How do you define the top?

Culture Change: It Starts at the Top!

How do you define the top?

Is it the Board? Or the executive team?  

What role does - or should - a board and the executive team play in the shaping of your organisational culture?

The Top is the Chairman of the Board

The chairman's role is to guide the entire Board and the Executive Team to proactively create + nurture the culture of the organisation.

This is not only good for business it is necessary to discharge their duties according to law incl. the criminal code.

Commonwealth Criminal Code: Culture of Compliance …

The following is an extract from a speech  "The Culture of Compliance - A Judicial Perspective" (FCA) [2003] FedJSchol 16 by Justice RS French of the Federal Court of Australia on a companies responsibilities under the Commonwealth Criminal Code with regard  to creating & maintaining a "compliant culture".

‍Corporate Culture of Compliance – The Definitions

…

The term ‘corporate culture’ also appears and is defined in a major Commonwealth statute.

As of 15 December 2001, the provisions of the Commonwealth Criminal Code relating to corporate criminal responsibility apply to all federal offences save for those offences created under Acts which retain specific regimes of corporate responsibility.

Where intention, knowledge or recklessness is a necessary element of an offence that state of mind will be attributed to a body corporate that expressly, tacitly or impliedly authorised or permitted the commission of the offence.

The Code provides in Pt 12.3 the means by which such an authorisation or permission may be established.

These include:

‘(c) Proving that a corporate culture existed within the body corporate that directed, encouraged, tolerated or led to non-compliance with the relevant provision.’ – This may perhaps be referred to as a culture of non-compliance.

Or

‘(d) Proving that the body corporate failed to create and maintain a corporate culture that required compliance with the relevant provision.’

- This may be referred to as the non-existence of a culture of compliance.

The term ‘corporate culture’ is defined in s 12.3(6) of the Code thus:

‘Corporate culture’ means an attitude, policy, rule, course of conduct or practice existing within the body corporate generally or in the part of the body corporate in which the relevant activities take place.

In determining whether the relevant corporate culture of non-compliance existed or whether no corporate culture of compliance exists, a court may have regard to:

(a) whether authority to commit an offence of the same or a similar character has been given by a high managerial agent of the body corporate; and

(b) whether the employee, agent or officer of the body corporate who committed the offence believed on reasonable grounds or entertained a reasonable expectation, that a high managerial agent of the body corporate would have authorised or permitted the commission of the offence.

The Importance of Corporate Culture

Extracted from a speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission

Gilbert + Tobin Board Luncheon (Melbourne, Australia) 15 June 2017

Culture

So, what is culture?

Culture is a set of shared values and assumptions within an organisation.

It reflects the underlying ‘mindset of an organisation’, the ‘unwritten rules’ for how things really work.  

It works silently in the background to direct how an organisation and its staff think, make decisions and actually behave.

Andrew Bailey, Chief Executive at the UK Financial Conduct Authority recently commented that culture was ‘everywhere and nowhere’.

He explained that this reference was meant to convey that almost everything that goes on in an institution affects its culture, but there is no distinctive external ‘thing’ called culture that acts as an input to institutional behaviour. And why is culture so critical in this landscape?

Word-of-mouth and reviews (i.e. the crowd) have become increasingly influential in consumer decision-making.

Personal recommendations have been effective in driving attitudes towards a brand and purchasing behaviour, but social media has now magnified and intensified the power of these recommendations. The power of consumer reviews and positive word-of-mouth can help build and maintain trust in a company’s brand.

On the flip side, social media and the 24-hour news cycle mean that companies are increasingly held to account for any perception of poor behaviour. If they are not behaving in the right way, the crowd will let them know, if not the headlines – often with damaging effects on their brand and reputation.

Creating a sustainable business today is not only about the quality of the product or service that is delivered.

It is also about the quality of a firm’s conduct, both internally and externally.

If the culture and values of a business are not aligned with customer outcomes, it is easy to see how a trust deficit will emerge, and this will impact its long-term sustainability.

Credits:

This FAQ was written by James D. Ford GAICD | Principal Solicitor, Blue Ocean Law Group℠.