Business culture could do with some auditing as well

We increasingly see a shift towards “enterprise value” in terms of purpose, ethics, trust and culture, rather than a focus solely on finances and performance. Auditing culture could, therefore, help firms understand how everyone in the business is affecting its value, including looking at the “middle” as well as the top.

Understanding how business values correlate to actual behaviours is critical. For example, inappropriate cultures can grow organically and become toxic if not kept in check.

“Culture” is open to many different interpretations — it is essential to determine precisely what you are assessing. Are you looking to be a barometer of the organisation’s culture or to provide insights into a specific aspect of the business? This will, in turn, dictate which approach will be most suitable for your organisation. The challenge is to make it meaningful and measurable.

But this can mean the bigger picture.

Culture touches every part of a business, but it’s not possible missing to audit every single aspect of in one go. Therefore, businesses should focus on areas where there is a higher risk of cultural issues within the organisation. Identifying where there seem to be problems is an excellent way to align resources.

There are many ways to audit culture. A multi-faceted approach to assessing culture that brings together both quantitative and qualitative data points that already exist can help give insight and help to build a picture of what is important.

This could be through interviews, focus groups and observations, or through data, surveys and KPIs (key performance indicators).

Reporting on culture typically looks and feels different to a standard internal audit report — so including context is useful. One area that is increasing in popularity is to look at root cause analysis. This means understanding the “why?” It requires listening to — and understanding — the motivations of staff to identify cultural and behavioural drivers.

It is vital that enterprises understand organisational culture isn’t a goal but an operational side effect that is difficult to change. There is little point in going through the motions of a culture audit unless the problems unearthed are acted upon.

A firm’s culture is critical — without the right culture, fast, rapid, organic and credible development and innovation cannot happen.

■ Michael Armstrong is ICAEW’s Regional Director for the Middle East, Africa and South Asia.