Interesting findings from the AICD/ASCI report on Governing Company Culture – 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.
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.