Boards have a vital role and responsibility in understanding culture and how it affects employees, highlights new CIPD report
CIPD explores culture and corporate governance in evidence to the FRC.
CIPD explores culture and corporate governance in evidence to the FRC.
The CIPD, the professional body for HR and people development, has been invited by the Financial Reporting Council (FRC) to contribute to its research into the evolution of the corporate governance code and the development of new approaches to governing more effectively on cultural issues.
The FRC promotes high quality corporate governance and reporting to foster investment. It has invited the CIPD, amongst other professional bodies and organisations, to submit evidence across four key themes of delivering sustainable success, people issues, embedding and assurance, and stakeholder issues.
The CIPD has been leading on the people issues them of work and has gathered insights in a body of evidence entitled: 'A duty to care? Evidence of the importance of organisational culture to effective governance and leadership'. In 'A duty to care?’ the CIPD considers a number of important questions posed by the FRC, and draws on extensive research from the HR profession into the understanding of organisational culture. Key questions about the purpose and value of culture, the measurement and reporting of cultural issues, and the impact and importance of workplace concepts such as employee wellbeing, engagement and performance are explored.
Culture is central to the success of organisations and to the wellbeing of our workforces, but it’s complex to understand and takes time to change and effort to sustain. Positive and healthy cultures are true to their stated values, give voice to people, engage them, and create the best environment for people to perform in, thereby creating value and competitive advantage. However, as recent corporate scandals have shown, when cultures turn toxic trust breaks down and performance, wellbeing and reputation suffer. This is why boards have a fundamental role in understanding the cultures of their organisation and how culture is changing or evolving, as well as leading from the top in the behaviours and values they demonstrate. They must also hold management to account to ensure that culture, values and behaviours align, and the decisions the organisation makes enables it perform financially, ethically and sustainably.
The CIPD’s report explores the crucial role that boards play in setting the culture of the organisation and maintain the standards for the business to operate against. It has the following top-level recommendations:
We know through many years of research and work with HR practitioners just how important organisational culture is in helping to develop the conditions which characterise high performing and ethically-sound organisations. Organisations have a duty of care for their workforce, and this includes building a culture which is inclusive, healthy for employee wellbeing and an environment which promotes positive productivity. This is a fundamental oversight role of the board, and one which the FRC has duly recognised in the Culture Project. The evidence we share in this report highlights just how important it is that boards take note of their workplace cultures, and that they measure and understand its various dimensions. By doing this we believe that we can create better organisations which are successful for all their stakeholders, including their employees.
The FRC will include the CIPD’s evidence in a report - Corporate Culture and the Role of Boards - which will be issued in July 2016.
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