At our seminar on Wednesday we looked at how to connect culture, strategy & governance, along with the belonging challenges emerging for leadership teams as a results of the Financial Reporting Council’s (FRC) report earlier this year.
We kicked off our seminar considering the true value of culture with a short clip of Senator Elizabeth Warren questioning John Stumpf on the Wells Fargo scandal. She directly references the corporate report in the first few seconds of the clip and uses their vision and values statement as a basis for examination.
We were delighted to have Anna Colban, Project Manager, Corporate Governance and Reporting from the Financial Reporting Council, as a guest speaker. Anna stressed the compelling evidence indicating the importance of a healthy culture to sustain long-term value. The key points supported findings from the FRC report on ‘Corporate culture and the role of the board’:
Anna emphasised that culture is not always easy to pin down:
“At the FRC, we wanted to understand the more intangible influences on behaviour, which is necessary for boards to move governance to the next level”
“Although tone at the top is critical, everyone is responsible for owning and maintaining the culture.”
“The best leaders realise that they cast a very long shadow- what they say is heard very loudly – they have to be connecting with people and giving those messages – but there is a two-way communication. Messages need to come back up to leadership”
“One of the sure fire ways CEO’s told us to wreck people’s belief and trust in your values ,and what you stand for, is if you do not deal with people that deliver on the numbers in a way that is not consistent with the values and behaviours that are expected of them.”
Isabel Collins, our Founder, talked through some of the implications for belonging and leaders:
“Belonging isn’t brittle – its fluid. Many organisations now are complex, and multi-layered. The oversight role of leaders and boards is very difficult. Culture can undo any amount of strategy.”
“Indeed, as one client said recently “the reason our Board has been slow to look at culture isn’t because it’s ‘soft’, it’s because it’s too hard to do”.
“The company with a strategy for innovation but a culture of ‘right first time’ will fail.”
“Governance and ethics are intertwined with culture. Candour, openness and ‘Just’ culture is as vital as policy and procedure. Again, it’s a balance. If ethics is over- stringent or under-defined, culture is left to the human tendency to compliance within a group.”
Our next guest speaker, Karen Wilson, CEO, Hoggett Bowers, unpacked the delicate challenges that leadership face when they are disconnected from the rest of the organisation and culture. She highly recommended the book ‘Reconnected Leader’ by Norman Pickavance for leaders that are disconnected from culture.
“What do people want from culture and what does the average employee want from leadership?
Taken from a recent Mori Poll:
1) tell me the truth
2) show me you care
3) keep me safe
4) give me hope”
“The biggest cause of disconnection is that you can’t get to everybody in a sizeable organisation. How can the leadership team get to all the employees to inspire them? The global expansion of companies gets in the way of people at the top being connected to the workforce throughout the business.”
We provided some practical ‘How To’s for your business:
- …set values: don’t take an isolated approach when defining values, everyone needs to own the values to live them effectively. Using verbs rather than adjectives or nouns then it becomes something active.
- …test whether culture is helping or harming: make it relevant to everyday business, look at what you’re culture means in daily business practice, and for the areas where your culture may be more of a hindrance than an asset. Our product, The Belonging Litmus Test, is a great way to see how culture is helping or harming your business.
- …open the conversation with the board: in order to open a conversation with the board, you must provide a reason to look at culture. You can’t just say ‘we need to look at our culture’ you have to make it grounded in reality. Show your board where something could’ve happened faster, or an error could have been prevented, if you’re culture was more in line with your strategy.
Keep watching this space over the next few days for more, in depth content on the implications for belonging, in response to the FRC’s recent report on “Corporate culture and the role of the board.”