Good governance starts with shared ethics, not just policy statements. Connecting culture and governance sets up the organisation so that employees are governed by an innate knowledge of the right thing to do, rather than relying on a hefty rulebook. It is important to have a commitment to what you value throughout the business in order for your culture to help your business performance to the fullest extent. When governance and culture are working together it us easier to see culture as it becomes contextualised.
The FRC’s report on culture and the role of the board states, “Chairmen felt strongly that there is a ‘one-size-fits-all’ when it comes to culture. What matters is that the culture is appropriate for the context in which the company is operating and that there is internal alignment between company purpose, values, strategy and business model(s). Aligning business decisions with purpose and values and focusing on how financial targets will be achieved, will over the long-term lead to more sustainable value creation.”
When culture and governance are working in tandem, business decisions will naturally be consistent with purpose and values, leading to long-term sustainable value creation. When culture and governance are not working together, the grey areas become much more difficult to navigate. Not everything has the black and white of the rules. Provide guidance as well as policy and a culture of ethics can flourish.
Culture and governance can also be brought together by creating a system of reward and recognition that focuses, not just on what you’ve made, but on how you’ve made i. By building cultural indicators into your reviewing system you can enhance good decision making, and help to safely navigate ethical grey areas without slipping up. In the Belonging Parameters©, a balance between Accountability and Appreciation is important.