Culture and boards

An article by Heidrick & Struggles proposes that business culture is rapidly becoming a crucial factor in business performance and hence board effectiveness.

While warning that boards must be careful not to begin micro-managing a business’ culture it is suggested that boards must be able to understand and “take the temperature” of the business’ culture in order to be able to fulfil their roles as directors.

While some directors may resist being involved in culture as it is difficult to define and measure, the writers claim that culture should not be invisible to the board and can be discerned from the values of the business and through questioning statements which measure agreement with the values.

While some directors may find this approach somewhat nebulous, the authors contend that directors can define the culture, but the picture they get is often wrong and may need external assistance.

In effectively carrying out the boards’ role having an accurate gauge of the culture can be important for succession planning, compliance and risk management. For example, with succession planning ensuring either a cultural fit or driving a cultural change with a new chief executive officer requires a deep understanding of culture. 

Similarly, understanding culture must help to identify cultural drivers that could impact on compliance or risk. For example if a hidden culture of extreme risk taking or carelessness were uncovered there would be ramifications for the board – which  could then instigate processes and controls to avert any crisis while then addressing a necessary cultural shift. 

To read the full article, click here.