By Elizabeth Proust, AICD Chairwoman
Organisational culture is essential to repair the trust divide.
Throughout 2017, successive scandals in the finance sector, the arts, the not-for-profit sector, and governments – perpetuated a significant trust decline in the Australian community.
A spotlight was shone on workplace culture which has forced directors to consider what role we have in shaping those cultures.
The culture of our workplaces has probably never been under greater scrutiny than it is today. And boards have a crucial role in shaping, monitoring and changing our organisational cultures – across all sectors.
If we, as directors, are not setting and requiring the cultures that our staff – and the wider community – expect, we cannot hope to repair the trust divide.
A good culture can be a competitive advantage. Conversely, poor cultures damage employee and stakeholder outcomes, and when they result in visible failures – be they regulatory or ethical – they erode trust.
In that vein, it is welcome that the most recent AICD Director Sentiment Index found that the vast majority of directors – 92 per cent – are actively trying to change the culture within their organisation.
But what needs to change?
There is no ‘one size fits all’ approach to culture.
I would posit however that boards can play a role in regaining trust through improved culture if their decisions are consistently in line with three key pillars:
- Transparency; and
- Ethical behaviour
The lack of accountability and transparency in instances of financial or ethical wrongdoing is undoubtedly a driver of the trust deficit between Australians and their institutions.
These may sound like straightforward principles – yet when stakeholders or politicians or commentators ask who is being held to account for failures – whether it be in corporate Australia or in the not-for-profit sector, the answer has too often sounded hollow.
Without greater accountability and transparency, a culture of ethical behaviour cannot take hold and there is no pathway towards regaining community trust.
In addition to ensuring these values underpin our decisions, we as directors, need to model the ethics we want to take hold in an organisation. If we fail to model the cultural traits we ask of employees or volunteers, we can hardly be surprised when the desired culture fails to appear.
And if we on boards reward success, we need to hold ourselves accountable and punish failure.
We must be transparent in doing so – explaining clearly the reasons why decisions have or have not been taken, honestly and fully. The tenets of organisations’ social contract are changing as the world changes, and directors must engage with that, rather than dismiss it, if we are to rebuild trust.
AICD is holding director’s briefings in May on the Board and organisational Culture.
- Ulverstone – Tuesday, 8 May
- Launceston – Wednesday, 9 May
- Hobart – Thursday, 10 May
For more information contact 03 6242 2200.