GPC the role of the board and organizational culture

GPC Organizational Culture Event. From left to right, Deborah Rosati, Carol Faull, Heather Laxton, and Lloyd Segal

The Governance Professionals of Canada hosted an educational panel as part of their professional development series on the role of the board in organizational culture. The three panelists were Heather Laxton (corporate secretary for Wesdome, Lloyd Segal, Chair of the board for MedReleaf, and Carol Faull from L&C Strategic Advisory Consultants, our organizational culture expert. Deborah Rosati from Women Get On Board was the moderator.

How do you Define the term “Corporate Culture”

Deborah wanted to know how culture is defined. Carol Faull explained that company culture very simply is “the way we get things done around here.” As simple as that sounds, the implications are significant. She noted that McKinsey did an extensive study with their clients a few years ago and discovered that an astounding 70% of McKinsey’s recommendations were not reaching their full potential because of the culture of an organization.
When Deborah asked how to get culture on the board agenda, there was general acknowledgment that getting the issue of culture on board agenda can be a challenge. Culture is often seen by boards as a “soft” issue and that makes it an item that boards tend not to be interested in discussing. However, with the rise of the #MeToo movement, a focus around diversity and inclusion and more and more evidence pointing to corporate culture being inextricably linked to business success, boards are beginning to realize that culture is an issue that needs to be addressed.

To this end, Carol pointed out that in fact, culture can be measured. In her practice, she uses the Barrett Values Assessment tool to look at the current culture within an organization. As boards are focused on making sure the business results are positive when framed with data, culture becomes an important issue. For example, by measuring such parameters as absenteeism and employee turnover you can begin to assess the pulse of your company’s employees. But the Barrett Values Assessment can measure whether or not what you’re saying as a company (mission and values) is being embraced by your employees.

The corporate culture of the company that ran The Titanic was responsible for the high number of deaths after the accident.

Carol used the Titanic as an example. If you’d asked the guests what they thought of the ship right before the collision, they would have said it was marvelous and the service was impeccable, the finishes exquisite, etc. She maintains that it was the company’s culture that led it to value luxury over safety – not having enough lifeboats for the staff and guests.

So where, exactly, does culture fit on boards? For some of the panelists, it is part of the Balanced Scorecard. For others, it was an issue that was dealt with by the committee responsible for HR. However, the size of the company and its board is also relevant. For small companies and small boards, there may not be any committees per se. Lloyd pointed out that in an emerging company, such as MedReleaf, the culture hasn’t formed yet or is in the process of forming. It is an opportunity for companies to make sure everyone is conscious of how it is forming and to get the “walk” and the “talk” right at the very beginning.

For resistant boards, one of the most convincing ways to get culture on the agenda is to demonstrate to the CEO that business results are tightly linked to the state of corporate culture. When the culture is positive, results also tend to be positive – which, naturally, reflects well on the CEO. When there are business metrics that can be tied to culture, the board will listen.

An audience member put forth her experience in getting culture on her board’s agenda. She works in a male-dominated industry where culture just isn’t something that the board feels needs to be addressed. So, she reframed culture in ways that would appeal to the board. They now talk about using a lens to evaluate actions and compensation. They ask, what are the drivers for business, what is the information flow, etc. It has been successful to change the language. “If they knew they wanted it, they would be there, so we just help them get there.”

While corporate culture can be hidden from the board in general, there are a few things you can do to make sure you are familiar with the culture within the organization, especially before you become a board member. Lloyd pointed out that before you accept a board position, not only do you sit down with the CFO or General Counsel, you also sit down with the head of Human Resources and ask how many harassment complaints have been launched against the company. If they haven’t kept track or the number is high, you should run away from that company.

All the panelists agreed that board members should take every opportunity to talk to middle managers and other employees they don’t have exposure to at board meetings. They should participate in off-site activities when appropriate as well as attend annual meetings in order to meet and speak with employees. But also important is keeping your ears and eyes open to the behaviour of the employees, the rapport, the underlying mood.
While getting culture on board agendas can be seen by some as an unnecessary or unpleasant issue, by framing it in a way that makes business sense board directors are more able to understand why it’s necessary. Using a measuring tool, such as the Barrett Values Assessment tool will help board members understand how the culture is at the organization and whether it is aligned with the company’s mission and values. In other words, is everyone walking the talk?