Corporate Culture’s Importance for Performance & Risk Management

20th Dec , 2016

Any business coach will tell you that the culture that defines an organisation is set by the top leadership. This should be crystallised and directed by the board, business owners, CEOs and senior executives, as well as all staff across the organisation. Culture should never be underestimated, as it is the fundamental basis on how the company acts and how it treats its customers, employees, suppliers and business partners – all of which drives results long term. If the culture is poorly set or left to deteriorate, this can adversely infiltrate every aspect of the organisation and lead to a deterioration in performance.

From an organisation’s perspective, the directors, partners, owners and senior management are primarily responsible and are the guardians of the culture that promotes and controls good corporate governance and delivers performance. These guardians must act consistently as leaders and be seen to act ethically and with integrity in all matters.

The corporate governance culture must be focused on sound risk management and performance, and all must be alert to possible pitfalls or road blocks that could have an adverse effect on performance or the culture itself. The leaders are responsible for the culture – they must keep informed by asking questions and experiencing the performance and culture first hand. The leaders must also be following up what they find with good research and robust debate – both of which are crucial for setting and reassessing the good corporate governance cultural standards that they are trying to or should be striving to achieve. As issues arise, prompt and appropriate action such as business coaching should be taken to maintain and improve the good corporate culture that is required.

Signs of a Good Culture

Good corporate culture is articulated through values, expectations and codes of conduct. Here are some of the areas in which the leaders of organisations can improve their positive impact through their culture:

• Articulate the values, expectations and codes of conduct
• Perform as leaders and make improvements to results
• Behave and be seen to act responsibly and ethically
• Know the risks in performance associated with a decline in culture in any area of the organisation
• Stay informed and engage with all areas of employees, from the CEO and senior management to all employees
• Ask questions and insist on research, preferably independently from the management, if the cost benefit analysis is positive
• Do not just go along with the current accepted wisdom (i.e.’ don’t rock the boat, as our performance is good right now’). Instead, be bold where you see possible cultural blind spots or weaknesses and get research done so you can act to make improvements
• Communication channels need to be open and encouraged positively to give real feedback (good or bad)
• The leaders need to lead by example so that their wider audience inside and outside of the organisation can see that they are serious about the culture and performance

Signs of a Deteriorating Culture

The following signposts indicate that culture deterioration may be present and business coaching might be necessary:

• Loss of customers
• Increasing complaints
• Quality dropping
• Service levels more difficult to maintain
• Deteriorating relationships with suppliers or business partners
• More complex problems arising including legal challenges
• Surprises in not meeting targets or achieving contracts
• A reduction in admission of failures internally
• Performance starting to flatten with no real reasons being given
• Worsening in internal politics
• Lack of commitment to and taking of responsibility
• Loss of focus or competing priorities getting in the way of cooperation internally
• No positive leadership being demonstrated
• Administration staff as a ratio of total staff rising
• Lack of positive attitudes in all levels of staff
• Performance reviews are generally good despite lower overall performance
• Increased staff turnover

Whilst the job itself and remuneration may be more than satisfactory, if the culture is not good, employees will leave, taking with them needed skills and experience – as well as other costs such as training. Furthermore, the reputation of the organisation can become tarnished. Fortunately, an independent view provided by a business coach can give you the insight you need to make the necessary improvements.

The Importance of an Independent View

An important aspect to achieving and maintaining a good corporate culture is independence. Whether implemented by a board, a business owner, a CEO or senior management, there needs to be independent input to test the status quo and deliver fresh insights. Those working in the business can often become blinkered, making an independent view from a business coach or mentor vital. A fresh perspective can help provide you with illuminating information that allows you to make significant improvements to culture. An independent view also brings a diversity of skills and experience that are essential ingredients for healthy evolution and performance.

The Independent Business Coach or Mentor

An International Business Mentors business coach can provide you with a very critical independent view of your business for you to tap into. Our business coaching professionals boast outstanding business acumen, broad organisational skills, and strategic experience. We also individually match you with the best business coach to help you meet your requirements so you can get the best possible outcome from the relationship. You can rely on your business coach or mentor to deliver a wealth of business experience and provide confidential and independent support.

International Business Mentors can connect you with a business coach or mentor for a wide range of circumstances and for a broad scope of areas that may need improvement or a second view. Whether you’re seeking business coaching for boards, directors, business owners, family businesses, CEOs or senior executives, contact us today to find out how we can provide assistance.

Chris Cartney, December 2016.