Why isn’t company culture a bigger focus in the boardroom?
Employee engagement. Customer loyalty. Talent retention. Strategic progress. Board members’ ears perk up at these phrases. Every leader knows how acutely these factors affect the bottom line, and how quickly companies crumble when these factors are compromised. As boards, when a flag is raised about one of these topics, there’s usually cause for some kind of discussion or check-in.
But what if your leadership team wasn’t measuring the factors above? The board’s role is to provide big picture direction and to ensure accountability from the leadership team for bringing the company there safely and successfully. How can board directors perform their role without the data that signals threats or highlights great strengths?
It’s not possible. Yet boards are attempting this around the world all the time. Sometimes it’s because leadership isn’t taking the measures to invest in and understand their culture at all, but more often than not, the board isn’t setting the expectations for leadership about what level of investment is required to get the real information and then probing to learn more than a surface report on it.
This lack of information and effective oversight is still wildly lacking in boardrooms. As tempting as it is to say, “that’s the CEO’s job”, that’s not quite true. When it comes to company culture, it’s the board’s job to embrace and set the expectation for organizational health and ensure that accurate monitoring data is reaching them. If real feedback isn’t being gathered, or if sentiments, ideas, and threats are getting tossed under the table, not only is the board unable to perform its role well, it leaves all kinds of opportunity untapped.
Culture as a Strategic Asset or a Dangerous Liability
Company culture encompasses the shared values, beliefs, and norms that guide how employees interact and perform. It is much more than a collection of perks and policies; it serves as a strategic asset that can propel an organization forward or hinder its progress.
Culture can be make-or-break when it comes to:
- employee engagement
- compliance and commitment
- willingness to speak truth when it matters
- retention of top performers
- values-purpose-strategy alignment
- clarity in communication and standards expectations
- stronger financial performance
Your CEO is going to know these are all important success indicators, but that doesn’t mean it's “their job”. While it’s the CEO’s role to ensure the implementation is happening effectively, it’s the board’s job to embrace the importance of organizational health and set the tone from the top about what that means. The board’s function is to address the “what” question of culture: What matters? What will be the hills we die on? What policies need to be in place to ensure clarity about these expectations?
Building a strong relationship with your CEO is key; it’s their job to answer the “how” of culture, to implement and make sure it’s working in real life. This is going to take a lot of checking in, but one of the dangers here is that check-ins can quickly devolve into micromanagement or being put on the spot. But trust doesn’t mean you don’t ask. It’s more about how you ask.
And you do need to ask. Not only could culture become a risk, it can present huge opportunities to build on!
Cisco: Culture as an Asset
Cisco came out at as #1 in Great Place to Work’s 2024 category for Fortune Best Workplaces in TechnologyTM, a list they have placed in consistently since 2018. While we couldn’t claim there’s nothing to be improved, the fact that 33% of their employees have been with the company for more than ten years is in keeping with employees’ voluntary comments about their positive experience with managers, flexibility, and talented peers.
As the company that (as of 2024) makes up over 40% of the global enterprise network infrastructure market, Cisco is a big player that shows consistent commitment to a “conscious culture”. In their own words, this means: “We are self-aware of ourselves and our environment. We feel accountable and empowered to contribute to a culture where everyone thrives and where we intentionally seek out, learn, understand, and appreciate who—and what—surrounds us.”
This track-record of culture strength is something the company is clearly capitalizing on, and as a board, that has to factor into how they give oversight. But Cisco is not leaving it to guesswork, or blindly charging forward without covering their backs on this: their intentional strategies for reward recognition, employee surveying by third parties, and investment in DEI and ESG are practical and measured, giving the board a far higher probability of spotting risks and providing effective oversight. It’s clearly paying off in multiple ways.
Uber: Culture as a Liability
The headline for a 2017 article in The New York Times called Uber out for an “aggressive, unrestrained workplace culture.” The article paints the recently-exposed picture of a company that claimed to value "meritocracy" and "hustlin’", but in reality created an environment where harassment flourished. And lest it sound like this stopped at employee experience, no: Uber used data collection to evade city authorities around the world and avoid costly code enforcement. Bigger, better, faster—but in ways that landed far from the innocent-sounding core value “inspiring leadership” on their wall.
