Is Your Board Behaving Itself?

is-your-board-behaving-itselfCulture is an enabler. A valuable asset is defined as a combination of values, attitudes and behaviours. Culture is about how ‘we’ are going to go about executing our strategy. Behavioural considerations are a prominent consistent part of everything an organisation does. Legislation, regulation and codes influence individual and corporate behaviour. They do not ultimately control it. One size does not fit all when it comes to culture. What matters is that the culture is appropriate for the context in which the organisation is operations.   “It is important that the board sets the correct tone from the top.”

How does the board influence and shape culture?     The UK Financial Reporting Council has recently published its report corporate culture and the role of the board.   What stands out from this report? It is important to recognise the value and impact of culture.

  1. The board must define its purpose and values setting out clearly the desired culture and behaviour against which it can benchmark actual behaviour throughout the organisation.
  2. It is important for the chair to set the tone in the boardroom to empower board members and to raise concerns where they have doubts.
  3. Trustees should lead by example and ensure that good standards of behaviour permeate throughout all levels of the organisation.
  4. It is important to embed the desired culture. The board must develop frameworks and tools to assess behaviour and culture. This will act as a guide for management and board decision.
  5. The key challenge for boards is to understand what drives behaviours. The board must shape and influence those drivers in such a way that fosters greater sustainability and to improve performance over time.
  6. It is the board’s role to develop and maintain its strategy to address culture and avoid culture misalignments. Components are setting and monitoring organisational culture, using review and follow up customer complaints for improvements.
  7. Culture is closely linked with risk and risk appetite. It is imperative for the board to look at risks that might affect the company and its long-term viability.
  8. The board and executive team ensure decisions around value creation and values are integrated.
  9. Relationships will be successful and enduring if they are based on respect, trust and mutual benefit.

While policies, procedures and systems have their place with values, behaviours and  a healthy culture you can say the organisation is in a better place for success.

Corporate culture and the role of the board can be downloaded from the UK Financial Reporting Council website http://frc.org.uk

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