A culture of integrity is not just the right thing to do — it is also good for business, because the culture of an organisation is extremely important to its long-term performance and increasingly valued by investors.
What Does It Mean to Create a Culture of Integrity?
Interesting findings from the AICD/ASCI report on Governing Company Culture note that boards are "clearly responsible for cultural oversight as well as the financial performance of an organisation". The report also highlights that the culture of an organisation is extremely important to long-term performance — which is why investors would "increasingly value greater disclosure of a company's cultural strengths and weaknesses". This reaffirms that creating a culture of integrity in an organisation is not just the right thing to do, but also good for business.
Why Is a Culture of Integrity Good for Business?
The report reaffirms that a culture of integrity supports long-term performance and that investors increasingly value disclosure of a company's cultural strengths and weaknesses. Culture has shifted from a secondary concern to a high priority, firmly in the spotlight for directors who see a clear link between culture and the long-term performance of a company.
What Are the Key Findings on Governing Company Culture?
The key findings from the report were:
Culture is the responsibility of directors, not just senior management. Directors can use a range of practical methods to exert significant influence over company culture.
Company culture is an increasingly high priority. There has been a significant shift over recent years, with culture now firmly in the spotlight for directors.
Directors see the link between culture and long-term performance. Directors feel that culture is extremely important to the long-term performance of a company.
Effective oversight of culture requires active and curious directors. Directors must be curious, persistent and willing to synthesise the many formal and informal sources of data relating to culture. Directors must be alert to an overly optimistic picture of culture from management.
There is limited public disclosure on culture. Investors would value greater disclosure to discern companies' cultural strengths and weaknesses. Yet practices amongst ASX 50 companies show wide variance in public disclosure and there is a lack of market consensus as to the most valuable metrics to report against.
Who Is Responsible for Company Culture?
Company culture is the responsibility of directors, not just senior management. Directors can use a range of practical methods to exert significant influence over company culture, and effective oversight requires active and curious directors who are persistent, willing to synthesise the many formal and informal sources of data relating to culture, and alert to an overly optimistic picture of culture from management.
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Frequently Asked Questions
What is a culture of integrity?
A culture of integrity is an organisational culture that is both the right thing to do and good for business. According to the AICD/ASCI report on Governing Company Culture, an organisation's culture is extremely important to its long-term performance.
Why is a culture of integrity good for business?
Culture is extremely important to the long-term performance of a company, and investors would increasingly value greater disclosure of a company's cultural strengths and weaknesses. This is why creating a culture of integrity is not just the right thing to do, but also good for business.
Who is responsible for company culture?
Culture is the responsibility of directors, not just senior management. Boards are clearly responsible for cultural oversight as well as the financial performance of an organisation, and directors can use a range of practical methods to exert significant influence over company culture.
What does effective oversight of culture require?
Effective oversight of culture requires active and curious directors who are persistent and willing to synthesise the many formal and informal sources of data relating to culture. Directors must also be alert to an overly optimistic picture of culture from management.
