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The Board's Role in Culture Oversight

The talent war is in full swing, and culture is a key weapon. Directors should consider the following steps to ensure their corporate culture is on the right track.


Corporate Board Member | October 25, 2019




The Corporate Board Member article, "The Board's Role in Culture Oversight," was co-written by Russell Reynolds Associates Consultants Anthony Goodman and Jack "Rusty" O'Kelley III and features the firm's paper, "Going for Gold — The 2019 Global Board Culture and Director Behaviors Survey". The article is excerpted below.

The three largest institutional investors—BlackRock, Vanguard, and State Street Global Advisors—have made it clear they believe culture and human capital management both pose financial risk and drive long-term value. They therefore expect directors to be prepared to communicate their oversight practices and processes to investors, whether indirectly through securities disclosures or directly during engagements. In parallel, there is growing awareness among board directors that corporate culture directly impacts operations, the potential success of transformation programs, and the integration of acquired companies and thus financial performance.

Data from the Russell Reynolds 2019 Global Board Culture and Director Behaviors Survey showed that board members who self-identified as having the most engaging, professional and productive board cultures discuss corporate culture at more than half of all board meetings, and that they are confident the company culture reflects the desire of the board.

Linking Culture and HCM with Strategy

Boards have traditionally looked at human capital management through the lens of executive compensation and CEO succession planning. Recently, there have been increases in the emphasis on rigor in CEO succession planning and in the demands for earlier planning; we have also seen a greater emphasis on succession planning for other C-suite roles. The growing focus on oversight of broader human resource issues (e.g., the attraction and retention of top talent, the gender pay gap, sexual harassment) is somewhat newer, and thus boards’ notions about what they should be doing, and how, is less well defined.

Relative to other components of strategy, such as customers, financials, and KPIs, culture is harder to define and understand, let alone measure. But, given that culture is a critical enabler of strategy, boards must focus on ensuring it is an integral consideration in management’s approach to executing strategy. The adage that ‘culture eats strategy for breakfast’ is still accurate.

To read the full article, click here.





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The Board's Role in Culture Oversight