Creating Great Culture Starts With Directors Looking In The Mirror

board of directors culture
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Boards have been wrestling with the question of how they can exercise their influence to promote, sustain, and monitor a workplace culture that maximizes organization performance and adheres to core values. Here is some guidance about how to do that.

board of directors cultureIn the past year, there have been scores of reported misconduct in companies across virtually every industry and sector. From Weinstein to Wynn, from Volkswagen to Wells, the behavior of executive leaders has resulted in the dismissal of executive leaders, thousands of lawsuits, and tens of millions of dollars in fines and lost business. As questions about the accountability of boards and CEOs for these actions have accumulated, directors and executive suite leaders have been wrestling with the question of how they can exercise their influence to promote, sustain, and monitor workplace cultures that maximize organization performance and adhere to core values. Here is some guidance about how to do that.

First, the culture of an organization starts at the top. As conveyed by the old saying “Where the head goes, the body follows,” people in organizations pay very close attention to and often emulate the behavior of their leaders. Board members and executive leaders need to develop and deliver against a code of conduct to which they hold themselves accountable. As culture is often defined as “how we do things around here,” generating and communicating company values and the behaviors that reflect those values is an important step. Board members and CEOs need to take a long, objective look in the mirror and ask themselves how the decisions and actions they take are reinforcing and advancing the values of the company. For example, a2017-2018 NACD Public Company Governance Survey indicated that 76% of the directors who responded said the boards they serve on have discussed whether existing compensation practices are driving the right behaviors. I’m sure the boards of Wells Fargo and Volkswagen have been discussing that question in the last year. Has your board?

Second, the values and resulting code of conduct that the board and CEO develop need to be broadly communicated and discussed throughout the organization. This should happen as part of every employee’s orientation and onboarding process but should also be part of the agenda for management and staff meetings throughout the year. Managers need to be continually vigilant about the kind of culture that exists within the teams they lead. Every business is replete with situations that present ethical dilemmas where leaders and employees are faced with difficult choices about how to pursue desired objectives. Good leaders ask about these dilemmas and help their staffs think through the best ways to navigate them. These discussions should be happening in the boardroom, in the C-suite, and at every level across the company.

“Board members and executive leaders need to develop and deliver against a code of conduct to which they hold themselves accountable.”

Third, just having a code of conduct and communicating it is not sufficient. There need to be ways to verify and confirm that people are behaving in accordance with company values and ethics. Another adage comes to mind: “Managers get what they inspect not what they expect.” Practical and effective ways boards and leaders can do this is through the use of organizational culture and feedback surveys as well as open channels of communication. Every business should conduct an organizational culture and engagement survey at least every other year where employees are given a confidential opportunity to weigh in on their managers, senior leadership, and experience of working in the organization. Periodic use of 360-degree stakeholder feedback can also provide data about how employees are being led and treated. Whistleblower policies should be in place and communicated so that everyone knows there is a channel for reporting misconduct in a safe way. The same NACD Public Company Governance Survey cited above showed that 72% of the directors who responded said their boards reviewed whistleblower helpline reports and 64% reviewed code of conduct and values violations. Also, the practice of skip-level communication and supervision whereby managers occasionally interact directly with employees two or more levels below them in the organizational hierarchy can provide direct information about what’s going on in the workplace and invite direct feedback about leaders beyond their self-reports. So board members should take the initiative to talk with the subordinates of the CEO, and CEOs should have direct access to the subordinates of their senior leadership teams and so on.

A fourth and very important set of actions for boards and CEOs who want to shape culture in their organizations is in their response to instances when the code of conduct and ethics has been violated. There is no better teaching moment than when misconduct occurs to reiterate and reinforce company values. When people misbehave and there is no consequence, the implicit message is that the behavior is going to be tolerated. Conversely, when a company takes bold and public action to remove or discipline an executive, manager, or employee, it underscores that the company is serious about its values and code of conduct. A recent example of this is the decision by Starbucks to close all of its more than 8,000 U.S. stores for a day of racial bias education. That’s putting your money where your mouth is and sending an unequivocal message to not only its workforce but to its entire customer base. Similarly, boards and leadership teams should celebrate employees who embody and exhibit desired values through recognition programs.

While there will always be misconduct and bad behavior in the workplace until the time when we will all be replaced by robots and computers, boards and executive leaders who are serious about shaping organizational culture and who follow these suggestions will minimize misconduct and cultivate positive, healthy, and high-performance cultures. Who knows? They may even get onto a list of responsible companies who are members of a community that could be known as #ThemToo.

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