Profit Through Ethics on Corporate culture

Does your business measure, monitor and develop its organisational culture?

Question collaborators: Engage for Success, Starboard

No 10 minute read

Profit Through Ethics Ltd (‘PTE’) does not currently have established policies and practices in place to measure, monitor or develop organisational culture. However, we recognise that culture in the sense of ‘the way we do things round here’ has a big impact on the nature of our organisation and it is extremely important to us. We have a distinct culture shaped, informed and manifest by what we do, and how we do it. This stated, since we are only able to meet some of the answering requirements for a YES answer, our primary answer to this question is NO.

Although we were founded in 2003, for all intents and purposes, for all intents and purposes PTE remains a start-up. The founder, Michael Solomon, is currently the sole director, and there is no board. We have three full time members of the team, two part time contributing team members, and one part time paid intern.

The R100 website provides profile pages for businesses, which PTE uses to publish its values and set out its Business Vision: Business balancing its pursuit of profit with the interests of society. We also set out Business Aims & Objectives and our Business philosophies and beliefs, see here http://responsible100.com/participants/view/profit-through-ethics/

Our business values were developed with the involvement of all staff several years ago, incorporating everyone’s contributions and opinions within the process. Taking responsibility for our culture something all staff engage in, and has been part of our recent work undertaken with a Strategic Communications Expert to further develop our vision, and a recent  brainstorming exercise aimed at understanding how our culture has evolved over the years, which is something we plan to use going forward.

This collaborative working environment is key to our culture. We work well together, sharing tasks and to do lists and dividing up the workload so that we accommodate each other’s needs and interests. Given that much of our work involves generating ideas, we’re open to challenging each other - often debating new ways of doing things, and critiquing each other’s thoughts. Working in a shared office space with other social enterprises, the atmosphere is informal, open and friendly. Our working environment is a key part of our culture and is conducive to the way we work.

Our stated values are evident across our policies and practices. They are:

  • Openness - We are open and honest about what we do and how we do it. We share the fact that our product and service offerings are not launch-ready, and identify where additional work and investment is required.

  • Honesty - We demonstrate our commitment to openness and honesty by answering the R100 questions candidly, and publishing all answers on our website, even if we do not score highly on the scorecard for a particular topic. We provide the option for people to track the development and changes to any question over time, and publicise the partners we had in developing questions.

  • Accountability - Our Company Code of Practice, which all new hires are required to read and is available to all current members of staff, details the importance of building strong relationships with our clients, partners and other stakeholders, and ensuring that a healthy level of accountability and trust exists between all parties. We continue to attract new and diverse clients, partners and investors and, as a result, develop and improve Responsible 100. We are accountable to these key stakeholders in particular, and we welcome the influence that they have on what we do and how we do it.

  • Fairness - We believe businesses should be at pains to show how they are fair, and show how they contribute to society, and we are committed to treating one another, and our stakeholders, fairly.

  • Innovation - We seek to be innovative and to empower and enable others to innovate for better business through R100. Day to day we do this by challenging ourselves, by debating with each other, and thinking creatively about how we can improve the R100 questions, scorecards, and roundtables.

  • Contribution - We regard contribution, beyond that of generating a financial return to shareholders, to be a vital component of responsible behaviour. We believe in business’ capacity to have a positive social impact by providing a benefit to society and the environment as a whole. This is integral to why we do what we do.

We seek to influence other organisations through the Responsible 100 benchmarking tool, and have identified culture as a core component that underlies everything a company does. It is a hugely influential and crucial aspect to all our R100 questions, from tax to work-life balance to whistleblowing to waste management.

In describing their responsibility practices by answering the R100 questions, we enable businesses to set out their values and demonstrate how these inform their policies and practices.

We are highly attuned to how policies and practices impact on and are influenced by culture, and, in turn, how culture informs an organisation’s policies and practices.

The organisational culture of any business is of critical importance - it shapes and influences everything people in the business do at all levels, from top to bottom. Yet evidence suggests that businesses’ organisational culture is not given the attention it deserves: only 14% of FTSE100 businesses discuss their culture.

A simple way to think of culture is as ‘the way we do things around here’. On a day-to-day level, organisational culture combines the behavioural norms staff tend towards, the environment they work in, the relationships between staff, and the business decisions they take. Though culture, given its abstract nature, is often reduced to ‘beliefs and values’, the real measure of the culture that is actually in place is the accumulated behaviours of people from across the organisation, from the shop floor to the board. The ‘way in which things are done’ is how performance is delivered and how embedded attitudes are demonstrated. Because organisational culture relates to the way things are done across organisations, it may differ across different parts of a company, particularly across different workplaces and locations.

