City Values Forum and Tomorrow’s Company urge boards to get to grips with corporate culture
City Values Forum and Tomorrow’s Company urge boards to get to grips with corporate culture
Following the publication of the Report on Corporate Culture and the Role of Boards by the Financial Reporting Council (FRC), the City Values Forum working with Tomorrow’s Company has released for consultation a draft guide entitled Governing Culture: Risk and Opportunity? – a guide to board leadership in purpose, values and culture.
Sir Win Bischoff, Chairman of the Financial Reporting Council, in a foreword to the guide writes:
“Culture is a critical element in the long-term success of any business. It is both a risk and an opportunity – a healthy culture which is consistently nurtured and developed can protect and enhance the value of an organisation and help differentiate it from its rivals. As we have seen all too often, if culture is neglected this can lead to a destruction of value.
In all of this boards have a leadership role to play and are accountable for the governance of culture.
Purpose and values embrace both strategy and behaviour. If clearly defined they can help the organisation to set a template for ethical behaviours and to embed a culture of ‘this is how we do things around here’. Clarity of purpose and clearly defined values I believe are critical to the success and sustainability of any major enterprise today.
Every organisation will have its own approach to this important topic and appropriately it is not the purpose of this guide to be prescriptive as to outcomes. It does however offer a practical agenda and roadmap to help boards to assess where their organisation stands in relation to their accountability for culture, to evaluate areas for priority action and periodically to assess progress.”
Drawing upon practical experience, research and consultations with senior chairmen and both executive and non-executive board members the guide helps them to determine how they might approach the key questions like:
- What do we have to do to address this issue?
- How do we go about it?
- What does good look like?
Boards are accountable for culture and for assurance. They are responsible for alignment of purpose and values and for embedding the behaviours necessary to achieve their strategic goals. The guide:
- provides a framework for boards to review purpose, culture and values and to assess the need for improvement
- points out the difference between the role of the board and the role of the executive team in leading and managing culture
- sets out 24 questions that boards might ask of themselves and of their executive
- offers a ‘roadmap’ setting out a framework which can assist boards to align purpose, values and culture with strategy and the business model, and
- provides two tool-kits to help boards to focus on the key issues and questions, to set future direction and assure continuous improvement.
Commenting on the guide, Richard Sermon, Chairman of the City Values Forum said,
“Especially in times of uncertainty business strategies will be buffeted by economic and political pressures and societal changes. A healthy culture which is aligned to purpose and defined values will serve to enhance the organisation’s relationship with its stakeholders and can act as an anchor, enabling the emergence of more agile strategies while keeping the organisation pointed towards its purpose and living its values.”
Mark Goyder, Founder and Chief Executive of Tomorrow’s Company, commented:
“For too long the high priests of shareholder value have told us that we must worship at the altar of financial analysis. Now, at last, after Enron, LIBOR, Volkswagen and others, boards and investors alike recognise that what most threatens shareholder value is to neglect the purpose, values, relationships and the human side of a business. The question is what to do about it? The answers are to be found in this very practical guide and its tool-kits.”
Consultation Period: Wednesday, 20th July to Wednesday, 7th September 2016
Governing Culture: Risk and Opportunity? – a guide to board leadership of purpose, culture and values is being issued as a consultation draft today and is freely available on the websites of both The City Values Forum and Tomorrow’s Company. It will also be circulated to all those who have been involved in the preliminary consultation process including members of The Chairmen’s Forum and Tomorrow’s Company’s Good Governance Forum. Comments and suggestions received by the cut-off date of Wednesday, 7th September will be taken into account in the production of the final published guidance which will be available for the FRC Conference scheduled for Wednesday, 20th September. Comments and contributions should be forwarded by e-mail to richardsermon@gryphoncorporate.com and pat@tomorrowscompany.com
A bank of case studies and quotations and ‘top tips’ from business leaders will be finally collated for inclusion in the final version of the guide and we welcome any other contributions for consideration by the editorial team.
Background
While boards recognise the importance of culture, many still find it an intangible and difficult topic to address in terms of assessment, accountability and assurance. To help address this issue the FRC brought together the Chartered Institute of Management Accountants (CIMA), the City Values Forum (CVF), the Chartered Institute of Personnel and Development (CIPD), the Institute of Business Ethics (IBE) and the Chartered Institute of Internal Auditors (IIA) to form a Culture Coalition to highlight good practice and promote the importance of a healthy corporate culture. Their outputs are designed to make it easier for boards to get to grips with culture and properly to fulfil their duties of accountability and assurance.
Building on their earlier work on Governing Values (2013), the City Values Forum and Tomorrow’s Company have developed Governing Culture: Risk and Opportunity? – a guide to board leadership in purpose, values and culture, a practical guide for those boards seeking to define, assess, monitor, nurture and develop the culture of their organisation.
About the City Values Forum
The City Values Forum works to embed the principles of trust and integrity in the financial and business services communities and the corporate sector and to improve cultures and behaviours.
Formed in 2011 to deliver the recommendations of The Lord Mayor’s Initiative ‘Restoring Trust in the City’, the Forum is constituted as an informal working group reporting to The Lord Mayor. The City Values Forum continues to work across a broad front with City institutions, corporate entities, regulators, professional and trade bodies, think tanks and academic institutions to strengthen standards of integrity in the City and corporate communities.
Our latest work, Governing Culture: Risk and Opportunity? – a guide to board leadership in purpose, values and culture is the latest in an occasional series of initiatives addressing standards of corporate governance, professional competence and the development and sharing of best practice – each aimed at improving business culture and behaviour.
No single initiative can remedy the failures of integrity revealed in recent years, but by acting with the support of many organisations, working throughout the financial, business services and corporate sectors, we aim to reassert the City’s long-standing reputation for fair dealing and to encourage the development of healthy business cultures and behaviours in UK corporate life.
If we succeed together we will inspire customers and clients to entrust us with their business and earn society’s endorsement of our economic role.
About Tomorrow’s Company
Tomorrow’s Company is a London-based globally focused agenda-setting not-for profit think tank
whose purpose is to inspire and enable companies to be a force for good.
It champions a practical agenda for better leadership, governance and investor stewardship.
Tomorrow’s Company believes that adopting an approach that focuses on purpose, values, relationships and the long term is the key to enduring business success. It promotes this approach by engaging business leaders, investors, policymakers and NGOs in a uniquely thoughtful process which sets new agendas.
Tomorrow’s Company developed the concept of the business licence to operate and redefined the concept of corporate social responsibility in the 1990s. Its work on investor stewardship and capital markets stimulated the emergence of the UN Principles of Responsible Investment and the UK’s Stewardship Code.
More recently it has championed integrated reporting and a new agenda for governance and stewardship. It has significantly influenced the direction of corporate governance, including defining the inclusive duties of directors for the UK’s Companies Act 2006 and influencing the King III report in South Africa.
Contact information
City Values Forum:
Venetia Howes
Mob: +44 (0)7540 635402
Email: vlhowes@btinternet.com
Richard Sermon
Mobile: 07738 733449
e-mail rsermon@gryphoncorporate.com
Tomorrow’s Company:
Yolanda Villafuerte
Phone: 0207 839 4040
Email: yolanda@tomorrowscompany.com