In line with the theme of long-term value creation explored in Issue 2 of Reporting Matters, Luminous held the second of three #illumination events, at the South Place Hotel in East London, on the subject of purpose and culture. Moderated by senior consultant Harriet Rumball from Luminous, we were delighted to be joined by our two guest speakers: Jo Iwasaki, Head of Corporate Governance at ACCA; and Graham Jerome-Ball, Director of Global Branding at FTSE 100 listed Informa. Below is a short film of the event.
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Connor Lundy, Investor Insight Executive at Luminous, shares some of the key insights he gained.
Why culture matters
An effective culture is required to set the business course. Companies that are unable to effectively articulate their business’s unique culture may find it difficult to encourage positive workplace practices. Encouraging positive behaviours can provide an enormous boost to achieving company goals, whilst companies that don’t may find their organisational goals impeded.
Define culture, then own it
‘Culture is the DNA in your business: you can’t change it, but you can influence it,’ stated Graham Jerome-Ball of Informa.
If you don’t know what your culture is – or it’s been diluted through acquisition, then commit to finding out from your employees and stakeholders through questionnaires and workshops and follow-up analysis. In short, find your why.
As Graham said, ‘People need to feel that they’ve built their culture and purpose.’ This opinion was shared by Jo, who believes that ‘once it’s been expressed in words, people can own it’.
How to measure culture
One of the most common business complaints is that culture is often made up of intangible – things that cannot be seen or measured using traditional metrics. The solution for this is to measure and manage the processes and procedures through which culture can be improved. In practice, measuring organisational values is likely to revolve around the measurement of recruitment, performance measurement and training.
ACCA has developed a culture-governance tool to help companies measure culture.
Consistency is key
If a company does not have purpose or appears to be inauthentic, this cannot be hidden. The Board must ensure that culture and purpose are integrated throughout the company and can do this by:
- acquainting themselves with the benefits of a well-defined culture and understanding how this can help foster long-term success
- listening to stakeholders and identifying the underlying culture throughout the company (e.g. consider site visits and engagement with the workforce)
- looking at areas where there may be inconsistencies and crafting an action plan
- taking steps to create company policy that encourages behaviours consistent with the underlying culture. One method of doing this is to evaluate internal targets and provide more appropriate measures that contribute to a better aligned culture
- revisiting regularly to ensure that the culture is correctly aligned and expanding to other parts of the business.
Uncovering company culture involves having a solid understanding of the value that your business creates for stakeholders. This involves a high degree of engagement with stakeholders, understanding the value that is created for them and what can be done better and communicating resultant changes throughout the rest of the business.
Feel the fear and do it anyway
Jo revealed that fear is the biggest factor in stopping people from examining their purpose and culture. No one wants to hear potentially negative feedback, but get things right and it’s a game-changer, especially for talent acquisition and retention. It means that, not only are you more likely to keep your employees happy and productive, but you’re more likely to hire the right people.
Remember, it takes time and investment to get it right – as well as a dedicated ‘culture’ team or individual who has full authority and Board support.
The Luminous view
Culture and purpose are integral to a company’s long-term value creation story and have been moved to the top of the corporate agenda in part due to corporate governance reform and amendments to requirements for strategic reports. Businesses that fail to grasp the importance of culture are likely to be stung by poor performance and will struggle to achieve strategic goals. To avoid this pitfall, business leadership must ensure that they get the ‘tone at the top’ right to create an environment where, at every level, people act according to the business culture and beliefs.
If you’d like to find out how you can uncover your purpose and better integrate culture within your annual report, simply contact email@example.com for some guidance and support.