Skip to content

27 January, 2023

Subscribe Advertise About Us
  • My Account
  • Register
  • Log In
  • Log Out

Board Agenda

  • Governance
  • Strategy
  • Risk
  • Ethics
  • News
    • Categories

      • View All
      • Board Moves
    • Davos resilience

      News round-up: this week in governance

      Lessons from Davos; companies risk sliding back on ethical practices; economics affects everyone; Sir John...

    • audit reform UK Audit reform in the UK risks ‘losing momentum’

      The Financial Reporting Council still awaits the proposed new statutory powers that would allow it...

    • Elon Musk Glass Lewis Elon Musk weighs in against ISS and Glass Lewis

      On Twitter, Musk complains that large proxy advisers hold ‘far too much power’ over shareholder...

  • Insight
    • Categories

      • View all
      • Governance
      • Strategy
      • Risk
      • Ethics
      • Board Expertise
      • finance
      • Technology
    • climate litigation

      Climate litigation: how 2022 will shape 2023

      This past year saw a rise in climate litigation, with a focus on the commercial...

    • value whistleblowing

      Why we need to value whistleblowing

      Encouraging staff to speak up and stop harm can reduce legal and reputational risk—both for...

    • HR corporate trust

      HR: How to build employee trust in corporate culture

      The right HR director is essential to lead on a culture that gets the best...

  • Comment
      • View all
    • A week of business moving to the centre of human rights

      A week of events signals the initiatives underway to have companies play a central role...

    • audit reform IIA Why we need audit reform right now

      There is an "urgent need" for reform to the audit landscape as well as internal...

    • climate change energy crisis Sustainability and climate change: the other energy crisis

      The world is addicted to cheap energy. We need to admit this and have the...

  • Interviews
      • View All Interviews
      • Podcasts
      • Webinars
    • Board priorities 2023 Board priorities 2023: tact, trust and transparency

      We asked key figures what would help boards this year. The answers ranged from 'smarter...

    • Group of investors/shareholders in glass building Climate issues likely to figure prominently at next year’s AGMs

      A recent webinar heard that say-on-climate voting is expected to rise, while ESG remains a...

    • NEDs role NEDs ‘needed more than ever’ in times of uncertainty

      The non-executive director’s role is to both challenge and listen to management, agreed the panel...

  • Careers
      • View all
      • Selection
      • Board Moves
    • NED recruitment News round-up: this week in governance

      Your country needs NEDs; governance does not compute; financial firms get more women on board;...

    • HR corporate trust HR: How to build employee trust in corporate culture

      The right HR director is essential to lead on a culture that gets the best...

    • powerful CEOs Boards want powerful CEOs in tough times

      Single-minded chief executives have greater staying ability when business conditions are uncertain, research finds

  • Resource Centre
      • White Paper Downloads
      • Book Reviews
      • Corporate & Advisory Services
    • Edelman Trust Barometer 2023

      2023 Edelman Trust Barometer

      The report is the result of the Edelman Trust Institute's research, which sampled more than...

    • Sophos 2023 Threat Report

      Barriers to entry for would-be cybercriminals are lower, with tools and tactics becoming available to...

    • The C-Suite Outlook 2023: On the Edge

      The Conference Board 2023 C-Suite Outlook survey reveals the events that C-suite executives see as...

  • Events
  • Search by topic
    • Governance
    • Strategy
    • Risk
    • Ethics
    • Regulation
    • ESG
    • Investor Relations
    • Selection
    • Board Expertise
    • finance
    • Technology

Non-executives ‘influential’ on corporate culture but worried by information

by Gavin Hinks on July 20, 2016

The UK’s financial watchdog has released its anticipated report on corporate culture. It concludes non-executives have a significant role but reveals concerns that they often fail to access the right information.

Sir Win Bischoff, FRC, Financial Reporting Council, corporate governance

Sir Win Bischoff, FRC

Sir Win Bischoff
Sir Win Bischoff

A survey of company chairmen revealed more than half (54%) believe the role of non-executive director is either influential or very influential in determining company culture.

However, the results of the Financial Reporting Council’s (FRC) report on corporate culture, published today, also reveals concerns that non-executives encounter difficulties accessing the right information to challenge management.

Sir Winfried Bischoff, chairman of the FRC, said: “A healthy corporate culture leads to long-term success by both protecting and generating value in the UK economy.

“It is therefore important to have a consistent and constant focus on culture, rather than wait for a crisis. A strong culture will endure in times of stress and change.

“Through our research, it has become clear that establishing the company’s overall purpose is crucial in supporting and embedding the correct values, attitudes and behaviours.”

The figures were compiled for the FRC from a survey of 44 FTSE 100 and 250 chairmen conducted by the advisory firm Independent Audit.

The FRC’s report is intended to stimulate debate on the role of culture in the running of companies, and comes against a background in which the reputation of corporates was damaged by their conduct in the run up to the financial crisis.

Recent events such as the collapse of retailer BHS and its pensions fund crisis have also provoked fresh debate over the conduct of managers inside large corporates.

The research revealed almost one in ten (89%) of chairmen believe that role of chairman is influential or very influential on culture.

The role of the non-executive was among those examined by the research, but non-executives themselves expressed some scepticism about their influence over culture.

The FRC concluded that non-executives can run into difficulty accessing the information they need to probe key issues.

The watchdog said in its report: “It can be difficult for non-executive directors … to obtain sufficient knowledge of business operations to challenge management effectively.

