“Organizational culture is how things get done around here.” – Deal and Kennedy
Organizational culture has been a popular topic for decades. Many now agree that culture is very important, that it can be managed, and that the board needs to be not only informed, but also involved. Where there is less agreement is how the board should be informed and involved vis-à-vis organizational culture. It is a complex area, and should not be underestimated. Research suggests that shifting an organization’s culture is the most difficult change initiative undertaken by organizations. Culture is a critical success factor for the organization, and the board must be appropriately engaged. The aim of this blog is to provide guidance for boards of directors in relation to culture and the board’s role with the following seven steps.
1. Assign responsibility for monitoring the organization’s culture to a board committee
Like other key areas, such as finance and risk, monitoring the culture of the organization should be assigned to a board committee, such as the Governance committee or the Audit committee.
2. Have the organization’s culture measured
As a first step, the board should know what the current organizational culture is. The relevant board committee should hire an expert who uses a reliable tool, such as the Barrett Culture Assessment tool, to measure the current culture. This data is important. Large organizations typically will have six to eight prominent culture dimensions or elements, e.g., safety culture, supportive supervision, etc.
3. Agree on what the organizational culture needs to be
Once the current culture has been measured, the board should discuss the results with the consultant. Ultimately the board should reach agreement on what the culture needs to be, i.e., determine what culture dimensions to keep and which ones to replace.
4. Agree on the plan to achieve the desired organizational culture
Ask the CEO to present a proposed plan to the board to achieve the desired culture. Recognize that shifting culture typically takes concerted effort on the part of many over several years. The plan should include the action items as well as the resources required. The board should discuss the proposed plan with the culture consultant, make any necessary changes to the plan, and have the board approve the plan.
5. Monitor progress on the plan to achieve the desired culture at each board meeting
A progress report on the plan for the culture shift initiative should be a standing agenda item at each board meeting. Allocate time at every board meeting to discuss the progress.
6. Assign responsibility for measuring the progress in shifting the culture annually
The board should ensure that the culture is measured each year, preferably using the same approach as the initial assessment, e.g., the same consultant and same methodology. Once the progress on shifting the culture has been measured, the board should review the results. Remember that it typically will take years to shift the culture, so patience and persistence are key.
7. Hold the CEO accountable for reaching the desired organizational culture
The board should make achieving the desired organization culture a key responsibility of the CEO. Culture should be included in the CEO’s performance evaluation and related compensation package.
Peter Drucker’s quote “Culture eats strategy for breakfast” is well known. Most boards have embraced their role vis-a-vis strategy. The time is overdue for boards to show similar commitment to carrying out their responsibilities related to organizational culture.
References:
Burke, W. (2014). Organization Change, 4th Edition, Sage, Thousand Oaks.
Deal, T. & Kennedy, A. (1982). Corporate cultures; The rites and rituals of corporate
life. Harmondsworth: Penguin.
Leblanc, R. (2016). The Handbook of Board Governance, Wiley, New Jersey.
Lipman, F. and Lipman, L. K. (2006). Corporate Governance, Best Practices, Strategies for Public, Private and not-for-profit organizations, Wiley, New Jersey.
© Dr. Karen Somerville, PhD, C. Dir., MBA, CPA, CGA, CEC
Karen has more than 25 years of experience as a leader and has worked in all three sectors – the private sector, the public sector and the non-profit sector. She has served on many boards throughout her adult life. Karen holds a PhD in Management, an MBA, a Chartered Director designation, a Certified Executive Coach designation and CPA/CGA designations. She is an expert in Organizational Culture Change, and the President of Performance Plus Group: www.performanceplusgroup.com . She is also a CTT Certified Consultant, qualified to use the cultural transformation tools available from the Barrett Values Centre, a global leader in values and culture.
