Culture is fundamental to the success or failure of an enterprise. The misconduct of a senior executive – or even that of a junior officer – in this era of social media can cause irreparable damage to the Company’s reputation. Underscoring the importance of Corporate Culture, Principle 1 of the Nigerian Code of Corporate Governance 2018 provides that an effective Board is responsible for providing entrepreneurial and strategic leadership as well as promoting ethical culture and responsible corporate citizenship. It is expected the Board Charter shall set out as a key Board priority, the establishment and maintenance of the Company’s values and standards as well as modelling these values and standards.
The starting point will be for the Board to define what kind of culture it wants to enthrone in the organization, assess the prevalent corporate culture, determine if this is a desirable culture and in alignment with the espoused values, how to reinforce it if it is durable, and remold it if it is not.
Defining the core values, a Code of Ethics (incorporating Business Conduct) a robust ethics and compliance program, designating an Ethics Officer, approving a transparent whistleblowing mechanism that protects whistle blowers and clear communication across the organization are steps towards defining a corporate couture. It entails ensuring that hiring, reward, compensation and firing polices are underpinned by the espoused culture. Performance targets and indices should also be set and appraised with the underlining culture as a basis.
Given that Directors don’t spend enough time on the shop floor, it is difficult for them to assess corporate culture. Usually, the most they see are senior executives who appear at quarterly Board and Committee meetings to make presentations on their respective areas of oversight. This does not give the Board sufficient opportunity to assess what the prevalent culture in the organization is.
To assess corporate culture, the Board should commission employee and customer surveys – this is best outsourced, and parameters clearly defined. The right atmosphere will need to be created to reassure employees of non-reprisals for speaking up. It is good practice to undertake this survey periodically to enable the Board keep a tap on espoused and actual corporate culture. Another useful tool in assessing corporate culture is to review the whistle blowing reports and how complaints are handled. It is not enough to accept reports of incidents as duly resolved. The Board needs to ask questions and gather as much information as possible to form as clear a picture as possible of the prevalent corporate culture.
The Board is encouraged to have occasional informal interaction with senior and middle level staff – company retreats, end of year events, etc. Directors should pay attention to little details – body language of executives at Board and Committee meetings. Is the effort to put up a common front contrived or genuine? Is there an effort to cover up infractions? What kind of side comments do executives make? Are these signs that there could be some toxic elements in the organization? These signs should not be ignored but be further interrogated by the Board.
With a clearer picture of what the culture is, the Board will then need to take action.
Where it finds a misalignment between the corporate culture in practice and the espoused culture, the Board will need to commission and acculturation that will seek to translate the core values, code of ethics and other elements of the corporate culture into action. In certain cases, this will entail replacing leadership, as to a large extent the CEO is a key driver of corporate culture and employees take their cue from him/her. An acculturalization process will entail staff and stakeholder workshops, identifying culture champions, rewarding good behavior, punishing bad behavior regardless of who the offender is, slogans that reinforce core values and open, consistent communication. Deliberate steps will need to be taken and periodic reports of progress presented to the Board.
Where the assessment indicates a positive culture, the Board will take steps to ensure this is reinforced and sustained and that the occasional soundcheck is undertaken. It is critical for the Board to keep a constant oversight of culture and develop over time appropriate measurement metrics that enable it ascertain that the programs and policies it has put in place continue to be fit for purpose, and where they are not, review these.
Bisi Adeyemi is the Managing Director, DCSL Corporate Services Limited. Kindly forward comments and reactions to badeyemi@dcsl.com.ng