Culture eats strategy for breakfast.Peter Drucker

If corporate culture (CC) is more important than strategy, then a board should give it appropriate priority. Boards that know how to set up, measure and improve corporate culture have a game-plan that shares three major steps:

Asking the Right Question

The company A promotes a flexible work schedule over a high compensation and believes employees rather to have a day off than a corporate celebration for a holiday. It also let employees to work in self-managed teams. The company B promotes a 9 to 5 work schedule, supports rigorous hierarchical structure and rewards its people by throwing in big corporate parties. The Company B offers the highest compensation package in its industry. Which corporate culture is the right one? The answer is both.

Corporate culture is not a one set of rules and behaviors that should be replicated across every industry, region and business. Corporate culture just like people that represent and execute it differs. Some people thrive in an individualistic culture, others prefer a highly collegial one, while a third may seek a whole new paradigm.  Various types of corporate culture can be successful.

Right questions for a board to ask are, therefore: What corporate culture is right for our company? What authentically represents the vision and values of the founders of the company, and most importantly, what works for the company?

Does the corporate culture take the company where it wants to be and helps it to achieve its goals? If it does, then great. The company should keep nurturing and spreading its particular culture. If it doesn’t, however, there is time to assess what is not working and introduce changes.

Setting the Foundation

A Board is a company’s strategic body that plays an important role on setting the corporate culture. It sets the tone at the top and communicates what is valued in this company. The values direct further to identify behaviors, language, dress-code, and HR policies that are acceptable or not acceptable in the company. The board sets the base for developing rules and practices.

Once the corporate culture is shaped up and established, it defines what kind of people (starting with the board members) the company needs to recruit to succeed in this type of culture.  While people may come from different ethnical and educational backgrounds they all should share the company believes that form the culture. If the recruitment policy is aligned with the culture, the people will buy in, follow through and thrive with corporate rules practiced in the company.

Board is the highest established authority within the company. The executive team and the employees listen to what the board says and, most importantly, what the board does. Employees don’t simply observe the authority figures, they emulate them. Role-modeling is one of the most powerful leadership tools and boards serve as role models.  While most of the board members are not full-time employees and are not involved in daily operations, they exemplify their loyalty to the values they preach through decisions they make.

Measuring the Health of the Culture

What can be measured can be improved. If corporate culture doesn’t support the achievement of company’s objectives, it should be changed. But how do boards implement cultural changes?

Corporate culture has long been recognized as an important element of sustainable development. One important source of information about the corporate culture is the results of annually administered company performance survey. However, a board shouldn’t stop there. It can develop its own set of metrics to assess the CC index throughout the year. Answers to the following questions can serve as indicators for measuring the health of corporate culture:

  1. What our HR practice numbers tell us? Do people work for the company long or they leave us soon? Do we know what’s the reason?
  2. How do we insure employees are informed about values we pursue? Is our practice in alignment with our values?
  3. Do we have company-wide trusted communication channels to generate employee feedback? What did we learn from it?
  4. How do we ensure the corporate culture is consistent across the company? Are we aware of any divisional “pockets” that establish practices different from the corporate culture?  
  5. What do we learn from external sources? Do we know what our alumni, partners, customers and vendors say about the company?

A simple, yet powerful CC plan will let a board to “keep a finger on the pulse” and create a winning corporate culture.