Monitoring and assessing your culture

There has been an increasingly greater focus on purpose, culture and workforce engagement in governance and corporate reporting. This has led to many companies defining their purpose, values and culture, and rolling this out to their workforce. However, how should you figure out whether this work has encouraged changes in your company culture? How do you know whether your culture is what it needs to be? How should culture be measured?

Culture is challenging to define and difficult to measure directly. It is clear that there is no one way of monitoring and assessing culture. The reality is that a mixture of observation and metrics need to be used to understand the status of the culture of a company.

A key source of metrics for culture is the employee survey. This can be used to generate many specifics, such as understanding how engaged employees are, how well employees feel that they can collaborate with other employees, and how effectively they are able to work remotely versus in the office.

Another good source of metrics comes from HR monitoring. These include staff turnover, rate of absences, diversity in the workforce, amount of training received, and data around promotion decisions.

The board has many potential ways of observing the culture of the business, including through interactions with employees, visits to sites and employee engagement mechanisms, such as employee forums and town hall meetings. Various reports that the board receive will give them indications on the culture of the business, such as ethics and compliance reports, internal audit reports, and reports on health and safety.

A crucial way of observing culture, as well as influencing it, is through the remuneration practices, and reward and incentive schemes that the business has put in place. Incentive schemes that put a high level of focus on short-term financial targets can lead to rewarding behaviour in the business that is not productive or sustainable for the long term, and can lead to compromising on values and intended culture of the company. The board should regularly review the rewards and incentives that are put in place for employees, senior management and the board, both to see if they are still aligned with the overall direction of the company and to see what the effects of these rewards and incentives are in the business.

Qualitative metrics allow the board to easily see trends in the direction of culture, while the observations of the board help paint a fuller picture of the behaviours within the business. Therefore, in the Annual Report, when considering the disclosures around the monitoring and assessment of culture, it is important to cover both metrics and observations to show that the board has taken a holistic approach to overseeing the culture of the business.

If you would like support in monitoring and assessing your company culture, get in touch with us, we would be happy to support you.