Corporate Culture = Talk + Action

Corporate culture is all the rage now, meaning it is an often used topic to signal commitment, sensitivity to issues of employee concern, and an awareness of governance trends.  In practice, as we all know, culture is not just about words — it is about action.  As the often repeated phrase goes — talk is cheap.  On the issue of culture, talk is not only cheap, but, in the absence of action, talk can cost you a lot of money. 

All too often we hear how corporate leaders who mistakenly believed that their company’s culture was strong, are “shocked” to learn about systematic misconduct resulting in a government enforcement action.  These senior leaders are not being honest — with themselves and their stakeholders. 

Senior leadership “knows” that corporate culture demands more than words, but they convince themselves that their loft and inspirational words are sufficient.  In the end, senior leadership teams are either unable to move themselves to tackle the important issue of culture, or they are unwilling to look under the hood of their company’s culture to discover potential issues that warranted attention.  Instead, they focused on the more interesting issues of quarterly financial performance, key business decisions, and strategic moves in the marketplace. 

Only when pressed to act — when an emergency occurs — will senior leadership suddenly turn to corporate culture and employee misconduct failures.  Reactive attention to culture is just that — reactive rather than proactive.  In these cases, senior leadership teams have to be held accountable for their failure to institute a proactive approach to managing corporate culture.

It is important to remember that a company’s reputation is the company’s most valuable intangible asset.  A company’s culture is inextricably  tied to its reputation.  As such, corporate culture, like any other valuable asset, has to be protected and promoted.  Rough estimates of the value of a company’s culture vary between 25 to 40 percent of stock value. 

When measured against other tangible and intangible corporate assets, senior leaders that ignore corporate culture are committing negligence (at the very least).  Yet, we have not seen efforts to hold boards and senior leaders for negligence in meeting corporate governance standards.  Instead, corporate accountability enforcement often points to structural deficiencies such as a lack of a safety oversight and monitoring committee, or some other glaring governance failure.

To address this issue, corporate leaders have to begin the hard work by defining the company’s culture, the measures or indicia of its culture, collection and analysis of culture data, and monitoring of corporate culture data trends.  A proactive strategy ensures that a company identifies potential problems before they occur, implement remedial solutions in advance of a culture breakdown, and remain vigilant in monitoring its corporate culture.

LRN’s recent report on corporate culture, Assessing Corporate Culture,  provides a great outline of a corporate culture oversight and monitoring strategies.  in particular, LRN cites a number of measures of corporate culture that can be used track trends, including: (1) employee surveys; (2) focus groups; (3) roundtable discussions; (4) exit interviews; (5) site visits; (6) internal audit reports; (7) feedback channels; (8) turnover rates; (9) employee hotlines; and (10) manager reports.

As a starting point, the LRN report provides a number of positive steps companies, beginning with the board and senior management, in defining, embedding, managing and monitoring its corporate culture.  The real work begins after the inspiring words are spoken, after the dust has settled, and day-to-day operations are executed.

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