©NicoElNino/ISTOCK/THINKSTOCK
Of the many areas of focus for boards in 2018, the importance of a positive workplace environment cannot be underestimated. But it’s often a challenge for boards to get a true sense of culture within the lower levels or the organization.
FEI Daily spoke with leader of the KPMG Board Leadership Center Dennis Whalen, about their recent report, On the 2018 Board Agenda, and about how management and boards can use culture dashboards to learn more about the values and satisfaction levels of their employees.
FEI Daily: What are boards talking about specifically when it comes to disruption?
Dennis Whalen: That's a great question because it is probably the term of the day and everybody uses it. But, I'm not convinced everybody means the same thing when they talk about it.
For example, companies are worried that Amazon is going to take over the world. So, they're having conversations about where are their weaknesses, vis-à-vis Amazon, and they are thinking about what they might be able to do to their business model.
People have been trapped in old business models. You oftentimes hear “how can Tesla, which is struggling with getting new models to market, have a higher market cap than Ford or GM?”
People are really challenging operating models, and it forces boards to think a little differently and to question if they are really on the right path from a strategy perspective. Because, at the end of the day, the board has two primary responsibilities. One is picking the CEO and the other is making sure they're on board with the strategy. I think it's very healthy to have a conversation about what could Amazon do to us? Why is Tesla more valuable than Ford? Why do those things make sense? I think from a disruption perspective, boards are forcing those conversations. Those conversations are really getting more robust in the boardroom and I think that's good for corporate governance.
FEI Daily: What are some of the main areas of focus when it comes to corporate culture? What discussions are happening at the board level?
Whalen: Everybody recognizes that culture eats strategy for breakfast, so you've got to be attuned to it. What boards really worry about, though, is their role in understanding culture and helping the CEO and management teams set the right tone, because the board is a part-time job. Their access to an organization is principally through corporate headquarters and through the C-suite. So the boards are really struggling with how to, from the chairs that we sit in, understand the corporate culture.
The board isn’t going to have enough time with an organization to understand the mood in the middle and the buzz in the bottom. So it’s important that that they ask management, how can you present the mood in the middle and the buzz at the bottom to us so the board can assess the tone at all different levels of the organization.
There are a lot of conversations happening about creating dashboards. Five years ago, the notion of a cyber dashboard that was reviewed with the board was a rarity. Today, I don't think there's any board that is not getting some type of cyber dashboard from the CIO or the CISO and I think we're going to evolve in the culture space to get to a culture dashboard.
Companies are starting to put teams together from three parts of the organization. One is corporate audit because they're positioned to be a sounding board and the eyes and ears of the audit committee. The second is a compliance organization or someone who focuses on compliance. The third leg of the stool is the HR team. Very few companies don't do annual employee surveys. Very few companies don't do exit surveys when their people leave. How do we start to put something together that pulls together information we probably have had for years but never put together and triangulated it to get a culture assessment?
That's the conversation that's happening. I'd be shocked if, by the end of 2018, most companies didn't have some kind of culture dashboard that somebody monitors and presents for the board on a regular basis so they can see outside the C-suite and the corporate office.
FEI Daily: Until more organizations use culture dashboards, what are some of the things that boards are looking to hear from management when it comes to corporate culture?
Whalen: Everybody has some kind of platform that they operate on in terms of business values. The discussion now is, while we might have this nice little flip chart or poster board in the cafeteria and it says what our behaviors and what our rules of operation are, do they really translate into the behaviors of people?
Directors are asking management, how do they know employees’ behaviors are aligned with the Company’s values? How can we get more insights into their values? And then how do you make sure you align the company's values and purpose with people's values and purpose? You also have to rethink incentives because incentives drive good behavior and bad behavior.