Recently there has been some suggestion that directors of boards, as opposed to CEOs, should be responsible and liable for company culture. While directors and boards can influence the culture, for example the appointment of a CEO, it seems impractical that they can then be found responsible for it. How could you expect a group of people that meet on average once a month, to take responsibility for the culture of an organisation?
On a daily basis, the senior leaders of any organisation influence the culture of the workplace. This is because it is the leaders who are in the workplace everyday who have the opportunity to influence behaviour.
In the Financial Review article, Boards Warn Bucks Stops with CEOs, Jacqueline Hey commented that she would give up her career as a director, if boards were made liable for culture. Hey is currently a director on many boards including Qantas, AGL, SBS, Cricket Australia, Bendigo and Adelaide Bank, and Melbourne Business School.
She stated that, “In the last couple of months, there has been a lot of media commentary and deregulatory commentary about boards being criminally liable for the culture of a company and that’s where I would have a real problem remaining a director. Because if that is the case, I would need to be at every company I am responsible for every day.”
I first met Jacqueline Hey in 2008 when she became CEO of Ericsson Australia and initiated a major cultural change program. As CEO, Hey realised the importance of her role and the responsibility of her senior leaders in driving change. Consequently, I had the pleasure of working with the top senior leaders at Ericsson to drive that change through business storytelling and several other initiatives.
Jac Phillips who is the Head of Brand and Marketing for Bank of Melbourne has also held various board roles including Melbourne Communities Foundation, Fitted For Work, and The Skin & Cancer Foundation Inc. The dual roles she has played as board member and senior executive has given her a good insight into the importance of culture and who should own it.
Phillips believes, “It is in every stakeholder’s best interest to understand the culture, given culture has proven to be eight times more influential to business performance than strategy. Your effective culture is a result of a daily investment in time, energy, and skills which is why the executive leadership team need to both own it and drive it”.
To think that there is a move to make directors responsible for company culture when they spend no time with employees shows a distinct lack of understanding of how culture is driven. While the board can advise on the desired culture and support it, they cannot be in charge of it. It is the senior leaders of the organisation, who are there day in and day out, that should role model desired behaviour and discourage unwelcome conduct. The CEO and senior executive leaders are the real drivers of company culture and the ones that should be ultimately in charge of it.