10 ways for NEDs to influence company culture

Monday, 18 April 2016

Katie Lahey AM MAICD photo
Katie Lahey AM MAICD
Executive Chairman, Korn Ferry, Australiasia

    Non-executive directors (NEDs) must be in tune to potential cultural breaches in their organisations. Korn Ferry’s Katie Lahey AM MAICD points out 10 ways to identify if your culture is on track.

    It can be challenging for non-executive directors (NEDs) to identify a potential breach of culture. Their touch points with the organisation tend to be structured and contained to their colleagues on the board, the CEO, and the executive team.

    However, NEDs share responsibility and accountability for their organisation’s culture and, as such, must be in tune to potential cultural breaches. It may be intuitive and nuanced work, but it requires an unequivocal exploration.

    Korn Ferry has identified 10 cultural markers that can assist NEDs to get closer to their organisation’s culture.

    1. The CEO – The appointment of the CEO will determine the culture of the organisation and the candidate assessment should explore character along with previous experience and reputation. A “god-like” CEO should set off warning bells.
    2. The strategy – Do you know the kind of culture required to drive the strategy? Is culture enmeshed in how the organisation goes about achieving its performance targets? Is it measured?
    3. The executive team – Does the organisation have a diverse executive team? Diversity of gender, ethnicity, experience, education and ideas is good for culture, performance, and governance. Also, look for hierarchical clues that point to a closed door at executive level.
    4. Talking culture – Start talking about culture to fellow NEDs, the CEO, the executive team and employees. Can they articulate it? Is everyone on the same cultural page? This is not about reciting values – it’s about knowing the hard-wiring of the organisation.
    5. Whistleblowers – Is there a formal whistleblower program and, most importantly, how are whistleblowers treated? Ensure you have access to whistleblower reports and that you are aware of the process.
    6. Toxic sub-cultures – Subcultures can be difficult to identify and challenging to change, but they can derail your entire strategy and must be disrupted, even when it results in financial loss.
    7. Media noise – Look for inconsistencies in media reporting between what you read and what you know. Social media sites such as Facebook and Twitter reveal much about the supply chain, customer service and brand awareness.
    8. Be a customer – Phone the call center, make an inquiry or visit a shop. Experiencing the organisation as a customer will reveal things about the culture that you may not learn in your NED role.
    9. Engagement – Be forensic in your review of employee engagement surveys and HR data. Red flags will show where there are consistent issues every year or pockets in the organisation where results are at odds with the overall picture.
    10. Recognition and reward – Are the reward systems financially driven, behavior-driven or both? People’s behaviour will directly correlate to what is most valued and rewarded.

    For more information, read Korn Ferry’s report, The Tone from the Top – taking responsibility for corporate culture.

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