Leveraging board experience in culture

Culture is a primary source of potential value and risk in most organisations and it is clear that Directors must have a clear line of sight to culture in order to apply their experience and expertise meaningfully.

In addition to playing an active role in setting strategy, Directors also have an appetite to ensure the culture supports the strategy, minimises risk and helps distinguish the organisation.

Active investors also have a critical role to play in the assessment and, more recently in shaping thinking on corporate culture through company engagement. While historically, they have looked at high-level lag indicators such as gender balance at Board and Senior Management level, crisis management and risk, they are now taking an active interest in the more predictive elements that culture can inform including cultural value and risk factors as part of their screening processes.

Visibility and transparency of the current state of corporate culture is a necessary starting point.

A couple of areas for Directors and investors to consider include the objective measures necessary to:

1.  Evaluate the suitability of the current culture to the Purpose and Strategy;

2. Assess the current state and the progress towards the intended state of the culture;

3. Test management claims on engagement scores;

4. Review progress on both diversity and inclusion, and

5.  Identify and monitor cultural risk.

With a clear and objective line of sight to the current state of the firm culture, Directors and investors can leverage the full experience and expertise they have to support the shaping of culture, the maximisation of value and the minimisation of risk.

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