Corporate Culture & The Role of Boards

Board effectiveness

2 min read

Board Intelligence welcomes the FRC’s report Corporate Culture & The Role of Boards, which explores the relationship between corporate culture and long-term business success in the UK.

We were invited by the FRC and IIA to contribute to the report and Dineshi Ramesh, an Advisory Partner at Board Intelligence, shares our thoughts on the report:

"We believe it is time to throw culture into the spotlight. Culture is an enduring quality of an organisation and a highly influential force, for good or ill. But the subtlety of the subject poses a challenge for regulators – how to apply rules to something that is unique and mercurial. The FRC has been wise to outline best practice but not set out requirements at this stage.

As specialists in board reporting, we were particularly interested to read about the implications for the role of the board and reporting within an organisation.

On the role of the board, the report states that boards should start by “setting out clearly the desired culture and behaviours”​. The suggestion that it is the board’s role to set culture is a contentious one. It is certainly right that the tone should be set from the top; however, we believe it is the responsibility of the CEO and their executive team - those at the heart of the organisation - to determine culture. The board's responsibility is to monitor, challenge and support the CEO in developing a culture that is right for the organisation, an important distinction.

When reporting on culture, you might start with the question, can it be measured? The FRC report outlines various culture indicators. These are set out as observations and it is reassuring to know that the FRC has not been prescriptive about which indicators to use; we believe measures (such as employee engagement results and attrition) can provide insight into certain aspects of culture, but metrics alone will never provide a complete picture. For that, you need to piece together information from a variety of sources, which might include internal audit reports, views from external groups and conversations with employees and customers.

What makes the FRC's report so encouraging is the contributions from CEOs, Chairmen and experts featured throughout. These demonstrate that culture is being recognised as a priority by those who have the means to affect change. We are delighted to have supported the FRC with this initiative.

For more information on our involvement with the report, please contact Dineshi.

Click here to read the full report.

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