Only 20% of Boards spend enough time on corporate culture
Despite corporate culture being within the top three priorities for company Boards, only 20% report spending the time required to manage and improve it. The finding is part of a European survey conducted by leading international tax, accountancy and advisory firm Mazars, together with the publication Board Agenda and Insead.
The survey, completed by over 450 directors and Board members across Europe, highlights the disparity between thought and action with regard to culture. Nearly twothirds (62%) felt that they were primarily responsible for setting culture from the top of an organisation, yet a similar proportion (63%) either do not consider culture as part of their formal risk assessment or fail to routinely consider the risk associated with their corporate culture.
At the same time, only a quarter of Boards undertake an internal or external audit of their culture. The other 75% rely upon sources such as on employee feedback, cus- tomer surveys and risk events such as rule breaches, HR issues and compliance-monitoring. Far less attention is paid to external sources of information, such as social media, press commentary or engagement.
Anthony Attard, managing partner at Mazars Malta, says: “It’s good that the importance of corporate culture is now widely recognised by Boards, but the survey also highlights the fact that translating that understanding into focused action remains very much a case of work in progress. Boards need reliable information on the actual culture in the business and to be clear on how they are going to close any gaps between that and their desired culture. Achieving culture change is not easy, but having a healthy corporate culture is essential if the business is to achieve sustainable success.”
Trevor Pryer, executive director of the publication Board Agenda, agrees: “Even if Boards are thinking more about corporate culture, there appears to be a discrepancy between what directors are thinking and what happens in practice. It is a gulf that needs to be bridged if leaders are to maintain, or restore, public trust in their businesses.” Erik van de Loo, Professor of Organisational Behaviour, Insead, adds: “Boards acknowledge the vital significance of culture for the long-term success of a company, but do not yet know how to effectively address this at board level. The first step is to address the culture of the Board itself.”
David Herbinet, Global head of Audit at Mazars, concludes, “Many years after Peter Drucker’s famous quote, it does seem that more Boards are coming around to the idea that Culture may, indeed, eat Strategy for breakfast. Much work, however, remains to be done by Boards to fully grasp this lesson and use it effectively in decision-making, and for investors to properly assess it, for the long-term benefit of companies, their stakeholders and wider society.”