On a company level, the culture of the organisation is seen in its overall approach to business, stakeholders, and employee welfare. Research indicates that organisational culture is a source of competitive advantage and the foundation of how a company approaches risk. It is a key determinant of how businesses approach any social, environmental or ethical issue, and an unhealthy organisational culture can lead to significant financial and non-financial risks. For instance, an excessively competitive culture, with unattainable targets can lead to poor business decisions being made in a sales environment.

A company has a culture whether it is monitored or not. There is no ‘right’ or ‘wrong’ organisational culture - it is specific to each business. Monitoring culture is a difficult task - a helpful though indirect approach is to consider ‘proxy’ indicators that reflect a variety of functions across the business. For example, monitoring employee turnover, levels of sickness-related absenteeism and customer satisfaction scores could illuminate whether there is a potentially unhealthy culture within a company. In addition, instances of whistleblowing or other grievances may indicate problems. An unhealthy culture can take years to reverse and ongoing monitoring allows senior management to make early changes if problems are detected.

The better an organisation defines this cultural profile, then manages activity against it, the more likely it is that the culture will in reality become the 'norm'. Often, there’s an attempt to sum up the company’s culture in a single phrase or short soundbite, such as ‘putting the customer first’. However, this rarely fully describes the intended culture.

Culture will always be a work in progress. Change can be initiated and evidenced over time, whether through to concerted efforts, or changes in company circumstances. Linking values and aims to day to day behaviours can make it clear to people across the business how the values and aims apply to them, and how their behaviour can affect the culture of the business. Directors can lead by example - demonstrating through their own behaviour how they act out the culture they want for the company. At the same time, however, leaders must realise that culture is the product of a complex combination of policies, practices and behaviours. It cannot be imposed from the top-down, rather it is the production of people at all levels of the organisation.

Organisational Culture

An 'organisational culture' is the collective ideas, customs and behaviours of an organisation or company. As it can be difficult to identify such an abstract concept, it is helpful to think of culture as the articulated values or beliefs of a company. A company’s culture does not just refer to interactions between individuals, but rather embodies all elements of what a company does, from the boardroom through to day-to-day operations. Culture is a key component in any business, influencing the strategic direction, decision processes, response to risk, management and all business functions. It may be informally categorised as ‘the way we do things around here.’

Core values

'Core values' are principles that guide all of a company’s actions, highlighting an ultimate set of behaviours and skills. A company’s values are the foundation of its culture.

Employee engagement

'Employee engagement' is a workplace approach which hopes to produce conditions in which all members of an organisation are able, and feel motivated and incentivised, to give their best each day. Effective employment engagement strategies ensure that the goals and values of organisations and its employees are aligned, leaving staff with an enhanced sense of purpose and wellbeing.

Internal auditing

'Internal auditing' is a catalyst for improving an organisation's governance, risk management and management controls by providing insight and recommendations based on analyses and assessments of data and business processes.

Proxy measures

'Proxy measures' are indirect measures of the desired outcome which is itself strongly correlated to that outcome. It is commonly used when direct measures of the outcome are unobservable and/or unavailable. Proxy or indirect measures may include values training undertaken by a company, references to culture in the company chairperson’s annual reports, and embedding values in long-term pay incentives.

Direct measures

'Direct measures' means that one specific variable is measured without the additional measurement of any intervening variables, or proxy measures. A direct method of measurement removes any interpretive linkage needed between the proxy and the variable of interest. Direct measures may include publicly stated principles and values, or a survey used to assess an understanding of company culture.

Metrics

'Metrics' are standards of measurement, here used by a business to assess their culture.

Implicit Bias

'Implicit bias' refers to the attitudes or stereotypes that affect our understanding, actions, and decisions in an unconscious manner.

Blind Recruitment

'Blind recruitment' is the practice of removing personally identifiable information from the resumes of applicants including their name, gender, age, education, and even sometimes the number of years of experience.

Informal Leaders

People who influence others without relying on their title or formal position in the hierarchy. These people can spread behaviours from the bottom-up. They may be seen as role models, or be popular members of staff, good team-workers or particularly innovative and enthusiastic about change.

