Is Your Board Behaving?
Culture is a critical component of good governance. Tesse Akpeki explains.
Leadership values the importance of collegiality, #trust, #confidence and #connection in building #effectiveboards in the UK through appropriate conduct. Culture is a strong enabler in this regard, underpinning fundamental values, attitudes and behaviours.
The #CharityGovernanceCode stresses that an effective board makes sure that the charity’s values are reflected in all its work and that the ethos and culture of the organisation underpin the delivery of all activities. The #UKFinancialReportingCouncil has also recently published its report #CorporateCultureandtheRoleofBoards, which recognises the value and impact of culture in strengthening #corporategovernance.
In its recent guidance ‘Cultural markers, Assessing, measuring and improving culture in the charitable sector’, the #InstituteofCharteredSecretariesandadministrators identifies 13 red flags that act as early warning system for charities. These include strong personalities in leadership roles, a ‘sticking plaster’ approach to major challenges, undue influence from funders , breaches of policies and procedures and competing cultures within organisations
However, one size does not fit all when it comes to culture: what matters is that the culture is appropriate for the context in which the organisation operates.
How can the board develop and maintain a culture which suits the organisation and underpins appropriate behaviours at all levels?
1. The board must define its purpose and values setting out clearly the desired culture and behaviour throughout the organisation.
2. The board must develop frameworks and tools to assess behavior, culture and impact. This will act as a guide for management and board decisions. For example, a desired culture could be that the board plays a core role in encouraging and supporting diversity, inclusion, participation and engagement in its leadership and decision making.
3. It is the board’s role to develop and maintain its strategy, avoid culture misalignments and endorse healthy behaviours.
4. The key challenge for boards is to understand what drives behaviours. The board must shape and influence those drivers in a way that fosters greater sustainability and improves performance over time.
5. Culture is closely linked with risk and risk appetite. It is imperative for the board to look at risks that might affect the organisation and its long-term viability. Alongside this, the board should periodically review the organisation’s approach to risk, ensuring that the board supports risks that are informed by strong evidence and based on sound and effective decision making.
6. The board and executive team ensure decisions around value creation and values are integrated in the way it does business and in the business model.
7. Relationships are successful and enduring because they are based on respect, trust, confidence and mutual benefit. The board, the chief executive and other key executives are strategic players forming a healthy top team, strengthening the performance, positioning and impact of the organisation.
8. The board leads by example. It role models and demonstrates accountability by periodically reviewing its effectiveness.
9. The board gives careful thought to its relationships and processes. Such approaches could be laid out in a Code of Conduct which board members discuss, agree to and sign as a visible sign of the culture, ethics and values the board and organisation is embracing.
The chair should work to set a tone in the boardroom that empowers board members and allows them to raise concerns where they have doubts. The Charity Governance Code states, “The chair working with the board, accepts responsibility for leading the governance of the organisation and ensuring its effectiveness”.
While the board takes collective responsibility for its decisions, board members must accept their individual responsibilities and duties.
Corporate culture and the role of the board can be downloaded from the UK Financial Reporting Council
To view the Charity Governance Code visit Good Governance.
Cultural markers Assessing, measuring and improving culture in the charitable sector (Institute of Chartered Secretaries and Administrators, May 2017)