Strategy & Operations » Governance » Speaking about corporate culture requires a new vocabulary

Written by Gilly Lord, head of regulatory affairs, PwC

IN a game of corporate buzzword bingo, rolling out the word “culture” will get you well on the way to a full house.  Plenty of organisations have published their views on the subject, most recently as part of the FRC-led “Culture Coalition”.

Most listed companies have pondered the subject in their boardrooms – exactly how are boards meant to exercise their responsibilities to establish and monitor the right culture throughout their organisations?  And what is the right culture anyway?

Let’s begin with that last question. Cultures aren’t inherently good or bad and we shouldn’t all aspire towards the same (mythical) perfect culture.  Some companies want to take more risk, some are more creative, others pride themselves on their meticulous and disciplined approaches.  All of these are cultural traits that can add value, if harnessed in the right way.  So, a pretty sensible place to begin on the culture journey is to work out how you would describe your own culture, and how you can make the most of it.

We’ve talked about tone from the top for years, and obviously it’s important that an organisation’s leaders are seen to embrace the same values as underpin the company’s culture.  But sometimes that leadership icing on the cake can sit on top of a stodgy layer of spongey middle management – and it’s that middle layer of sponge which dominates a mouthful of cake – or the culture of an organisation.  So tone in the middle is just as important, and often ignored.

A good way to tackle tone in the middle is to identify a network of informal leaders who can spread your culture and values much more effectively than a CEO’s voicemail.  These informal leaders are people of differing seniorities, usually without an official leadership or management role, but who, through their charisma and behaviours, can influence numerous people around them.  In today’s digital world, they’re often active on social media and command huge followings.

You could also consider giving people a vocabulary so that they can talk about cultural issues.  Culture is notoriously difficult to articulate, but many organisations have now translated their culture into a set of values, and associated behaviours, that can be described, measured and monitored.

These are my practical tips for leaders wanting to tackle the questions we began with.  But why has culture risen to the top of the agenda, particularly the regulatory agenda?  Many recent examples of high profile corporate failures can be traced to a cultural failing – whether it’s a dominant chief executive, rogue traders or leadership who are over focussed on short term financial performance.  So certainly, harnessing corporate culture successfully could be the key to protecting against disaster.

But in a business-as-usual world, culture can have other, more positive benefits.  If your employees have an implicit, cultural understanding of your expectations and how to “do the right thing”, then you’ve got far less need for complicated policies and rules and a real opportunity to save on substantial compliance costs.