• Why Boards Should Give a Damn about Culture

    by  • May 13, 2012 • Human Resources, Leadership, Strategy

    BoardsDuring my tenure as a CEO, my Board of Directors never challenged me with questions pertaining to corporate culture. I wasn’t surprised in the least. Jacobs Suchard Directors expected me to run their North American operation as an entrepreneurial enterprise, and as long as the returns were acceptable, they assumed I was doing just that. Like most Boards, their interest was profit, shareholder value, efficiencies, headcounts, labor climate and strategic initiatives. Maybe it was the times – a quarter century ago, culture was beginning to come of age. And even though culture is a critical determinant of business performance, I suspect today’s Boards still don’t give it the attention it deserves.

    Imagine Apple without innovators or Zappos neglecting service or Whole Foods selling a slew of processed foods loaded with saturated fat. Generally, the founder instills the culture. And when they are gone, the culture is left to the CEO to nurture. He or she perpetuates “the way” or makes changes depending on the environment. This, I am not arguing. I am advocating that culture should be as important to a company’s Board of Directors as the business strategyFor all intents and purposes, culture is the strategy. With the exception of mega-company “clout” in the marketplace, sustainable competitive advantage cannot survive in toxic cultures.

    In the simplest of terms, a Board’s primary responsibility is to:

    1. Oversee corporate performance.
    2. Provide perspective and input to the long-term business
    3. Provide strategic direction to managemen
    4. Identify risk and monitor mitigation.

    I’m suggesting this addition.

    5. Foster a culture that creates value.

    Superb strategy and execution comes from the people within the enterprise. Cultures conducive to inspiring individuals and teams with meaningful work are the ones that deliver results. Procter and Gamble have been winning the culture game for 175 years. That is sustainable competitive advantage. And that is why a Board of Directors ought to give a damn about corporate culture.

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    Formerlife: CEO of Jacobs Suchard (Nabob, Kraft), Strategy/Branding Consultant. Afterlife: Fortune & Forbes Contributor, Wannabe Novelist.

    2 Responses to Why Boards Should Give a Damn about Culture

    1. Pingback: Corporate Governance Wire » Blog Archive » Governance as an Extension of Culture by guest blogger Susan Singer, SCPM

    2. May 20, 2012 at 10:49 am

      Agree 100%, John. Culture is “how we do things here,” and is often more powerful than the program de jour. Some boards are now embracing this responsibility, and we believe that trend will accelerate as organizations accept the challenge to build excellent, ethical, and enduring organizations. We define this as Triple Crown Leadership in a book coming our in July from McGraw-Hill.