By Rachel Crossley, Senior Reporting Consultant at Emperor
The first event in Emperor’s new Culture Club series explored the recent governance changes and how they will impact reporting on culture.
Emperor recently launched the Culture Club, a series of events exploring the importance of culture in driving business success. The first event focused on the new reporting requirements, arising from the revised UK Corporate Governance Code among other developments, and how companies should report on culture and the role of the Board.
It featured presentations from Emperor’s Head of Employee Communications Darryl Mead, Alison Baker, a non-executive director and member of Emperor’s strategic advisory board and myself, as well as an engaging Q&A session with the audience, which included a discussion of the geographical sensitivities around embedding values and culture across an organisation.
Key takeaways were:
A gap analysis is the first step
Every company has a culture. However, there’s often a gap between the actual and the desired culture. The first action for companies is to assess their current culture, identify any mismatch with the desired culture and set a plan of action to close the gap.
Board buy-in is essential
The Board of Directors has a vital role to play in demonstrating the importance of a company’s values and behaviours, and monitoring how they are embedded and modelled across the workforce. Alison shared her experience as a non-executive Director of Kaz Minerals, where the Board’s focus and engagement in embedding a culture of zero harm has led to a significant improvement in safety performance.
It’s important to measure culture
If culture is measured, then it will be managed and you can demonstrate progress. Many companies struggle to define culture metrics as they see culture as something intangible. But it doesn’t have to be. For example, a mining company focused on safety could report on its long-term injury rates as part of culture reporting, while an engineering company focused on innovation could report on R&D spend or the number and quality of ideas generated from employees.
Purpose is a key component
Both the updated UK Corporate Governance Code and the Guidance on the Strategic Report require companies to report on their purpose, values and strategy, how these are aligned with the culture and affect Board decision making. Culture should also be incorporated as part of the Section 172 statement, introduced by the Companies Regulations 2018, which sets out how directors are considering the long-term success of the company as part of their duties.
Culture contributes to long-term business success
Investors are increasingly interested in how culture drives performance. Culture should not be confined to a box-out in the business model or CEO statement but should be linked to the company’s purpose and incorporated into the achievement of strategic priorities, its performance and risk management. Stories and case studies should demonstrate action and impact and help bring reporting to life.
Take a long-term view
If the culture and values are not where you’d like them to be, explain where you are heading, how you intend to get there and the challenges you are facing. It’s not something you can achieve overnight but will take time, effort and engagement.
Culture is so much more than just the social side of work it is often dismissed as; it is about the company’s values, beliefs, and traditions; the systems, practices and policies in place; the interactions and attitudes towards stakeholders. It is the company’s personality.
Regulators, investors, employees and companies themselves have woken up to its importance — what and how you talk about culture will be vital in the next reporting season.
We are running two more sessions as part of our Culture Club series, which you can find out more about here.
If you’d like to learn more about reporting on culture, please get in touch with rachel.crossley@emperor.works.
