Workplace culture is more important and perhaps more vulnerable than ever before. A positive and attractive work environment, destructive forces like political division, the emergence of AI, market rotation, and macroeconomic disruption can all seed fear and incongruence and penetrate the workplace in an insidious way. Again and again, a powerful and adaptable culture in such an era serves as a superpower, bringing together team members to fight against negativity, moving forward, and becoming stronger than ever.
But understanding, overseeing and managing management to build and maintain a strong corporate culture is challenging for the board. This agreed with participants who agreed to the participants in the recent roundtable held in a partnership with Semler Brossy. “It's hard to measure emotions,” said Enels director Caroline Chan. “Unlike management, we don't go out every day. We meet once a quarter.”
“When you're a board member, it can be very difficult to hold your arms on what that culture is and understand how it's translated across the organization,” agreed Blair Jones, managing director of consulting firm Semler Brossy. “The risk with the board is that you get these ink rings and it's 18 months to 2 years too late.”
The stakes are high, Barbara Rang, director of Piedmont Office Realty Trust, said he served officers of a large nonprofit that could not recognize the cultural red flag. “All of a sudden, the board started receiving a lot of anonymous letters, citing a lot of things,” she explained. “We had a few metrics before, so the board never did the job, but everyone was turning a blind eye until this sudden blast happened. Now we're going to have a health rating and try to figure out what's really going on.”
Trust and transparency
To stop these outcomes, we need to be proactive and bold in monitoring and dealing with cultural health. It is important to leverage data collection methods and seek opportunities to engage directly with employees, pointing out some roundtable participants. “Are we always ahead of the game? No, but it's better than hearing once a quarter from the head of HR. I don't think that's enough.”
The board that makes the most of the survey goes beyond headline engagement scores to explore response analysis, segmentation of feedback across business units, and compliance-related data as a gifted concern as a complete board. “So you're checking, how many executive action complaints do we have?” she explained. “How many reports on sexual harassment and racial issues? And how many substantial ones were there? How were they dealt with? Because you learned a lot about the company by how they operate a lot of those items.”
Several directors emphasized the importance of opportunities to speak directly with employees. “Extend it from C-Suite alone,” suggested Evan Templeton, director of Kolibri Global Energy. “Whether you're at an event or jump into a meeting, you need to dig into that second-level management team and try to actually investigate people. Are you sure you have enough resources? Do you find that you're offering what you need in your group?
“There's no alternative to being on the field so that the board can socialize, have dinner, visit sites, or talk to employees,” agreed Christobelle Seckey, director of Immunology Bio, where the director regularly works with employees. “Every year we go out and visit sites where board members meet with frontline employees without being in the room.
The role of CEO
Derrell Porter MD, CEO of CTRL Therapeutics, said that level of trust between the CEO and the board is the basis of its deep cultural engagement. “We need to build a trust-based relationship with our CEO before we enter the next layer of our organization and spend time with our executives,” he said. “If not, you'll get a CEO who's nervous and wants to control a lot of communication and exposure.”
Trust often falls into lead director. Lead Directors can ensure that the board is in place with a focus on CEO support and advice. “When the CEO sees what the board members can add and they're constantly pushing back, and they're there, and the trust starts building up,” Jones said. “It's something that lead directors can help with communication, or if that trust doesn't exist, then they'll take an external facilitator.”
Boards tasked with meeting companies through the CEO succession process should be aware of how new leaders will affect culture, particularly when considering external employment. “It's a very difficult position for the board to get involved to truly delve into the new CEO's ability to provide the culture the company wants,” said Bill Sandbrook, director of Knife River. “That individual's experience is trying to determine how he or she leads the company and leads the possibility of disrupting a good culture, so especially if you bring in a command and control person, that's a big risk, and it's a decentralized culture because the new individual wants to put a stamp on it.
Supplement the culture
Integrating cultural indicators into performance assessments is another powerful tool in the Board of Directors' Cultural Surveillance Arsenal. “We need to hold people accountable to how they manage their business and to achieve that level of trust and transparency,” said Gary Colour, director of Hillenbrand and Histeryale. “The feedback we get from an organization about our leaders, not just how they lead, what they get, but also the feedback they get from the organization about that leader is part of the annual review process. We can't stress how much work in culture can give back to the organization.
Connecting these metrics to incentive pay and promotion opportunities drives the message home. When employees see people who deliver results and embody the cultural values of the company are elevated, it reinforces the importance of both “what” and “how.” Conversely, failure to perform high-performance people who are responsible for poor behavior leads to poor trust and reliability. By clarifying the promotional standards and ensuring that those standards match the company's desired culture, the board can play a central role in overseeing how these decisions are made.
Some organizations apply modifiers to performance-based payroll so that individuals pay less incentives when they meet business goals, but even do so in ways that undermine core values and behavior. “For example, they might get 80% instead of 100%,” Jones explained. “The moment you don't pass someone or get results and sue someone, it doesn't do it in a good way. And the whole organization knows. And promotion is a much bigger deal than an increase in 3% or 4% merit.
Ultimately, effective board oversight of culture calls for continuous efforts in multiple ways and a deep understanding of culture as a strategic factor for performance, risk management and long-term value. Today's boards are in an area where they can't afford to be complacent. “At this moment, when everything's out, the quilters are out, employees are looking for stability from leadership,” Jones said. “People look at leaders and 'Are you chasing us, leading us to not be left behind?” Clarifying clearly on clear objectives and values is a leaning towards it so visible in these times. ”
