Do boards help shape organisational culture? 78% board members say ‘Yes’

That culture forms the core of good governance is a known fact. For only then can vision and values be shaped, strategies executed and reputation built with stakeholders. Does that mean the boards of companies play a strategic role in shaping organisational culture? Does culture find a place in the list of governance responsibilities of company boards? Culturelytics and the Institute of Directors (IOD) decided to find out.

To understand the developing attitudes of board members about organisational culture and how it fits into their governance responsibilities, a survey was conducted. Executive and non-executive directors serving on public and private-company boards across sectors were part of the same.

The findings were interesting: A whopping 92 per cent board members believe that a board’s governance responsibilities should include ensuring that organisational culture aligns with company purpose. A significant 78 per cent of board member respondents agree or strongly agree that the board plays an active role in shaping the culture of their organisation. Where is the problem you may ask? Well, the problem is that, in reality, a good 67 per cent of respondents report that culture is never, or only occasionally, discussed at board meetings. Only about 30 per cent respondents stated that the board of directors and its chair were responsible for shaping culture in their organisation. A measly three per cent respondents admitted to culture being among the top 5 items of the board meeting agendas. About 50 per cent respondents said the agenda items at meetings only comprised operational topics that required approval, including organisational performance, strategic planning, financial reports and projections that
were important to major business decisions. Culture is missing from the agenda.

Clearly, while most respondents of the survey were of the opinion that culture should be aligned with the purpose of the organisation, and that the same should be the responsibility of the board, they also admitted that they are not presently playing an active role in shaping organisational culture. That means, while the intent is there, no action has been taken to address the same.

Why is culture important for achieving business outcomes? For one, the respondents felt that a positive organisational culture contributes to performance, particularly amidst change. It is essential for the culture of an organisation to be adaptive and responsive, and without such a culture there cannot be success. Additionally, the emotional environment of an organisation is important for productivity and good performance. This is determined by long-term culture, which only the board can drive and instil.

Culture, according to many respondents is what shapes a company’s reputation and affects every aspect of the business, as well as its stakeholders. Culture also forms the foundation of a company’s long-term sustainability goals and vision.

Culture suffers when the board and executive leaders fail to align the organisation’s purpose with its culture.

This brings forth another important question. Do boards have the right tools to assess culture performance? Over 87 per cent of the respondents agree there is a need to comprehensively measure the culture of their organisation, while over 65 per cent recommend embracing AI platforms to help measure and manage organisational culture. Almost 87 per cent of respondents believe that their organisation’s culture is aligned with its mission, vision and goals, while only 35 per cent actively benchmark their culture practices against global best practices. Almost 63 per cent of respondents felt a need for a dedicated management team to implement and monitor culture in their organisation.

When culture is so crucial to the fulfillment of business objectives and is such an integral part of good governance, it is but understood that the boards will have to play a fundamental role in ensuring the establishment and maintenance of the right culture in the organisation. The boards will have to co-create culture and also supervise and support the same.

With growing competition, and the increasing number of mergers and acquisitions today, cultural compatibility is a must. When business transformations fail, most of the time the reason is cultural incompatibility. Therefore, it is high time boards addressed culture through their agenda and committee structure.