by Erika Eliasson-Norris
Company culture and governance are intertwined, influencing and reflecting upon one another – which is why a lack of governance is to blame for bad company culture. Just as governance starts at the top of a business and must be shared with the layers of business, company culture spreads from the top too. Whether your company’s governance is good or bad will determine if the company culture is good or bad.
Governance is the map of the business, an outline of the structure of the company including its processes, targets and ideals. It clarifies what the business needs to do to be efficient, identifies any risk factors and states how best to manage these, as well as details how decisions are made and by whom. It confirms what everyone’s role is in the business and the measures in place to protect staff and reduce and mitigate risk. As everyone knows their role and is supported, they feel empowered and motivated to do a good job.
Ultimately, good governance influences and ensures good company culture – culture is at the heart of governance.
What Is Company Culture?
Company culture is the internal workings of a business, its values and beliefs. It underpins all that the business stands for and impacts upon the behaviours of staff. It is the operations of the firm, how and what gets done. As it sits within governance, it confirms how staff should behave, what is expected from them and how the business should be run.
A company with a good culture usually does well. The environment is positive, and people enjoy working for the business as they feel appreciated and supported. They understand exactly what their role is and what measures exist to ensure they can fulfil their duties without the risk of litigation. As a result of a good working environment, people are attracted to the business, especially talented people which has the knock-on effect of boosting productivity and leading to more recruitment of good people.
Systems work as the frameworks are in place to support staff to work at their best whilst protecting them from any risks. External stakeholders like investors have confidence in the business as they can see the business is operating well because the managers are accountable and make solid decisions, employees are looked after, and the culture is good.
However, a company with a bad culture often struggles to achieve longevity. The environment is unpleasant, and people don’t want to work for the company. Staff have low morale, turnover is high, and there is a lack of accountability leading to poor decision-making. Any new staff that are recruited are quickly influenced by the bad culture and either switch off from their role or resign, which impacts the already weakened business.
Often there are legal claims and money is lost. Investors and clients usually lose trust in the company due to the toxic culture and poor decision-making. The reputation of the business is damaged by poor productivity and a lack of staff loyalty. There can be scandals and lawsuits, and the cleaning up and handling of these are costly.
How To Achieve Good Company Culture
The main priority for all businesses is to ensure there is good governance, and that the core framework of the company and what it wants to achieve and how, are clearly defined. Governance feeds into the environment of a business, into its culture and determines if the culture is good or bad – so if a business gets the governance right, it will get the culture right, and the business will be good as a result.
As culture comes from the top, it’s vital that the CEO and board lead by example. If they’re fully invested in the business and support all that is outlined in the business’s governance, this will seep down to all staff and influence behaviour.
Looking after staff is one of the best investments a company can make as they are as much a part of the business as the products or services are – you can have the very best products and finest service, but without good staff to deliver these, they’re worthless. Listen to employees and let them know they’re appreciated. People who feel appreciated work harder and are more engaged, and are willing to go above and beyond their job role.
Having staff who are committed to the company means you achieve bigger goals and maximise opportunities as there are capable, motivated and productive people at the ready to ramp up output when needed. This agility is a great benefit to the business as it provides the ability to out-compete rival businesses that lack such a high level of staff loyalty.
Happy staff also leads to a lower turnover, which saves on the time and costs of recruiting and training new team members. As the business is a place people want to work, it is also easier to hire talented people when needed as the reputation of the business will be enhanced by the twin influence of good governance and good culture.
By taking care of the culture, a business takes care of the company and ensures its longevity. Even when businesses face many challenges, which they do at the moment with a recession looming and the harsh economic climate, having a good company culture will go a long way to future-proof the business and enable it to survive by operating at its best.
The author, Erika Eliasson-Norris, CEO of Beyond Governance, has always worked in the ‘eye of the storm’. Her career included navigating controversial board decisions, shareholder rebellions, a share price collapse to the brink of insolvency, high-profile anti-management stakeholder protests, survival-focused business division disposals, corporate manslaughter investigations, forced CEO and Chair removals, c-suite fraud investigations, FCA dawn raids, unexpected radio appearances, liquidation evading emergency finance and more. These challenging and extensive experiences afforded her the top governance and legal position in a London-based FTSE 250 organisation at the age of 32 – the youngest person in the industry to take on this c-suite-level role. Following frustrations over the lack of tailored, realistic, practical advice for c-suite Governance Professionals, Erika left her corporate career in 2019 and founded Beyond Governance.
