Setting the right corporate tone from the top is seen as by far and away the most effective way to influence the culture in today’s businesses. Lead by example, and others will follow that lead. But research among European company board directors reveals that this belief is not being reinforced by action on how their businesses behaves.
Mazars is pleased to present the research report Board Leadership of Corporate Culture in Europe, which was prepared in association with Board Agenda and INSEAD. This research shines a light on the mismatch between words and deeds – it is to be hoped that the emphasis that is placed on the tone from the top, especially in the role of chief executive officer, will rapidly spread around the boardroom table and into the business.
“Understanding both the desired corporate culture and that which exists in practice is vital if a board is to provide effective leadership and direction to the business,” says David Herbinet, Global Head of Audit at Mazars. “Many boards need to assess whether their information on cultural issues is sufficiently comprehensive, structured and subject to independent scrutiny to meet their current and future needs,” says Anthony Carey, Head of Board Practice at Mazars in the UK.
The survey was conducted during the summer of 2017 among 450 chief executive officers, chief finance officers, board chairs, executive and non-executive directors, company secretaries, risk officers and investment managers. The respondents represented both private and publicly listed companies and were drawn from the UK and mainland Europe.
Stephen Martin, Director General of the Institute of Directors, places high importance on corporate culture: “Public trust in business has been rocked in recent years by several high-profile corporate failures. Regaining trust begins with ensuring the right culture is being set at the top of companies. As this report highlights, 85% of the value of leading businesses is in the form of intangible assets. With increased scrutiny on how a business conducts itself in relation to a diverse range of stakeholders, getting culture right is no longer just the right thing to do, it is essential for long-term success. Board Agenda and Mazars have drawn out a range of evidence in their report which should be read and digested by boards across the business community.”
Tone at the top: While believing that the culture of business can be influenced from the top, particularly through the role of the CEO, only one in five board directors believe they are spending the right amount of time addressing cultural issues.
Perception versus reality: A half of these board directors say they are “reasonably clear” on the desired culture of their business, but only a fifth say their boards fully consider the desired culture of the business.
Strategic gaps and alignments: Half say there are either significant gaps between strategy and culture or have not spent much time considering alignment between the two. However, the other half believe they are very clear on alignment between strategy and culture or that their strategy is broadly consistent with their culture.
Overall, the findings indicate that although awareness of the importance of corporate culture to business success is recognised, boards have yet to find a way to discuss corporate culture in a meaningful way and hardly include culture as a relevant item in their own performance assessments
Gain deeper insights, including 10 tips on how to bridge the cultural divide, by downloading the report below.
Corporate Culture Infographic
Board Leadership in Corporate Culture European Report 2017
Mazars, with the Institute of Directors, hosted a panel event for investors (including proxy advisers), companies, and influencers to discuss the challenges around effective engagement and how each group could contribute to the long term sustainable success of companies for the benefit of stakeholders.