Corporate culture has become an important theme in recent times, whether in academic circles, amongst regulators or in the broader press. But what does it mean for your business? Is there a single standard "right culture"? How can you instil the appropriate culture in your business?
Regulators and the press have focused on allegations of "bad culture" within businesses in recent times. This has led to growth in literature and training seeking to promote a standard "right model" of corporate culture for businesses. However, a more sophisticated approach recognises that there is no single "right culture" for all businesses. Identifying the appropriate culture should start by understanding the drivers and behaviours that a business wants to promote. Our corporate culture team can guide you through this area of growing importance.
Be clear on corporate culture
5 questions to ask yourself
What is the right culture for our business?
There is no single correct culture to suit all businesses. Factors which will affect a business's culture will include its appetite for risk, its preference for process over discretion and its emphasis on individual decision-making. Businesses should consider whether their staff's approach to these issues is consistent with the culture they want to promote.
How do we embed culture in our business?
Whereas setting the right "tone from the top" is crucial, senior management should ask itself whether its day-to-day expectations reflect that tone. Moreover, even if the tone from the top is right, employee decisions are more often affected by the attitudes of their immediate line management. How does senior management instil the right behaviours in middle-management?
Can policies and procedures play a role?
Having appropriate policies and procedures is important, but this alone is unlikely to promote the right culture. It is also possible that reliance on policies and procedures leads to excessive formalism or minimalism, i.e. checking the box or working to a "just gets over the line" basis for policy compliance. Good culture requires decisions being made in difficult cases that are consistent with the values that the business wants to promote.
What are the consequences of poor culture?
Having a poor culture can lead to serious consequences for a business. At the risk management level, it can lead to legal, regulatory, PR and internal management risks. More generally, it can simply result in poor business decision-making.
Are the authorities interested?
We have seen numerous authorities take a keen interest in culture in recent years, whether in identifying the root cause of a business's failures or as a stand-alone matter. We expect the trend to gather momentum, both with authorities that have not yet focused on culture and in new jurisdictions.