“Culture” is the word of the moment: societal culture, organizational culture, corporate culture. The media blames culture—and rightfully so—when things at an organization go bad, referencing it as the reason for why people break the rules, disrespect others and go against societal values. The media often cites a “win-at-any-cost” attitude within such organization that leads to bad behavior. But culture is also a good thing that leads to innovation, accomplishment and integrity. Managing culture is the responsibility of everyone in an organization and the board should set the tone.
“Responsibility” is another important word in society and the business world—taking responsibility, being responsible to yourself and others, or corporate social responsibility. The world would be a better place if we all took responsibility for our own actions and felt a responsibility to be truly engaged. Few people actually engage to change a situation they’re not happy with, and even fewer do so in a way that is responsible (for example, by using data or evidence to build an argument, rather than deferring to emotional reactions). We experience this everyday on social media. Unfortunately, “responsibility” is not always taken seriously by corporate leaders and infused into corporate cultures. For example, if there was a stronger culture of responsibility with certain tech companies, they might not be facing such intense scrutiny.
Culture is how the work gets done. “While it is often perceived as a ‘soft issue,’ it is actually a hard issue—both in the sense of concrete impact, and in the sense of being difficult to assess,” says the National Association of Corporate Directors in a new report called Culture as a Corporate Asset. “The idea that an appropriate corporate culture boosts performance by providing a framework that encourages behaviors aligned with goals for long-term creation would seem to make it an obvious topic for regular, routine discussion among corporate leaders. Yet, in many organizations, culture does not get the level of boardroom attention it deserves until a problem arises.”
Boards, executives and managers need to ask questions, the right questions. The days of not asking questions because you don’t want to know, can get you into big trouble. These leaders should be asking their teams: “How did you get it done?” Often, results-driven cultures fail to ask this question, but ignorance is no longer an excuse—you are still responsible.
Last month, issues at my alma mater came to a head. The University of Southern California (USC) is results driven, as it should be. But, after a range of issues, including recruiting violations for sports, ignoring a top fundraiser’s abuse charges, and allegations against a doctor at the student medical center, coupled with a deliberate lack of transparency, called into question the results-driven culture and whether it led to these and other incidents.
Within one week, the faculty council asked for the resignation of the university’s president. In response, the president issued a report detailing how the university would address the aforementioned issues, and the chairman of the board of trustees issued a statement saying the trustees had full confidence in the president and his “leadership, ethics, and values and is certain that he will successfully guide our community forward.”
Three days later, the chair of the trustees executive committee released a statement saying that they had “agreed to begin an orderly transition and commence the process of selecting a new president.” The next day, a new board chair was also announced.
The USC situation is an example of primarily internal matters that could have been dealt with appropriately, transparently, and in a timely manner, if the board had closer oversight of culture and risk. But, instead, the issues were left to fester, resulting in a big public scandal that tarnished the reputation for the university led to the removal of a president that I have admired.
My colleague and top reputation risk and ethics expert, Andrea Bonime-Blanc, wrote in her recent article Culture & ESG Governance: Inseparable in the #MeToo Era: “Internal organizational culture and external environmental, social, and governance (ESG) matters are, and should be, intimately and inextricably interconnected. They’re two sides of the same coin. I believe that it is not only time for boards to get cracking on internal culture governance, but that it is also a core part of good modern governance for directors to know the key ESG and corporate responsibility issues relevant to their companies. By tying the two together, boards can proactively and carefully oversee management’s efforts to act on these often siloed, disparate, or even ignored and untreated parts of a more resilient organization.”
Corporate culture and its effects have been long integrated into my career. Long before I headed philanthropy at The Walt Disney Company and started the corporate social responsibility council, I was part of The Disney University. Frank Wells, Disney’s President and COO at the time, called The Disney University “the keeper of the corporate culture.” I taught ethics at the university and was involved in an initiative to bridge the cultures of “old Disney” and “new Disney.” I was also part of the cultural integration team, led by PwC, when Disney acquired Capital Cities ABC.
I have seen both the positive and negative aspects of culture up close and personal and I truly believe what Peter Drucker once said: “Culture eats strategy for breakfast.”
Many of us in both the corporate citizenship and corporate governance fields view culture and responsibility as intertwined. Management and boards need to spend a little more time on the “how” and what the implications of the “how” are on our employees, customers, shareholders, community, and the world. It’s just not because issues become public quickly, but because it is good for business to act responsibly and is the right thing to do.
First published by The Conference Board on June 15, 2018