Corporate culture has become a topic of national conversation. Organisational balance sheets and reputations are being severely impacted, and regulatory scrutiny is intensifying. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry has had not only a significant impact on the finance world but also all companies and boards from all sectors across Australia.
The role of boards, CEO’s, business leaders and human resources professionals around curating and measuring organisational culture was a vital feature of the report and findings. Company culture is becoming a key component of corporate governance and responsibility. More often than not, boards now have a desire to understand and monitor company culture, and human resources professionals should be acting now.
In its written submission in response to the Interim Report, Treasury identified key questions emerging from the Interim Report. Leadership, governance and culture was a key feature. While the tone of leadership, corporate values and ethics, risk appetite and the type of incentives are important, culture is ultimately a local construct. It is driven by social factors, which means people are mainly influenced by the colleagues they interact with every day. These local influencers can be people they like and trust or fear due to pressure and bullying. With this in mind, Treasury asked the obvious question:
“What more can be done to achieve effective leadership, good governance and appropriate culture within financial services firms so that firms’ obey the law, do not mislead or deceive, are fair, provide fit for purpose service with care and skill, and act in the best interests of their clients’?”
At their most basic, the underlying principles reflect the six norms of conduct identified in the Interim Report:
- obey the law;
- do not mislead or deceive;
- act fairly;
- provide services that are fit for purpose;
- deliver services with reasonable care and skill; and
- when acting for another, act in the best interests of that other.
These norms of conduct are fundamental precepts. Each is well established, widely accepted, and easily understood.
7 critical HR questions all boards should ask in 2020
At the Australian Institute of Company Directors Annual Update 2019, Graham Bradley AM FAICD suggested a number of key questions all Directors should ask around the board table in 2020. As a HR professional, can you clearly articulate your answer to these in front of the board?
- Is our desired culture clearly articulated?
- Do we have effective measures of culture?
- Have we reviewed incentive compensation?
- Is our regulatory compliance in good order?
- Do we need more oversight of non-financial risks?
- Do we have effective and compliant whistleblower policies?
- Do we need to rethink our social purpose?
Culture and Conduct Dashboard
Since what cannot be measured cannot be managed, a data-driven approach to managing culture and conduct risk is needed to enable the culture and conduct related policies and procedures. Bradley suggests the implementation of a culture and conduct dashboard to be reviewed at a board level as a standing agenda item. So what kind of measures could be included in such a dashboard?
Best practice suggests that a culture and conduct dashboard should always contain the following metrics at a minimum:
- Customer survey and feedback/NPS
- Employee survey scores, e.g.:
- Do we live our values?
- Am I safe speaking up?
- Are we fair to our customers?
- Customer complaints – number, causes, speed of resolution
- Regulatory/compliance breaches
- Employee conduct incidents and staff terminations
- Negative/positive social media comments
- Whistleblower complaints
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