Peter Crow
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What is "corporate governance culture", and how is it relevant?

30/7/2014

2 Comments

 
Ah, culture, an oft misunderstood and sometimes misrepresented word. In the last few decades, a lot has been said about culture in business. Drucker's comment, that culture eats strategy for breakfast, is widely quoted. Given the importance of strategy to the achievement of objectives, culture must be really important! 

Many of us know about culture, but what is it? You might like to read what others think culture is before you read on, because I have just come across a rather troubling variation: corporate governance culture. Yes, that's right. Corporate governance culture. It's mentioned here. Craft makes some good points in his article, but this term seems to imply that boards have their own culture, which leaves open the possibility that the rest of the company has a different one. That doesn't sound right.

Craft suggests that the vital relationship between culture, strategy and performance is at the heart of good governance. We nearly agree. I suggest that the vital relationship between culture, strategy and boards is at the heart of effective performance. Same elements—different arrangement. But then Craft moves on, and in so doing he loses me:
The only way in which a company is able to ensure that it is delivering the right type of business growth is through performance analysis and appraisal.
Really? Performance analysis and appraisal are both rearward facing activities. How does looking backward only ("the only way...") help if you want to go forward? Bob Garratt's book, The Fish Rots from the Head, tells us most of what we need to know. Culture starts at the top, in the boardroom, and it pervades outwards from there. If boards expect to influence the achievement of company performance outcomes, they need to engender a company-wide culture and wrestle directly with strategy (which is "the art of command" after all). So, let's leave cute terms like "corporate governance culture" where they belong—on the cutting room floor.
2 Comments
International Whistleblowers link
31/7/2014 08:41:53

Fostering a corporate culture that encourages transparency has been identified as one of the best ways to stop corporate crime. Yet, we still have people debating its importance, what it is, and where different cultures start and new ones begin within a business. It needs to be encouraged and fostered from the top but there also must be buy in from employees. It takes a lot of work but when you look at the price of fraud and corruption within business, you realize companies can't afford not to invest in promoting a transparent culture. However, we can’t forget that there also needs to be mechanisms in place to protect employees.

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Peter Crow
31/7/2014 10:24:59

Thank you very much, we generally agree!

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Peter Crow PhD CMInstD

Company director | Board advisor
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