Talk of “company culture” is commonplace and typically includes a variety of elements such as the company vision and mission, values, employee value proposition, and working environment.
For me, company culture sits at the heart of great branding. I call it ‘Branding the Inside’. These are the things a company believes and does, and it’s what drives employee engagement and commitment.
When you consider that employee engagement across Australia is 17% (SOURCE: Gallup), you have to conclude that company culture is something most Australian companies give lip service to. It’s something they have to do to, not something they’re really committed to doing.
Until now, that is. Suddenly companies and their boards are starting to take company culture seriously. Why is that? Is there a sudden new feeling of concern for employees’ wellbeing and workplace satisfaction? Maybe.
Company culture is being taken seriously for two reasons:
1. ASIC’s Commissioner John Price has warned companies that ASIC plans to incorporate company culture into its risk-based surveillance reviews. Incoming ASIC chairman James Shipton has backed this position by declaring that tackling culture is one of his top priorities. And when the corporate regulator starts talking “culture”, boards start taking notice.
2. Recent Australian research that shows how a poor culture impacts on the company share price. Governance firm Regnan is undertaking one of the largest studies of company conduct (i.e. culture) on the share price of ASX200 companies over the past five years. Findings to date suggest “high” conduct companies doubled in value while “low” conduct companies lost 50 per cent of their value. And when “culture” starts impacting the share price, boards start taking notice.
The CEO of the Australian Institute of Company Directors, Angus Armour, says the board director community “has well and truly come around to the need to focus on culture, with the DSI [director sentiment index] showing that 92% of board directors are saying ‘company culture’ is a key focus”.
As a result, boards are starting to introduce measures to “audit” company culture. Using metrics such as customer complaints, levels of sick leave, exit interviews, in addition to traditional staff engagement surveys. Board directors are also recognising that managing people and culture is now a key selection criteria for the next generation of CEOs — as important as industry experience. And after what’s gone down at The Financial Services Royal Commission culture is being taken even MORE seriously from now on.
Okay, so the motivation behind this new focus on company culture is share price and risk management. No matter. If this leads to workplaces where people like you and me are more engaged and satisfied at work, long may it last.