the Public and Private Sectors

We were recently preparing a media thought leadership article, and it got me reflecting on the relationship between controls and culture in a business. The article proposed outsourcing certain financial functions of municipalities and SOEs to trusted private-sector partners, addressing the challenge of misalignment between financial management and leadership in the public sector.

While this idea may seem radical, it’s rooted in the reality that no amount of financial controls can succeed without a supportive organisational culture. Controls — rules, policies, and systems to ensure accountability — only work when the culture reinforces them.

South Africa’s Public Sector Example

Take South Africa’s public sector as an example. In the 2022/2023 financial year, only 34 out of 257 municipalities received clean audits, while fruitless and wasteful expenditures ballooned to R7.41 billion. These figures highlight weak financial oversight, not because of a lack of formal controls, but due to a breakdown in the culture of accountability within these entities.

One prominent issue is non-payment — by both citizens and public entities. Municipalities owe billions to Eskom, significantly contributing to the country’s ongoing energy crisis. As highlighted in a recent Daily Maverick article, raising tariffs or introducing new financial controls won’t solve the problem if the culture of compliance and trust is absent.

The Role of Culture in Financial Governance

This disconnect isn’t limited to the public sector. In businesses, having all the financial controls in place won’t make a difference if the organisational culture doesn’t support them. In companies with strong ethical cultures, compliance with financial controls becomes second nature, whereas in organisations with weak cultures, misconduct and financial mismanagement are more likely.

Culture matters as much as controls—possibly even more. In businesses where accountability and transparency are ingrained, employees and leaders don’t just follow rules because they exist. They understand the value of these controls and the role they play in the business’s sustainability. In contrast, weak cultures allow controls to be bypassed, which can lead to significant consequences.

Building Trust and Accountability

Whether in government or business, trust is a critical component of success. South African taxpayers, as well as global consumers, are increasingly demanding greater transparency and accountability from the institutions they interact with.

Discussions around withholding taxes as a protest against poor service delivery are becoming more frequent, reflecting the erosion of trust between citizens and the government. This shift shows that even the strictest controls won’t suffice without a culture of accountability and transparency.

Building trust requires more than implementing financial controls—it demands a culture of responsibility where all stakeholders, from leadership to frontline employees, act with integrity. In such cultures, compliance is seen not as a burden, but as a necessary part of maintaining good governance. In cultures where blame-shifting or avoidance is the norm, even the best controls will fail.

The Bottom Line: Controls and Culture Must Work Together

As we think about the future of governance in both public and private sectors, it’s clear that controls without culture are ineffective. In South Africa’s municipalities, for instance, private-sector partnerships may help strengthen financial oversight, but without a shift in the culture of accountability, these efforts will have limited impact. The same can be said for businesses: no matter how robust the financial controls, they will be circumvented if a transparent and compliant culture isn’t in place.

So, it’s worth considering: Are the people managing financial functions — whether in the public or private sector — fostering a culture of trust, responsibility, and accountability? Without this cultural foundation, even the most rigorous financial controls won’t be enough for long-term success.

If you're in a leadership position or responsible for financial oversight, now is the time to reflect on your organisation's culture. Are you prioritising accountability and transparency? Join the conversation by sharing your thoughts on how businesses and public entities can build stronger cultures that support effective governance. Let’s work together to create environments where controls and culture reinforce each other to drive meaningful change.