Top Down

A 'top down' culture is one where values and behaviours are decided on by a few people in authority rather than by the people who are affected by the decisions, and imposed rather than facilitated with the involvement of staff.

Answering YES

All Businesses MUST

Describe the key elements of their organisational culture

Confirm that they monitor organisational culture on an ongoing basis, and describe how this is done

Describe what policies and practices are in place to develop organisational culture

Explain who in the business is responsible for monitoring and influencing organisational culture, including individuals and departments

All Businesses MAY

Explain how their culture is evident in day-to-day practices and processes

Explain how the culture differs across different areas of the organisation

Set out their defined values and purpose and explain if and where those are made public (e.g. via a website)

Give examples of how board members and senior leaders act according to the defined values

Explain whether they consider corporate culture when entering into business relationships with other firms, e.g. investment, suppliers

Explain how employees’ opinions are taken into account

Describe if and how the business aims to influence the culture of other organisations

Note any negative effects of the company’s culture

Explain any future plans on organisational culture

Explain any further relevant information

Answering NO

All Businesses MUST

Explain why they do not or cannot answer YES to this question and list any mitigating circumstances or any other reasons which apply

All Businesses MAY

Indicate any relevant practices and policies, even if they do not fully meet all the requirements for answering YES

Mention any future plans

DON'T KNOW is not a permissible answer to this question

NOT APPLICABLE is not a permissible answer to this question

Version 5

To receive a score of 'Excellent'

Developing healthy culture is a strategic priority and involves people at all levels of the organisation. Organisational culture is defined and measured in a fully inclusive, open and accountable fashion. Policies, practices and structures are put in place to facilitate this culture

Examples of policies and practices which may support an EXCELLENT statement (not all must be observed, enough should be evidenced to give comfort that the statement is the best of the four for the business being scored):

  1. Behaviours consistent with desired organisational culture are incentivised
  2. Values are clearly articulated – e.g. via company website and/or annual report
  3. Performance matches stated values
  4. Policies on culture are continuously reviewed and evolve to reflect new standards
  5. Uses a comprehensive variety of direct and proxy measures to measure and monitor culture
  6. Integrates culture with company purpose, strategy, and business model
  7. Proactively outlines future plans and intentions
  8. Employees have a clear idea of what is expected from them
  9. Encourages feedback from a wide range of sources (stakeholders, evaluators, independent experts, suppliers, customers, etc)
  10. Members of the workforce are able to proactively engage with developing and manifesting healthy organisational culture
  11. Acknowledges and corrects errors with employees and/or customers
  12. Hiring practices consider whether applicants are a good ‘fit’ for the company, in addition to competency and without compromising employee diversity
  13. Has whistleblowing procedures in place
  14. Board has identified if ‘misalignment’ between desired and actual cultural values represents risk
  15. Clear processes in place to prevent or mitigate misalignment of (stated) values and practice
  16. Displays a robust commitment to monitoring various non-financial risks
  17. At the board level, can demonstrate how cultural considerations play a role in the thought process and reporting of committees
  18. Ensures management understands the everyday operational duties of staff
  19. Has reporting processes in place to ensure various stakeholder inputs are appropriately considered
  20. Has processes in place to review and revise how employees’ voices are heard across the organisation
  21. Board members and Senior Managers take a personal responsibility in demonstrating their delivery of the agreed culture
  22. Internal auditing is undertaken to monitor organisational culture
  23. Company is an exemplar of good cultural practices to other businesses in the field
  24. Business takes into account organisational culture when making supply or investment decisions
  25. Understands and describes the work environments necessary for the intended company culture to form
  26. Culture supports staff well-being - levels of bullying are low and work-life balance is widely reported as good
  27. When altering structures, the company considers the cultural impact. For instance, remuneration structures reflect desired values
  28. Structural changes are in place to encourage a diverse workforce, such as ‘blind recruitment’
  29. Training given to staff on what it actually means to put company values into practice when making day-to-day business decisions
  30. Identifies and supports informal leaders to influence organisational culture according to the company’s values
  31. Conduct focus groups on culture and its impacts with a wide variety of staff
  32. Conduct staff surveys on culture
  33. The business is seen to invest in its employees, offering work-life programs, perks, and training opportunities
  34. Pay or performance reviews of senior staff are linked to performance on culture
  35. Good staff relations demonstrated by low staff turnover/good exit interviews/ in touch with alumni
  36. Structure for gathering staff views before key decisions are made, eg. worker on the board, panel, board member responsible for collating views of workforce
To receive a score of 'Good'