“It is important for the chairman to set the tone in the boardroom so that NEDs are empowered to raise concerns where they have doubts.”

Some non-executives revealed doubts about whether culture was their responsibility at all:

“Throughout our engagement, NEDs were comfortable with the board’s responsibility for setting the values of an organisation,” said the report. “However many were much less comfortable about their role or ability to embed the values in the organisation, and some felt this is not the role of the non-executives.”

Key observations drawn from the study were:

  • “Directors should not wait for a crisis before they focus on company culture.” The FRC is explicit in saying it is the board’s role to “determine the purpose of the company and ensure that the company’s value, strategy and business model are aligned.”
  • “Boards have responsibility to act where leaders do not deliver.” The FRC maintains that the chief executive must embed culture at all levels and in every aspect of the business.
  • Companies should “respect a wide range of stakeholder interests”. Good governance should include openness and accountability and should be demonstrated in the way a company “engages” with and reports to stakeholders.
  • The voice of HR, internal audit, ethics, compliance and risk should  be “strengthened” in the boardroom.
  • Time should be made for evaluating culture and how it is reported. This means defining indicators and measures “aligned to desired outcomes”.
  • Investors need to challenge themselves on the behaviour they encourage in companies and reflect on their own cultures.

Sir Winfried said in his introduction to the report: “There needs to be a concerted effort to improve trust in the motivations and integrity of business. Rules and sanctions clearly have their place, but will not on their own deliver productive behaviours over the long-term.”

He added: “A healthy culture both protects and generates value. It is therefore important to have a continuous focus on culture, rather than wait for a crisis.

“Poor behaviour can be exacerbated when companies come under pressure. A strong culture will endure in times of stress and mitigate the impact.

“This is essential in dealing effectively with risk and maintaining resilient performance.”

  • Facebook
  • Twitter
  • Google+
  • LinkedIn
  • Mail

Related Posts

  • GE whizz: Jack Welch's focus on corporate culture was ahead of his time
    January 31, 2022
    GE logo

    To judge GE only on its recent performance is to vastly underrate its achievements—in particular, its strong, consistent corporate culture.

  • Internal auditors sound alarm over corporate culture
    March 1, 2022
    Book marked "company culture"

    Two-thirds of internal audit chiefs support attempts to strengthen directors’ duties to “promote, monitor and assess” corporate culture.

  • HR: How to build employee trust in corporate culture
    January 10, 2023
    HR corporate trust

    The right HR director is essential to lead on a culture that gets the best out of people, rather than policing them.

  • Why big firms are rarely toppled by corporate scandals
    March 21, 2022
    Modern corporate buildings

    An analysis of the effects of a wide variety of business scandals shows that only rarely is the effect as severe as we might imagine.

For thoughtful journalism, expert insights on corporate governance and an extensive library of reports, guides and tools to help boards and directors navigate the complexities of their roles, subscribe to Board Agenda

corporate culture, culture

Search


Sign up to our Newsletter

Receive independent news, thoughtful journalism & expert insights about leadership, corporate governance & key boardroom issues straight to your inbox every week.

SIGN UP

Follow Us

 

 

 

 

Most Popular

  • Activist investor campaigns rise back up to pre-Covid levels
  • How to ensure stakeholders trust your sustainability reporting
  • Companies ‘will face growing climate litigation’
  • News round-up: this week in governance
  • Climate litigation: how 2022 will shape 2023
 

Featured Partner Profile

Diligent

Diligent

Diligent Corporation, which was founded in 2001, is headquartered in New York, NY with a European HQ in London. Diligent’s modern governance platform empowers leaders and teams at every level of the organisation to digitally transform and create ...

Featured Partner Resources

2022 AGM Season Forecast: An Eye on The Horizon

To help prepare for AGMs in 2022, Equiniti (EQ) hi...

Stakeholder Engagement: A Roadmap for UK Plc Boards

This guide aims to provide directors and their col...

Digital Boards: How Technology Adoption is Driving Culture Change and Resiliency

Digital tools proved their worth to boards during ...
Leadership in AI report

Leadership in AI

This report from Board Agenda and Mazars, in assoc...
Creativity in a Crisis: a Boardroom Map for Innovation

Creativity in a Crisis: a Boardroom Map for Innovation

In the uncertain times at the height of any crisis...
Board Directors Guide to D&O Liability Insurance - November 2020 - AIG & Board Agenda

Board Directors' Guide to D&O Liability Insurance

Directors face liability over a range of new threa...
Leadership-in-Risk-Management-Board-Report

Leadership in Risk Management: Board Report

Board Agenda, in association with Mazars and INSEA...
Director's Guide to Internal Investigations

A Director's Guide to Conducting Internal Investigations

An internal investigation must be handled meticulo...

 


 

ADVERTISE – FREE CORPORATE LISTING

FREE - Add your company profile to our Corporate & Advisory Directory.
ADD

ADVERTISE – PROMOTE YOUR REPORTS & WHITEPAPERS

FREE - Add your company profile to our Corporate & Advisory Directory.
Add Resource

Register Free

Register to receive free article views, selected resource downloads, and all the latest news alerts straight to your inbox. Register


  • Editors & Contributors
  • Editorial Advisory Board
  • Corporate & Advisory Services
  • Media Marketing Solutions
  • Contact Us
  • Careers
  • Board Director Network
  • Terms & Conditions
  • Privacy Policy
  • Cookies
  • Sitemap
|