Magazine article Strategic Finance

Aligning Culture with Company Goals: A New Culture-Governance Tool Helps Organizations Find Harmony between Business Objectives and the Dynamics of Corporate Culture

Magazine article Strategic Finance

Aligning Culture with Company Goals: A New Culture-Governance Tool Helps Organizations Find Harmony between Business Objectives and the Dynamics of Corporate Culture

Article excerpt

IN THE culmination of a three-year effort, the Association of Chartered Certified Accountants (ACCA) has created a tool designed to help organizations develop a corporate culture that encourages positive, supportive behaviors rather than dysfunctional ones. The tool facilitates organizational assessments of corporate culture and the alignment of stated goals with current practices.

THE IMPACT OF CULTURE

The ACCA culture-governance tool affirms what is well-known about the importance of a strong ethical culture, asserting that "corporate culture is decisive in determining whether an organization will do the right thing."

The tool's practical aim is to align corporate culture with organizational objectives by identifying inconsistencies and periodically reviewing goals to adjust for internal changes "such as fast growth, ownership and capital structure change, or developing a succession plan." According to ACCA, the benefits of a strong ethical culture include:

* A more productive workforce, which means better customer service, lower turnover and training costs, and higher profitability.

* Higher morale, which facilitates employee resiliency and the ability to adapt to changes caused by growth or acquisition and the external effects of competitive challenges.

* A more motivated workforce, which leads to higher-quality products and services and improved marketplace penetration.

* A stronger reputation as a good corporate citizen, which results in better customer acceptance of products and services as well as avoidance of regulatory interference.

* Greater opportunity for teamwork.

Findings from the ACCA research, which included a global survey of ACCA members, emphasize the influence of organizational interaction since everyone in the organization experiences the weight of mirrored behavior, peer pressure, and formal and informal norms.

THE CULTURE GOVERNANCE TOOL

The purposes of the ACCA culture-governance tool are to help organizations:

* Understand the corporate culture and its relationship to achievement of organizational objectives.

* Identify inconsistencies, if any, between organizational goals and the corporate culture.

* Periodically review the place of corporate culture in promoting behaviors that facilitate achievement of organizational goals.

The tool uses three rings to represent an organization. The center contains the four basic tenets of leadership responsibility that drive corporate culture: tone at the top, mission, performance management, and communication. In the view of ACCA, leadership comes from both senior management and the organization's ownership or board of directors. The outermost ring represents the actual policies, processes, and procedures in place throughout the organization. In between those two, the middle ring is a set of governance lenses to help analyze and introduce change to the corporate culture. These include organizational values, risk-taking and transparency, accountability and trust, sustainability, and interconnections.

Organizational values affect how the organization deals with risk appetite, incentives and rewards, and performance and people management. Corporate leadership should clearly communicate the organization's values and consistently act in accordance with them so that the rest of the organization can mirror them. The rest of the organization experience the effects of corporate value decisions in their day-to-day responsibilities. …

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