Should a Board of Directors Influence an Organisation Culture
At the “Changing the Game Forum: Reforming American Business” in June 2nd - 4th, 2005, Beaver Creek, Colorado. Daniel R. Denison and Caroline Fisher presented a paper The Role of the Board of Directors in Shaping Corporate Culture: Reactive Compliance or Visionary Leadership?
The paper generated some very heated debate with each side making an excellent case for their position. For example,
Mr. Rand Garbacz, of AT Kearney in San Francisco, in his position paper framing the session, noted that “Culture impacts the interests of all other stakeholders, and thus derivatively has a direct, measurable impact on shareholder wealth”. Therefore, he said, culture, as a governance role is neither optional nor tangential. He argued that culture starts with the board and identified a number of board issues that significantly influence corporate culture."
Ms. Ellen Heffes, Managing Editor of Financial Executives magazine and moderator of the session, acknowledged that it is not clear at this point that the board has or should have a role in shaping the corporate culture. She posed the question, “What was the culture and ethical behavior like at companies like Enron, WorldCom, HealthSouth, or Adelphia that allowed malfeasance or misguided judgments. Where were the boards?
"Ms. Bethany McLean, Senior Writer at Fortune magazine, observed that the corporate culture of Enron was one of the most important factors in the company’s apparent success and dramatic demise. She said that rather than the board shaping the Enron culture, the executive management of the company shaped the board’s culture."
"The Enron board became too much a part of the Enron culture and therefore lost its independence. Ms McLean noted that the board of directors should stand apart from the corporation’s culture so as to not loose its ability to observe and judge management’s behavior objectively; that is, they must resist being seduced by the company, its power and its success."
What's your opinion: should a board have any influence over an organization culture? Share your feedback.