Why culture counts
For those interested in corporate culture executive director at KordaMentha Corporate, Heather Brown has written a ‘must read’ blog.
In her blog post Brown makes the point that the concept of culture is moving from a lofty, soft concept to something that should be defined, measured and improved and she is not alone in that observation. In a speech last year, ASIC chairman Greg Medcraft reinforced this view defining culture as ‘a set of shared values and assumptions within an organisation that reflect the underlying ‘mindset of an organisation’, the ‘unwritten rules’ for how things really work. Because culture lies at the heart of how an organisation and its staff think and behave.’ He also made the point that poor culture can be a driver of poor conduct.
That is why boards and senior management must understand the impact culture has on an organisation and what they need to do to protect it. It is also why Governance Institute will continue to encourage members to consider how they can assist their organisation embed a culture in their organisation that will result in positive behaviours at all levels.
In her blog, Brown also refers to a report released by Korn Ferry in 2016 ‘The Tone from the Top — taking responsibility for corporate culture’, which found business executives in Australia cited the CEO as the most important factor in strengthening culture. She notes that ‘CEO’s need to cascade simple messages across the organisation that outline how risk is valued, taken and monitored. They need to walk the talk and there needs to be consequences when they don’t.’
As Brown says, complexity is the enemy of good risk management. Policies, procedures and reporting are all integral to a good risk management framework. However, she cautions that you cannot write policy for every decision or every judgment so ethics and values are paramount in ensuring that the right thing gets done. Good behaviours must be rewarded and recognised, poor behaviours must be acted upon and when necessary action undertaken, openly and transparently.
A lived culture is dynamic. It can shift over time and requires ongoing monitoring. ‘Set and forget’ and you’re in real trouble.