On October 3, 2017, the National Association of Corporate Directors (NACD) published the NACD Blue Ribbon Commission Report on Culture as a Corporate Asset, affirmatively advocating that corporate culture be a part of board room agendas and not just left to management as a soft human resource issue. A company’s culture can have a direct influence on its reputation and, often, performance. In the wake of corporate scandals ranging from sexual misconduct by top executives to incentive plans that entice employees to behave in their own self-interest, leading to CEO shake-ups, government investigations, falling stock prices and consumer backlash, a board should consider culture as part of its company’s risk profile as seriously as it considers its company’s financial and competitive challenges.
The report by NACD, the world’s largest association of corporate directors, brings to the forefront what many management leaders already know — corporate culture matters. The absence of a healthy corporate culture can be a significant liability. Culture is linked to business strategy, selection and turnover of management, reputation and employees and customer satisfaction. In 2015, researchers from Columbia Business School and the Duke Fuqua School of Business released a report after surveying more than 1,400 North American CEOs and CFOs about corporate culture. Overwhelmingly, the respondents agreed that “leadership needs to spend more time to develop the culture.” But what are the actionable steps that leadership, both directors and executives, can take to tackle this key issue?