A recent poll conducted by Thoughtpost Governance and the Global Governance Initiative (GGI) found that 49% of not-for-profit CEOs consider their boards add “very little” to culture, with 2% responding that in fact their board destroys it. And the result in other businesses could be higher.
“This is a concerning result,” said GGI’s governance expert Andrew Donovan, who has steered the governance conversation in Australia for the past 20 years. “As ‘purpose-driven’ organisations, NFPs are assumed to have a stronger culture, perhaps because they are generally led by people passionate about a particular cause. So it’s likely that this number would be even higher in public and private organisations.”
“Just like good governance, a healthy culture starts in the boardroom,” he said.
The poll results showed strong agreement from many executive teams that not only do boards add very little to culture, but that they lack awareness of the influence they have on culture – and the flow on benefits of good culture for employees, customers and society.
“Most boards are late to the culture party so they really have some catching up to do to align with increasingly sophisticated expectations of stakeholders including employees, customers, community and regulators.”
Get your House in Order
Donovan, who is also the Founder of Thoughtpost Governance, has been a facilitator with the Australian Institute of Company Directors for 15 years and offers a simple piece of advice to boards who are unsure of how to get started on culture: get your own house in order first and tackle the more sophisticated challenges later.
He outlines three steps to good ‘housekeeping’ when it comes to culture:
1. Self-reflection: Individual directors need to reflect on their approach and consider the impact they want to have on culture inside and outside of the boardroom – and then work on aligning their own behaviours.
“In GGI’s governance training we use the metaphor of a garden,” said Donovan. “To grow certain plants, you have to prepare the soil and ensure the conditions are right. The same goes for culture. You can’t expect to grow a particular type of culture if it is not nurtured in the boardroom first.”
2. ‘Break bread’ together – boards need to build relationships and trust with each other before they can hope to positively impact organisational culture.
“There’s a lot to be said for the old idea of ‘breaking bread’ together as a means of connecting and building social muscle,” said Donovan. “These days it could start with putting away the phone, closing the laptop and spending the time before the meeting starts connecting with colleagues. This is good practice in the boardroom or anywhere.”
3. Work on board-management relationships – The relationship between board and management is critical.
“When there is a relationship of common understanding and trust, where all participants feel psychologically safe, a free flow of information and communication is more likely. We’ve seen too many cases in the past where executives have omitted information – possibly for fear of repercussion, and boards haven’t delved in as much as they should. There are no sides here, everyone is working towards the same purpose, so it’s vital that every voice in the room is heard and respected for the value it will add.”
In the past year, and particularly since the 2018 APRA report into the Commonwealth Bank of Australia and the recommendations of the banking Royal Commission, the correlation between good governance and ‘culture’ has come sharply into focus for boards and executives.
Donovan claims that governance is now everyone’s business.
“As organisations – both within the finance sector and outside of it – take note and respond, culture as the foundation of behaviours, strategic approach and pursuit of purpose is emerging as the strongest external driver, shaping the biggest change, in recent governance history. It’s a movement too great for any board to ignore.”
For further information about nurturing a healthy culture, explore GGI’s Purpose & Culture module as part of the Governex governance training suite.
Global Governance Initiative (GGI) was established to ensure that every business, regardless of size or financial ability, should have access to leading corporate governance resources to support and enhance their performance. GGI offers a complete online governance training suite as well as consulting services, which can be tailored to suit individual client needs. More information is available at www.ggi.community
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