Listen! ...Is your Corporate Culture ticking?
What do The Banks, Melbourne City Council, The ATO and Cricket Australia have in common?
Sadly, this is not the set-up line for a joke. Each of these organisations has recently experienced their own world of pain. If nothing else, the lesson to be learned from their headline scandals is that a weak Corporate Culture is a ticking time bomb.
Smart leaders know Corporate Culture will make or break an organisation. According to the AICD Director Sentiment Index, 90% of Australian Company Directors indicate improvements in Corporate Culture is a pressing concern. 1
Things can look good on the surface with record profits, and before you know it, it’s National headlines, manipulating markets, unconscionable conduct, investigations, legal battles and a reputation in shreds. 2
It’s too late to discuss culture when the ship has a gaping hole and water is flooding in. The challenging question is how do you really know what’s going on inside your organisation right now? Wouldn’t it be great to have a tool that can provide critical data on the health of your culture, and lead indicators to warn if something is about to explode? Managing Corporate Culture is now a much-discussed topic in the Board Room. AICD Chairman Elizabeth Proust says, “A focus on culture over the long-term is critical for management and boards of all organisations.” It is, “a complex task that requires sustained effort.” 3
Proust’s counsel echoes Greg Medcraft's thoughts in his speech, “Tone from the top: Influencing conduct and culture” at the Thomson Reuters 4th Annual Australian Regulatory Summit. 4 Nearly two years ago, Medcraft, then Chair of the Australian Securities and Investment Commission, presented four key considerations regarding the importance of corporate culture, and the role of Boards in the active management of culture.
- Poor culture often leads to poor outcomes for investors, and consumers. Poor culture can erode the integrity of an organisation and erode investor and consumer confidence and trust.
- Focusing on culture provides early warning signs of bad behaviour (lead rather than lag indicators) so misconduct and bad behaviour can be caught early and addressed quickly.
- Focusing on Culture will identify individual instances of misconduct and uncover broader more pervasive problems.
- Firms that do not have a good culture risk losing their customers to firms that do.
Medcraft’s concerns have been potently illustrated in a string of high profile scandals. In recent months we have witnessed:
- The dismissal of AFL executives for inappropriate relationships with staff 5
- The Bank Bill Rate Rigging Scandal implicating ANZ, NAB, Westpac and CBA 6
- The biggest white-collar fraud in Australia’s history at the ATO 7
- Robert Doyle’s history of sexual misconduct at the Melbourne City Council 8
- Barnaby Joyce’s spectacular demise and the fallout for the National Party and Australian Government 9
- The spectacular Ball-Tampering Scandal in the Australian Men's Cricket Team 10
- And now The Royal Commission into the Banking Industry is uncovering a slew of devastating and even criminal admissions 11
We could point to many other failings and scandals from all over the world, such as Harvey Weinstein’s history of sexual misconduct spawning the “#MeToo” movement that is shedding light on alarming stories from thousands of organisations and industries all over the world. 12
The cost of these issues is in the order of billions of dollars, not to mention the organisational disruption, reputational damage and leadership stress for those left to clean up the mess.
Such a list makes you wonder who’s next?
A weak Corporate Culture is a ticking time bomb
It’s only a matter of time until another headline scandal breaks. What will you do if your organisation is next?
If you’re not worried about the culture of your organisation, you should be. A healthy culture is the responsibility of the board and senior management. As Medcraft points out,
Along with the board, [senior executives] should set the values and principles of a firm’s culture and ensure these are reflected in the business’s strategy, business model, risk appetite, and compliance and governance frameworks. And they need to ensure the firm’s values are incorporated into all of its business practices and are cascaded down and understood throughout the organisation. …The senior management should ensure the compliance and governance frameworks that are in place are both monitored and enforced – and that expectations are made clear throughout the organisation. 13
In order to establish a healthy corporate culture the “tone from the top” is essential. The great difficulty for Directors and Executives is they do not have clear insight into what is going on in the organisational culture at lower levels of the organisational system. Poor attitudes, unwise choices and even malicious behaviour can grow in the hidden recesses of the organisation and fester and tick... tick... tick... away until... Boom! Significant problems explode stunning not only company execs and directors, but also the Nation.
Wouldn’t it be great if you could tell exactly what’s going on inside your organisation? Wouldn’t it be valuable if you could capture critical data on the health of your culture? Wouldn’t it be powerful to have objective data delivering lead indicators of poor behaviour and organisational dysfunction, so you can defuse the time bomb before it goes off?
If you’re in need of support to measure, define, establish and protect a healthy culture for your organisation we can help.