Organisational culture as a concept is recognised, although attempts to define and monitor it may only be undertaken in an ad-hoc and/or superficial way. Culture is understood as a top-down phenomenon

Examples of policies and practices which may support an OKAY statement (not all must be observed, enough should be evidenced to give comfort that the statement is the best of the four for the business being scored):

  1. Importance and impact of organisational culture is recognised by key individuals
  2. Culture is seen as the responsibility of all executives
  3. Internal audits are effective and independent
  4. Employees do not fear retaliation for raising concerns
  5. Organisational culture is integrated into several aspects of the business and aligns with company goals
  6. Encourages feedback primarily from stakeholders
  7. Effectively manages conflicting priorities between stakeholders
  8. Develops goals and objectives against which success can be measured
  9. Demonstrates awareness of the impact culture may have on risk
  10. Company leadership is engaged in circumstances where actual/desired culture are misaligned and feel engaged with the organisation's goals
  11. Employees understand what is expected of them
  12. There are measures in place to discourage harmful director, manager, and staff behaviours
  13. Strategies are in place to address customer misalignment between actual culture and public perception
  14. Consistently demonstrates a positive ‘tone from the top’ with regards to company culture
  15. Board and management team are involved in what is happening in the company, aware of experience of staff at all levels
  16. Facilitates open dialogue between management and workforce through ‘open door’ policies, scheduled conversations/meetings or similar
  17. Has reporting procedures in place to ensure employee input is appropriately considered
  18. Has training policies to ensure managers know how to effectively engage staff in a positive manner
  19. Uses a comprehensive variety of proxy measures to monitor culture
  20. Regularly reports publicly on organisational culture
  21. Culture is considered when determining supply chain and investment opportunities
  22. Staff welfare is good with below average levels of turnover and absenteeism
  23. Codes of conduct are informed by the organisational values
To receive a score of 'Okay'

Organisational culture as a concept is recognised, although attempts to define and monitor it may only be undertaken in an ad-hoc and/or superficial way. Culture is understood as a top-down phenomenon

Examples of policies and practices which may support an OKAY statement (not all must be observed, enough should be evidenced to give comfort that the statement is the best of the four for the business being scored):

  1. Culture is treated as a standalone issue, without reference to other aspects of business
  2. Measures taken to deliver a positive culture are often ad-hoc and non-comprehensive
  3. The definition of culture is shareholder driven with minimal input from wider stakeholders
  4. More comprehensive future policies are well articulated but not yet implemented
  5. Communication channels between board/directors, managers, and employees could be improved
  6. Disconnect between statement of values and ‘on the ground’ culture
  7. Organisational culture is not regularly or comprehensively measured against effective measures
  8. The board attempts to ‘enforce’ culture in a top down manner, rather than enabling it to form
  9. Action is slow when issues relating to culture arise
  10. Employee engagement is not actively encouraged or acted on effectively
  11. Staff welfare is only satisfactory, with average levels of absenteeism, work life balance and turnover
To receive a score of 'Poor'

No meaningful engagement on culture and/or no acknowledgement that culture is an important business and responsibility issue

Examples of policies and practices which may support a POOR statement (not all must be observed, enough should be evidenced to give comfort that the statement is the best of the four for the business being scored):

  1. No engagement with culture as a salient topic
  2. No indication of positive future intention to identify company culture
  3. No measures in place for employee voice to be heard and reviewed
  4. No channels that hold business to account on instances of poor organisational culture
  5. Examples of toxic organisational culture are prevalent within the business, eg. corporate stress leads to staff taking shortcuts, overemphasis on short term financial targets, tolerance for small misdemeanours that have the potential to escalate
  6. Rift between staff and management
  7. No attempt at addressing recurring problems year after year
  8. Lack of communication or complex structures lead to lack of awareness of ‘reality on the ground’
  9. No statement of company values or culture
  10. Culture is harmful to staff welfare
  11. Staff report feeling stressed at work
  12. Work-life balance is poor
  13. Bullying is widespread in the workplace
  14. The culture is experienced as coercive by staff
  15. Culture is viewed by senior staff as a means to make people work more without raising salaries or increasing resources
  16. Values are a series of buzzwords with little tangible impact

Join the conversation

Log in or join to leave a comment.