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Culture & Reputation Damage

Over the past 18 months, Australia’s key regulators have been more active than ever before. The very challenging, and in many respects, damming recent Royal Commissions have publicly demonstrated that the management and governance of corporate culture is grossly inadequate. As a result, boards and executive teams are investigating how their organisation’s culture is being led, fostered and governed, and why the standard of expertise in corporate culture governance isn’t up to speed.

The answer is very simple. Culture is the most delicate and complex of all social constructs. It’s not a ‘function’ or a department, a strategy or a set of levers. Culture is an advanced, detailed psycho-social phenomenon that requires collaboration well beyond that of most large organisations. Most boards and executive teams don’t have the opportunity to truly understand culture, its defining significance and how it forms the foundation for conduct and critically – misconduct.

The acceleration of culture from being ‘a job for HR’ to becoming the very thing that can bring down Australia’s largest organisations has been dramatic.

The acceleration of culture from being ‘a job for HR’ to becoming the very thing that can and will bring down Australia’s largest organisations has been dramatic, and from what we’ve seen over the last decade, very few are up to the challenge. However, who really ‘owns’ culture? The erroneous misconception that culture is owned by ‘HR’ or ‘People and Culture’ has led many companies to the failings we are seeing today. The board and executive team must realise they are responsible for culture and consequential misconduct.

Great corporate culture starts with great leadership. It begins with the cultural literacy of boards members, through to the executive and permeates down into ‘the way we do things’. Many Australian companies still grossly underestimate the impact poor cultural leadership can have.

Now is the time for organisations to face the enormous capability and collaboration gap that threatens their very existence. It’s a time to be asking the hard questions about the motivation of their people, the dominant influences and pressure on behaviour, and how effectively conduct is being monitored.

Culture is the most delicate and complex of all social constructs. It’s not a ‘function’ or a department, a strategy or a set of levers. Culture is an advanced, detailed psychological phenomenon that requires collaboration well beyond that of most large organisations today.

Corporate Conduct (employee behaviours etc.) is the dashboard of culture. By effectively monitoring employee perceptions, organisations begin to legitimately understand what’s driving individual, team and organisational performance, along with the associated risks.

There are 6 Culture Competence areas that all boards and executive teams have to possess and skillfully manage.

  • Organising Assets (alignment)
  • HR / Conditions &  Reinforcement
  • Outstanding Talent and Leadership Practices
  • Meaningful Communication
  • Culture & Employee Engagement Measurement
  • Conduct monitoring and Active Management

Without all 6 areas effectively managed a company remains vulnerable to culture disfunction, misconduct and consequent customer and regulatory backlash. Given the crippling effect of corporate reputation damage and the knowledge that every reputation issue can be traced back to culture, organisations have no option but to invest. They must create culture and conduct excellence, build strong ethical corporate communities, and protect and preserve their reputation. The organisations that do will thrive, while the leaders who choose not to may well find themselves caught up in the next scandal.

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