Corporate culture is not set in stone
By Reto Savoia, CEO Deloitte Switzerland
Board members in Switzerland are aware that corporate culture is a key competitive advantage. Yet this welcome realisation is rarely reflected in concrete measures: culture is often still regarded as static, and hardly adapted to strategic change.
The saying “culture eats strategy for breakfast” is attributed to management guru Peter Drucker. I believe what he wanted to convey was that a new strategy must mesh with the existing culture, or that a strategic change must absolutely be tied to a change in the corporate culture. Drucker saw culture as a decisive component of a company that deserves particular attention.
Many of the 360 board members surveyed by Deloitte and swissVR have probably heard of Drucker’s saying: almost two thirds felt that a good corporate culture was a competitive advantage and a driver of business success. More than four out of five had discussed their firm’s culture within the past year. The respondents cited “setting examples of the promoted values” and “careful selection of management members” as the best means of influencing corporate culture.
Gratifying survey findings
I was happy to see these findings, which are truly exemplary, because all too often, you only hear about those few companies where an unhealthy culture leads to excesses. Given the growing number of urgent issues, it is not always easy for a board of administration to tackle corporate culture actively and on a regular basis. However, if culture becomes a pressing matter during a board session, it is often already too late.
A goal-oriented discussion of corporate culture within a board of administration is further complicated if the company views culture as an unchangeable constant, or a body of principles set in stone by the company’s founder. In our survey, one third of the respondents said that they did not adapt culture following a strategic realignment. This is surprising, given that corporate culture is essential for success and can now be influenced and measured systematically.
Navel-gazing vs. independent measurement
The challenge for companies often begins with identifying its existing culture. According to the survey, board members rely largely on feedback from staff and management. Less than one fifth of the companies systematically examined cases of non-compliance or other infringements of the rules – and only one company out of 20 had already organised an external audit of its corporate culture. Yet corporate culture can only be modified in a targeted fashion based on a clear, regular identification of its different dimensions.
Board members are constantly dealing with new issues and must adapt strategies at ever-shorter intervals. These realignments require an analysis and adaptation of the corporate culture.
Corporate purpose nurtures culture
To define corporate culture meaningfully, a clear corporate purpose can be useful: in my view the corporate purpose should point the way forward. The corporate culture is a combination of the actions and values required to reach one’s goals. The corporate culture exemplified by management and driven by staff breathes life into the corporate purpose.
In order to meet the growing demands of investors, employees and the public, the elaboration of a corporate purpose and conscious management of corporate culture can greatly benefit board members. As far as I am concerned, our study has confirmed that board members must place culture high on the agenda, check it regularly and refine it in a goal-oriented way in the event of strategic realignments.
Read our report: Corporate culture as a competitive advantage