What was the board doing during this time? Were there directors in the room extoling the benefits of gathering teams of ambitious, driven individuals who are solving problems left, right, and center and surpassing targets? Were there any efforts to probe deeper and get the real picture of how these values were being lived and experienced throughout the company? Failing to own culture as a board responsibility has cost the company more than "hurt feelings".
While it's true that Uber has achieved remarkable success, its 2019 IPO serves as a cautionary tale about how an ungoverned approach to culture can ultimately undermine a company’s financial future. In it, they acknowledged: “Our workplace culture and forward-leaning approach created significant operational and cultural challenges that have in the past harmed, and may in the future continue to harm, our business results and financial condition. A failure to rehabilitate our brand and reputation will cause our business to suffer.”
Noses In, Fingers Out: How an Effective Board Gives Engaged Oversight to Culture without Micromanaging
The board of directors holds the ultimate responsibility for ensuring the long-term success and sustainability of the company. While financial performance and strategic direction are often top priorities, culture is a critical underlying factor that influences these outcomes. A board that overlooks culture risks missing warning signs that could lead to larger problems down the road. And further, they miss out on an opportunity that can create incredible momentum.
While the board may not be involved in day-to-day management, it plays a critical role in setting the tone from the top. This includes ensuring that the CEO and executive team are not only capable but also committed to fostering a positive culture. Boards must strike a balance between oversight and autonomy, walking the fine line between being involved and allowing leadership teams the freedom to operate independently.
Key Areas to Examine
To effectively probe the company’s culture, s should focus on several key areas:
- Alignment with Strategy: Does the company’s culture support its strategic goals? If the culture is misaligned with the strategy, even the best-laid plans may fail. Your company’s culture is not going to be a fit for everyone, but it needs to be clear so fit is a real indicator.
- Employee Engagement: Are employees motivated and committed? Engaged employees are more productive and less likely to leave, reducing turnover costs and preserving institutional knowledge. For instance, Patagonia cultivates an engaged workforce by emphasizing their environmental mission, which resonates deeply with their employees. Those who share that value are attracted to the company as a loyal, motivated workforce that drives the company’s success (and those who don’t are quicker to self-deselect).
- Ethical Standards: Is there a strong ethical foundation? A company’s culture can either prevent or permit unethical behavior, which can have serious legal and reputational consequences (pointing back to Uber’s story above).
- Leadership and Communication: How do leaders embody and communicate the company’s values? Leadership plays a crucial role in shaping and maintaining culture. The board should ensure that leaders at all levels are reinforcing the desired culture.
Tools and Approaches
To effectively probe for a more accurate picture of company culture, boards can utilize various tools and approaches:
- Surveys and Feedback
Regular employee surveys and feedback mechanisms provide invaluable insights into how culture is perceived at different organizational levels. Companies like Adobe utilize “check-in” conversations to gather ongoing feedback, helping to shape their culture continuously. - Direct Engagement
Board members should engage directly with employees across various levels, not just the executive team. This hands-on approach provides a more holistic view of the culture. For example, board members at Unilever often participate in employee forums, fostering open communication and trust. - Culture Audits
Periodic culture audits can help assess whether the company’s practices align with its stated values. These audits can identify areas for improvement and highlight strengths. A well-executed audit can lead to actionable insights.
The Role of the Board in Shaping Culture
If a board director truly want to look out for their organization’s success, they need to focus on organizational health just as much as they do on financial indicators. By making culture a priority, boards can help foster an environment where everyone can thrive, leading to long-term growth and sustainability. It’s time we change that perspective and recognize that a healthy culture is just as crucial as any financial metric.
For board members, probing the company’s culture is essential not just for risk mitigation but for unlocking the full potential of the organization. By actively engaging with and understanding culture, boards can guide their companies toward sustainable success, ensuring that they not only survive but thrive in an increasingly complex business environment.
Board members need to own this as part of their role from the get-go. If you step up to become a board director, culture is your responsibility. Building a relationship with your CEO where culture is explored just as thoroughly as market fit is one of the strongest steps forward you can take for your company in today’s competitive landscape.
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