Over the last 20 years, we’ve seen a big shift in where Boards focus their energy. Where compliance and number crunching were their key interests in the past, great Boards have recognised that it’s equally important to know how people behave in the organisation, and what impact that has on others. Do new staff feel supported, encouraged, informed, or are they bullied, blamed, abandoned? In the 21st century, effective Boards have a clear expectation of what the culture should be like, and they provide leadership to make that happen.
In 2016, the Financial Reporting Council (FRC) produced ‘Corporate Culture and the Role of Boards’ – a report of their observations from extensive research on the subject. The report recognises the crucial importance of organisational culture on governance, and stresses the Board’s responsibility for shaping that culture, starting in the boardroom and extending to everyone in the business. It acknowledges that, within the Board’s thinking on key risks, there needs to be recognition of the threats arising from behaviour in the company. Behaviour happens one person at a time, and becomes a habit if not corrected. Our 6 top tips for Board focus on this are:
- Recognise the importance of culture and behaviours on business success – ask managers to bring examples of where it’s healthy, and where it needs to change
- Lead by example – list the core values on the Board meeting agenda, include them in assessment of the performance of the CEO, ensure they are woven into all business processes (recruitment, induction, feedback, review)
- Nurture openness and accountability – ensure managers share the bad news with the Board, as well as the good
- Seek feedback and really listen to all key stakeholders – within the organisation and externally
- Ensure rewards aren’t incentivising bad behaviour (eg) unhealthy competition between colleagues
- Audit the culture at least annually – publicise the good and address the not so good
These questions require a focus on the long term benefits rather than the short term costs (both financial and time) of putting the necessary processes in place. The results we’ve seen in the clients that have made the investment are higher performing teams, increased customer satisfaction, and ultimately business success. We worked intensively with Hastings Hotels over several years to clarify the Board’s vision and values, and weave those into their recruitment, induction and review processes. All managers were trained in leadership, coaching and feedback, and the results were palpable – happier, more confident staff, improved customer service, and sustainable business success.
In contrast, a friend who recently spent time in hospital reminded me of the consequences of a lack of such investment. In one ward, she was always called by her name, received personal attention when she needed help to eat and visit the bathroom. When moved into the ward next door, she felt like a number. Nobody took time to get to know her, or to attend to her personal needs. The result was a real drop in her mood, which undoubtedly slowed the recovery process. When she retires she intends to write a book on the contrast of the two cultures, and what she observed about the style of leadership that influenced both!
So what needs to happen to make great culture happen? Ensuring that the Board spends time in reflective and creative mode needs planning. Getting the Board to invest time and energy in Board Away Days, with a less pressurised agenda than usual, and an opportunity to define the required culture and behaviours, pays huge dividends. If you haven’t yet experienced that energy, ask someone who has. It is also really important to put in place processes to assess the culture in all parts of the business, and ensure that the values are being lived.