“Culture Counts” by culture management consultancy Walking the Talk and investment consultancy Stamford Associates reveals new insights into how investors value organisational culture.
Culture Counts – to what extent does culture influence the views within the investment community?
Walking the Talk & Stamford Associates, July 2015
ASIC considers criminal sanctions for poor financial company culture
ABC News, June 2015
A recent UK survey titled “Culture Counts”, conducted by culture management consultancy Walking the Talk and investment consultancy Stamford Associates provides insight into how investors value organisational culture. This has implications for boards and directors in setting the tone of an organisation’s culture.
The study’s methodology involved an on-line survey as well as a series of in-depth interviews. Approximately 100 investment professionals responded to the survey.
Results showed that 94% of respondents considered organisational culture important to their investment decisions and approximately one third of respondents considered that culture influenced both buy and sell decisions.
Respondents identified their main source of cultural information as both personal experience with the company (81%) and dialogue with the company leaders (79%), reinforcing the board’s role in setting and monitoring organisational culture.
“Today, the focus for professional investors is on the behaviour of your executive and whether they can be trusted to operate consistently with your stated values. It is therefore, no longer sufficient to just talk about your culture. Your ability to demonstrate it in action, ‘your walk’, is critical”, states the research.
Poor or “risky” corporate culture may also attract increased scrutiny from regulators. For example, the Australian Securities and Investments Commission (ASIC) has recently announced its plan to conduct surveillance reviews within the financial sector, including an examination of corporate culture. ASIC’s chairman, Greg Medcraft, has also called for civil penalties to be increased and broadened, citing corporate culture as “a major risk to investor trust and confidence.”
Part of the difficulty in implementing good corporate culture is in defining what, exactly, it is. Further, corporate culture is rarely static and good corporate culture generally takes time, as well as strong leadership from the board, to establish. Notwithstanding this, the Culture Counts study shows that organisational culture is not simply a rhetorical concept but influences the way a company is perceived by its stakeholders and shareholders.
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