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Closing the Gap Between What Boards Know – and Think They Know – About Company Culture
Closing the Gap Between What Boards Know – and Think They Know – About Company Culture
Daniel Forrester, CEO
By Daniel Forrester, CEO
October 10, 2017
The National Association of Corporate Directors just released a benchmark report on “Culture as a Corporate Asset.” This is an encouraging step as it shows that business leaders are taking corporate culture seriously. Among the critical recommendations: boards and executives must help change company culture by enabling consistent behavior that reinforces company values and priorities across corporate divisions.

The National Association of Corporate Directors just released a benchmark report on “Culture as a Corporate Asset.” This is an encouraging step as it shows that business leaders are taking corporate culture seriously. Among the critical recommendations: boards and executives must help change company culture by enabling consistent behavior that reinforces company values and priorities across corporate divisions.

It’s encouraging that the NACD is kick-starting this conversation, and their suggestions are good ones. However, one of the missing pieces is a discussion about how the cultural fabric of a company (its values and how employees reflect those values) spell the difference between success and intractable problems. I longed for such stories to be told in the report. To effectively weave that cultural fabric, boards must be part of the discussion before their cultural shortcomings are broadcast on social media or the nightly news.

Timing is crucial. When a CEO is on C-SPAN – think of the recent appearances of Wells Fargo and Equifax leaders on Capitol Hill – it’s the wrong time to talk about the culture you want to develop. Those conversations should have started years ago. There are consequences to poor timing: companies are buckling because of their inability to reconcile the disconnect between the boardroom and daily office culture.

If you serve on a board, the last thing you want to discover through a Facebook post or Tweet is that you’re sitting on a toxic culture. Still, the gap between what boards think they know and what’s really taking place at the office is often stark. That gap needs to close immediately. In addition to the NACD’s many excellent suggestions, I recommend that boards take a few extra steps:

  • Accept the Culture of Radical Transparency: Every board needs to accept the sometimes-uncomfortable fact that your culture is live on the Internet on a real-time basis. Every CEO is being scored on Glassdoor. Employees share every aspect of their experience and every workplace quirk they notice online. Salaries are shared, too. Accept that these tools are changing the workplace, and respond to this transparency by listening and improving your company culture.
  • Explore the “Permeable Layer” of Your Company Sooner: Your culture – and what others perceive to be your culture – is now part of the media mix. This will only increase exponentially in our frenetic and connected world. Boards need to close the gap between what they see and hear and what is happening on the ground. There is often a considerable lag between what happens inside a company and what a board hears; news often breaks before a board even has the opportunity to mull changes. Know the perceptions of your company culture before others make up their mind for you, and fix what’s wrong.
  • Embrace Ethical and Purpose-Driven Leadership: Employees aren’t just looking for a positive culture; they are looking to be part of something meaningful that reflects their values. They want to see leaders exit employees who are “cultural vampires” and clearly acting at odds with the stated values of the company. When you establish purpose and shared values, you ignite employee performance. Turnover plummets. People in companies without purpose are less productive and more likely to leave. Employees with purpose work to make things better and to uphold a healthy workplace culture that reflects your company values.
  • Engage in Transformative Conversations: Understanding and reacting to the culture of transparency is just a building block. Again, you must help knit a strong cultural fabric. Boards and companies should stretch and ask big questions from the workforce about how to make their work and jobs meaningful. Don’t just fix what’s broken; seek to inspire.

There are consequences for ignoring corporate culture: stock prices plummet, prospective employees don’t apply, great employees leave, and bad public relations events are frequent. Boards are on the hook for leading conversations about culture and, ultimately, holding leadership accountable. Taking additional steps to weave that cultural fabric will keep your workers happy and your business thriving.