Organisational Culture and how to find it.
It’s fine to agree that organisational culture determines the success of the organisation. We agree that the “tone from the top” set by the Board is one of the determinants of dominant organisational culture; but what of behavioural indicators of culture?
For Board members – how do we assess culture and how do we confirm that the culture in the organisation we are directing is a positive culture? How do we find it?
Some good ideas come from the Financial Reporting Council: Corporate Culture and the Role of Boards a report of Observations. working with these ideas, I'd like to suggest the following:
Four questions that, if answered honestly, will give you an initial understanding of how your culture percieves regulation.
ONE: What are the organisational attitudes to regulators?
Are your internal and external auditors treated a burden or treated as “outsiders” or is the relationship constructive, and are the recommendations negotiated to be useful and helpful? Where do they sit? Are they hidden away in a remote location or do they engage with the organisation on an open and collaborative manner?
TWO: What are senior management attitudes to employees?
Is this relationship respectful, with a conviction that senior management is only as good as the teams which support them; a great team working together makes everyone excellent? What language is used behind closed doors, and do you ever hear descriptions or characterisations which are based on glib stereotypes?
THREE: How does management respond to Internal Audit recommendations?
Are they treated as an additional imposition, or has the relationship between management and auditors been a good relationship? A good working relationship will produce recommendations are constructive and helpful for the organisation, and will further the goal to have excellent, transparent and visible systems and processes.
FOUR: What action is taken to deal with poor behaviour/instances of non-adherence to values?
Is poor behavior overlooked or treated with indulgence? Or is it “nipped in the bud” and “called out” as soon as it happens? What about recurrent bad behavior from “star employees” – is this tolerated? An attitude of indulgence towards good performers on certain teams can permeate through the organization, and instigate a tolerance for bad behaviour throughout; 'what you permit, you promote'.
Worrisome? Intangible? Difficult to assess? Of high reputational risk? That’s the nature of organisational culture! Remember, we are all part of the cultures we live in, but if we are honest with ourselves, and start by refusing to accept lax attitudes towards regulation that is critical to our continued business success, we have already started the process of cultural transformation.