How to Get an Organization’s Corporate Culture Right
Economic and Social Research Council (ESRC) and Association of Chartered Certified Accountants (ACCA) have issued a report that specifies the importance of role the board members play in setting the culture of ethics in their organization. The report shows that the boards are vital in setting such culture in the organizations that helps to prevent the possible non-professional behaviors that can result in damage to values, reputational degradation and financial loss as well.
The report titles as “Culture and Challenging Corporate Behavior” recommends that boards should evaluate their organization’s culture by finding out the answers of 3 basic questions.
· What are the organization’s goals and objectives?
· How to set the tone of top management and covey throughout the entity.
· What kind of behaviors are wished to be promoted.
ACCA’s head of corporate governance Paul Moxey feels that to incorporate a system that actually works, it is necessary to get the right questions answered. For example, are mistakes tolerated or punished? Does innovation or control prevail in your organization?
Following are the seven points which the boards are recommended to take into consideration while setting out the overall culture of the organization:
1. Do those people get promotion that does not follow entity’s values? Are there any management practices that encourage others to do unethical things?
2. What can stop the tone set at top management level to flow through the entire entity?
3. Observe how decisions take place. How are the new and different thoughts encouraged?
4. What approach to laws and regulations is adopted by an organization? Whether the entity follows the laws in true sprit or it considers the laws and codes as something that should be avoided for the entity’s and its customers’ benefits.
5. Is it assessed how the incentive structure work in practice? Can the board ascertain better measures that are aligned with long term objectives of the entity and utilize them in such a way that they cannot be wrongly used?
6. Identify what motivates people? Assess incentive structure and its aims.
7. Predict the trends. Whether the organization promotes innovative thinking style or the fear of the uncertain prevails? How well the management is aware of global trends?