
If trust in businesses is broken, how can corporate reporting help to fix it?
Author: Karen Almeida, Head of Corporate Reporting
The breakdown in trust between the public and business has been a pretty grim spectacle.
An incessant stream of headlines has called out some of the UK’s biggest companies for crimes ranging from fraud, bribery and corruption to executive pay deals that deliver huge rewards without demanding performance targets. Add to this unfair charging of customers, aggressive use of zero-hours contracts and poor treatment of suppliers, and the growing demand for more ethical corporate behaviour and transparency is inevitable.
Safeguarding corporate reputation: easier said than done?
At times like these, safeguarding corporate reputation should be a priority for businesses. The widespread use of digital communications, and particularly social media, is making it harder for businesses to ‘own’ their reputation. Sites such as Glassdoor provide a platform for employees to share their views on their employers, and Twitter and Facebook make it easy for consumers to air their customer service grievances in public. It has become easier for the prevailing view of a company to be shaped by messages that are not of its choosing.
In a noisy world, companies need to find coherent ways of engaging internal and external stakeholders. And this is where having a healthy corporate culture, and communicating it effectively, can help.
What is culture, and why does it matter?
Culture can be defined as a common purpose and goals, a set of shared beliefs, attitudes and values, expected behaviours and an understanding
of ‘why we do what we do, and the way we do it’.

‘Culture is what happens when no one is looking.’
A strong culture is a way of improving employee engagement, focusing employees on organisational and strategic priorities and improving customer service. Compelling and credible communication of culture, supported by
an ethos of ‘living our values’, helps organisations to attract and retain the talent that will allow them to thrive.
‘Strategy alone is just not enough. To go further and faster we need the right culture, the right way of doing things. Our values and culture crystallise how we are going to leave behind anything that holds us back, by killing complexity and making sure the customer is at the heart of our thinking.’ Mark Wilson, CEO, Aviva
Evidence of an effective culture can also support investor and stakeholder value propositions, reinforce the strength of a brand and facilitate innovation, giving employees the confidence to voice their ideas. And the ability to integrate cultures effectively can mean the difference between success and failure in mergers and acquisitions.
How can corporate reporting help?
Where does corporate reporting come in to the mix? It’s an opportunity for the chairman and the CEO to set the ‘tone at the top’ and explain how the board monitors and measures the cultural health of the business.
The annual report also provides a framework for explaining how an organisation’s culture supports its strategic objectives and how it drives performance. Companies such as AstraZeneca and National Grid
include developing their culture to improve performance as part
of their strategic priorities.
‘A commitment to report is a good discipline and can translate into a commitment to take real action on culture — what gets reported tends
to get done.’ FRC, Corporate Culture and the Role of Boards, 2016
Measurement of culture is not always easy, but metrics such as employee engagement and customer satisfaction/net promoter scores can be used to help quantify cultural health. Businesses are increasingly linking these to executive remuneration, which is an important step, as the remuneration report often acts as a lightning rod for sentiment around corporate behaviour and culture. The report gives boards an opportunity to explain how they are aligning executive pay with cultural health, alongside strategic performance and creation of long-term shareholder value. Companies such as Rolls-Royce and Lloyds Banking Group, which include employee and customer satisfaction measures in their remuneration scorecards, Vodafone, which uses a customer appreciation metric, and Severn Trent, which has a health and safety measure, are among those leading the way.

Many organisations already have a clear internal focus on vision, values and behaviours. The time has come to develop a more compelling narrative that shows how a strong corporate culture can be real source of competitive advantage.
If you would like to speak to our consultancy team about how we can help you to develop your reporting on culture, please contact Helen Parker, helen.parker@conrandesigngroup.com

