7. Corporate culture is a priority for most NEDs

Commissioner Hayne described culture as ‘the shared values and norms that shape behaviours and mindsets’; or more practically ‘what people do when no-one is watching’.  He noted that while the culture of each organisation is unique and cannot be legislated or prescribed, it can be assessed. His report made it clear that an entity must form a view of its own culture, identify problematic aspects of that culture, develop and implement a plan to change them, and then re-assess to determine whether it has succeeded.  

A number of NEDs commented on the challenges involved with this.
 

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Directors appear confident about most aspects

Despite the obvious challenges, in responding to the survey questions, the vast majority of NEDs either agreed or strongly agreed that they were clear on:

  • The desired culture of the organisation, including behaviours to be encouraged and behaviours for which there is zero tolerance

  • The reality of the culture of the organisation today, including sub-cultures and negative traits that need to change.

Approximately three quarters of all NEDs either agreed or strongly agreed that:

  • The Board explicitly considers how it role models the behaviours it expects

  • The Board spends sufficient time on understanding and seeking to improve culture

  • There is a plan in place to shift the organisation’s culture that the Board is confident in.

Where most work is needed

Having said that, as noted earlier, some 77% of NEDs responded that their Board is investing or planning to invest more in understanding and strengthening corporate culture.  In particular, approximately two thirds of NEDs either agreed or strongly agreed that their board is:

  • Working to increase its visibility and engagement through the organisation

  • Investing in more sophisticated ways to assess and monitor the culture.

A number of their comments referred to an increase in focus on corporate culture. 

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