Navigating the cultural compass The Board's vital role in organisational culture

They imply that while a strong organisational culture can help achieve robust success although the strategy is not as strong, the converse does not apply. Culture is simply how people conduct themselves routinely in the office; what their values, beliefs and principles are and how these influence their behaviour in an organisation, and ultimately impact the institution and its stakeholders. Naturally, then, it follows that culture is largely dependent on the people hired.

“Noses in fingers out” is a common Corporate Governance phrase, which seeks to guide the relationship between a Board of Directors and the Senior Management team. It suggests that a Board should not involve itself in the business operations of the company and should instead focus on governing the strategic affairs.

This prompts the question: can the board comfortably ensure the success of an organisation by simply focusing on strategy? Should the important issue of culture and people be considered operational and be left solely to the management team? The answer to both these questions is a resounding “NO”.

A Board of Directors is responsible for creating a healthy culture that will ensure the successful implementation of a good strategy. This starts by setting the “tone at the top” through both their individual and collective behaviour, which then sets an example to the senior management and the rest of the staff.

Secondly, it is critical for the board to ensure the recruitment of candidates whose individual values are aligned with those of the institution at the CEO and senior management levels. These candidates should also possess soft skills such as communication, teamwork and critical thinking among others. These skills can be verified through background checks and psychometric tests.

Getting the right CEO and Senior Management team is crucial in defining the culture and long-term success of an institution as the right culture will be cascaded to the rest of the organisation. In addition to recruiting the right candidates at senior level, the Board should put in place mechanisms to monitor the culture of an institution to ensure that it remains progressive.

These measures include but are not limited to:

• Ensuring management conducts periodical stakeholder surveys which include relationship and culture questions.
• Creating an opportunity to experience the organisation at all levels. This could be achieved through having informal sessions with staff members to gauge how they relate to each other and/or management.
• Broadening the CEO’s performance review to include internal and external opinions on lived values.
• Commissioning occasional independent verification of organisational culture and workplace environment.
• Making culture an integral part of the brand for both internal and external stakeholders.
• Establishing a clear and secure whistleblowing process that flows through an independently monitored channel of which the board has visibility.
• Adapting zero tolerance of behaviours inconsistent with the espoused culture and values.
• Ensuring a robust performance evaluation process which measures behavioural competencies as well as financial and non-financial KPIs.
• Having a permanent agenda item on organisational culture to deliberate on any incidences and learn from them as well as take corrective measures.

In essence, the Board of Directors serves as the custodian of an organisations culture, guiding in its evolution and ensuring alignment with strategic objectives. Through their commitment to nurturing a positive organisational culture, boards empower employees, inspire trust among stakeholders and ultimately drive long-term value creation.

This is a guest blog which contains the views of the author and does not necessarily represent the views of the IoD.