Thursday, October 10, 2013

Why Should Boards Oversee Culture

The Boardroom Paradox: Harden the softest like culture; and soften the hardest like number.

As organizations enter into a more competitive, unpredictable business environment, the more closely an adaptive culture is linked to organizational performance. Statistically, in the fortune 500 since they started reporting, about 2000 companies have come and gone. So just because you get there does not mean you stay there. The staying power is largely something to do with the culture. Therefore, which role corporate board should play in over-sighting & refining business culture? 

1. Culture can Literately Make and Break the Company 

The simple definition of culture is the collective behaviors of a group of people that share a common mission. Companies with an adaptive culture which is aligned to their business goals routinely outperform their competitors. To achieve great results, the boards have to figure out what the culture is, decide what it should be, to make the invisible culture more tangible, and move everyone toward the desired culture, but it is through clear business vision

The Boardroom culture is determinant of overall business culture: The spirit of organization comes from the top. An organization's culture reflects the values and pattern of behavior of its executive management and can be labeled as the organization's PERSONALITY. Not only is the culture of the board/executive important, it is a determinant of the culture developed within the whole organization. Thus, the development of organizational culture starts with the board and executive. 

A healthy and productive culture is both the cause and result of enterprise success, If a Board of Directors and Executive Management team has an open, inclusive and innovative culture, they also clearly define the mission of the enterprise and align organizational behaviors toward achieving goals derived from the mission, a healthy and productive culture will result. If Boards and Management do a good job of defining Mission, Objectives and Strategies, exemplify and oversight the culture, and successfully align resources toward achieving them, business culture will take care of itself.

Therefore, it is imperative that the Board has a clear understanding of how the Company rates in regards to the overall culture of the Company. Company culture is important because it can literally make or break the company.

2. Culture can be Changed with Effective Leadership 

It is very easy to assume we know the culture of a company but there are so many elements to it.  When you try to do a merger, a spectrum of culture differences can get very visible very fast. Company cultures evolve and they change over time. Changes could either be negative or positive. The changes in company culture may be intended, but often they are unintended and just occur over time or they may be major changes or minor. However, culture will change as the corporate environment changes and that starts with effective leadership.

Leadership is one of the key ingredients in cultureThe company culture will change and it is important to be aware of the changes. But better know your mission, gather resources, define strategies and set goals to drive a business to market-driven performance and excellence. As culture, has much to do about how a group people feel about and how they contribute and make a difference. Self-motivated people really want a sense of belonging and contribution. If the team does not believe or support the corporate vision or its mission, is not focused on the strategies or execution and they are not working together to achieve these goals, they will not feel like they are part of or contribute to the culture. 

3. Culture as Defining Step in Innovation 

There are six elements (leadership, culture, resources, processes, measuring & monitoring and improvement) in innovation management. The first two elements are critical to innovation and if not addressed properly, innovation can not be a sustained within the organization. Board and executive management are directly responsible for the first two elements (culture and leadership), whereby these elements can not be delegated. 

A Culture of Innovation like a blender, which can well mix three important ingredients in high performance team - PASSION, FOCUS and TEAMWORK. If an effective leader can lay out a realistic Vision/PASSION and FOCUSES on the essential strategies and their execution, and drive the results through TEAMWORK, people will begin to achieve. But its starts with leadership, shaping the high effective culture and getting people to rally around a common vision that resonates action and innovation!

There’s intra-organization culture, and don’t forgetting that there is an extra-organization culture as well. Culture is not a mythical "thing" that comes automatically. It will change how the process works and how collaboration works and most importantly "How to identify Innovation" and deliver it for the success of all- Employees, Customers and Shareholders. Since only 7% of the companies have achieved "Best In Class" Performance.. It is not something that rolls in on the first day of outstanding performance and stays there. However, the most of Boards had never placed importance on the culture of their business or even given it a thought. Or it is never discussed or measured in any meaningful way at board/executive level. This is especially true regarding the culture of boardroom.

Therefore, boards and senior leadership team have to play pivotal role in refining business culture. And high performance culture is an attitude & leadership quality that institutionalize the true foundation for continuous improvement….ultimately becomes a way of life for the enterprise


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