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Culture-driven governance

In what ways is the culture of your organisation influencing the standards of governance you achieve? Do your people know what ethical conduct looks like and are they committed to behaving accordingly?

Culture-driven governance

You don’t have to look too far or wide to find examples of organisations and leaders who have fundamentally failed to deliver on their duty of care to shareholders, customers and employees. Misconduct in the financial services sector exposed by the royal commission, for example, paints a clear picture of the impact poor organisational cultures have on risk management, compliance, performance and ultimately, public and consumer confidence.

Ensuring business practices are both ethical and prudent is central to the role of any CEO.

Among the most important steps you can take to create a culture that enables high standards of governance include these:

  1. Lead from the top.

    The simple reality is that the ways in which leaders think and behave, at every level of your organisation, is ultimately what drives culture. If leaders are willing to bend the rules to achieve a commercial outcome, other members of the team are likely to do the same. If leaders think it’s OK to behave with a lack of compassion or integrity, chances are other people will follow suit.

  2. Hire well.

    Whether recruiting from the external market or promoting people from within, never compromise on the standards of behaviour you expect. Regardless of how attractive a candidate’s professional skills and qualifications are, never hire them if you doubt their ability to behave ethically.

    Take particular care in appointing people to leadership roles. Recognise the risks in appointing someone who is likely to set a poor example and fail to hold themselves and others accountable to acceptable standards of behaviour. The ability to be a positive influencer of culture must be a non-negotiable part of your selection criteria.

  3. Reward the right behaviours.

    Hold up as an example only those members of your team who consistently behave in ways that influence a culture of trust, respect, integrity and accountability. Recognise the members of your team who do the right things and encourage others to do the same.

  4. Invest in leadership development.

    All too often people are promoted to leadership roles without the training they need to be successful. Reflect for a moment on how often you have observed a leader, promoted on the basis of their technical strengths, struggle to build an effective team culture and drive high standards of performance and behaviour.

    Every manager of people needs to be skilled at setting clear expectations and coaching members of their team to behave successfully. Core to their success will be their ability to engage in tough conversations and hold people accountable for the standard of conduct they bring.

  5. Apply consequences.

    Creating a desirable workplace culture takes both a ‘top down’ and ‘bottom up’ strategy. Every member of the team needs to be held accountable for doing their part to protect the interests of the organisation and its stakeholders. Focus on creating an environment in which people feel safe to speak up and point to behaviours that need to change.

Holding leaders accountable to behaving in ways others are expected to, is especially important. An inconsistent approach to holding anyone accountable is damaging to culture, but it’s especially so when the people being ‘let off the hook’ are in leadership positions.

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