A recent headline read “Complacent and arrogant culture allowed to flourish.” Is this evidence enough to prove that Boards need to set, manage and be held accountable for an organisations culture?

A Board’s close involvement in the design and management of the culture the organisation requires to mitigate its risk, execute its strategy and deliver the best bottom line possible is now a crucial and proven requirement and should form part of the Corporate Governance Processes says Craig McCallum General Manager Marketing at Mettle Consulting, a specialist in Corporate Culture and Executive Leadership.

A worldwide survey conducted in 2005 showed that CEO evaluations do not measure the CEO’s or the Board’s ability to lead people, create and strengthen culture, manage stakeholders or act as a role model. 48% of the 4200 worldwide respondents said that they had complete knowledge of their company’s finance, 34% had a complete knowledge of their corporation’s strategy but only 18% said they had complete command of its risks.

McCallum suggests that boards need to be held accountable for approving, implementing and auditing specific culture development KPI’s that determine what cultural characteristics will best support the organisation’s unique strategy. The Board should be accountable for regularly auditing the health of these characteristics as they are the most powerful leading indicators about the long term performance of an organisation and its risk profile. (2005 McKinsey Board Directors Survey)

“Auditing the culture, however, is more than just distributing employee opinion surveys and engagement scores once or twice a year” says Katharine McLennan, Practice Leader at Mettle Group. “These review systems are often used as proxies for the Boards to review the health of the culture”, but Katharine warns “opinion surveys often indicate how satisfied employees are with the organisation at a given moment in time, they do not indicate whether employees believe that they are required to behave in the specific ways that the Board and CEO have deemed best to support the organisations strategy.” A large number of organisations undertake regular employee engagement survey’s (or similar), but find that they simply compile copious amounts of data yet, continue to struggle for any real insight or perform tangible response actions to the results.