New report outlines how to identify weak corporate culture

Good governance is critical, but there should be a broader definition of what it means. Governance is not just a matter for boards of directors, but should be integrated into all areas of a company. Transparency matters.

Those are the key findings of a report on corporate culture produced by the International Corporate Governance Network, ICSA: The Governance Institute, and the Institute of Business Ethics.

The report is the product of a workshop of senior regulators, company directors and executives, and investors convened to study ways of identifying early warning signs of a weak culture. Measurable indicators of business culture were analyzed, including staff turnover, customer satisfaction, health and safety record, and public commitment to values by leadership. The warning signs extracted from this data include high levels of corporate stress, flawed remuneration policies, and lax financial discipline.

The study offers some solutions. It suggest that more attention should be paid to the role of HR departments in embedding culture, and to internal audit, which is well placed to notice when culture is slipping.

For more information:

• International Corporate Governance Network

• ICSA: The Governance Institute

• the Institute for Business Ethics