Experts in Organisational Culture Dynamics, Virtuity Consulting Group can lead you through our Culture Management System to:
- Provide clear line of sight into what is actually going on in your organisation
- Identify and articulate the specific values that will define and drive your healthy culture
- Align thinking and practice with the cultural standards across the entire organisational system
- Regularly monitor and empower the cultural standards to ensure sustained health and organisational vitality
Establishing a strong Corporate Culture will help align and govern your organisation for sustained good. Virtuity Consulting Group's Culture Management System could be the difference between long-term health and success and becoming the next National headline for all the wrong reasons.
Contact Virtuity Consulting Group today to explore the power of actively managing your Corporate Culture for long-term success.
- Nassim Khadem, “Company Directors See Need to Improve Corporate Culture, and More Optimistic Post Brexit, Trump Shock,” The Sydney Morning Herald, November 1, 2017, Website edition, sec. Workplace, accessed March 9, 2018, https://www.smh.com.au/business/the-economy/company-directors-see-need-to-improve-corporate-culture-and-more-optimistic-post-brexit-trump-shock-20171101-gzclux.html
- Patrick Durkin, “Why ANZ and NAB Folded in ASIC’s Bank Bill Rate Rigging Case,” Financial Review, October 27, 2017, Website edition, sec. Banking & Finance, accessed March 9, 2018, http://www.afr.com/business/banking-and-finance/why-anz-and-nab-settled-asics-bbsw-case-20171026-gz9d90
- Khadem, “Company Directors See Need to Improve Corporate Culture, and More Optimistic Post Brexit, Trump Shock.”
- Greg Medcraft, “Tone from the Top: Influencing Conduct and Culture” (Speech presented at the Thomson Reuters 4th Annual Regulatory Summit, Sydney, New South Wales, June 21, 2016), accessed March 9, 2018, http://download.asic.gov.au/media/3901451/greg-medcraft-speech-thomson-reuters-4th-annual-australian-regulatory-summit-21-june-2016.pdf
- Patrick Effeney, “AFL Sack Two Senior Officials after Sex Scandal: Simon Lethlean and Richard Simkiss Both Get the Axe,” Nine.Com.Au, July 2017, Online edition, sec. Sport, accessed March 27, 2018, https://wwos.nine.com.au/2017/07/14/12/03/afl-important-announcement-gillon-mclachlan
- “‘Public Should Be Shocked’: Judge Clears NAB, ANZ $100m Rate-Rigging Settlement,” The Sydney Morning Herald, November 10, 2017, Online edition, sec. Banking and Finance, accessed April 24, 2018, https://www.smh.com.au/business/banking-and-finance/public-should-be-shocked-judge-clears-nab-anz-100m-raterigging-settlements-20171110-gziufh.html
- Kate McClymont, “Straw Director in Massive ATO Tax Fraud Simon McIntyre Pleads Guilty,” The Sydney Morning Herald, October 30, 2017, Online edition, sec. Business, accessed April 24, 2018, https://www.smh.com.au/business/straw-director-in-massive-ato-tax-fraud-simon-mcintyre-pleads-guilty-20171029-gzaiv9.html
- Stephanie Anderson, “Robert Doyle: Investigation Upholds Sexual Misconduct Complaints against Former Melbourne Mayor,” ABC News (Melbourne, March 13, 2018), Online edition, accessed April 24, 2018, http://www.abc.net.au/news/2018-03-13/robert-doyle-findings-into-alleged-sexual-harassment/9543840
- Naaman Zhou, “Resignation Timeline: How Barnaby Joyce’s Fate Was Sealed,” The Guardian, February 23, 2018, Australian edition, accessed April 24, 2018, https://www.theguardian.com/australia-news/2018/feb/23/resignation-timeline-how-barnaby-joyces-fate-was-sealed
- Tracey Holmes, “Ball-Tampering Scandal: Cricket Australia under Mounting Scrutiny over Team Culture,” ABC News, April 1, 2018, Online edition, accessed April 24, 2018, http://www.abc.net.au/news/2018-04-01/cricket-australia-under-mounting-scrutiny/9608638
- Peter Ryan, “Corporate Crooks to Face Tougher Penalties under New Rules to Be Revealed by Government,” ABC News, April 20, 2018, Online edition, accessed April 24, 2018, http://www.abc.net.au/news/2018-04-20/corporate-crooks-set-to-face-tougher-penalties/9677792
- Samantha Schmidt, “#MeToo: Harvey Weinstein Case Moves Thousands to Tell Their Own Stories of Abuse,” The Lily News, October 16, 2017, Online edition, accessed April 24, 2018, https://www.thelily.com/metoo-harvey-weinstein-case-moves-thousands-to-tell-their-own-stories-of-abuse
- Medcraft, “Tone from the Top: Influencing Conduct and Culture.”