AIM 100: The opportunity and challenge of communicating culture
We know company culture is a vital driver of long-term success and a point of competitive advantage for many. However, though stakeholder interest and scrutiny continues to grow, companies are still not communicating this vital part of their offering.
Job vacancies in the UK are hitting record high after record high – there were more than a million vacancies between July and September, over three times the amount from January to March 2020. With greater options for candidates, competition for talent is fierce, and aspects such as company culture are critical as businesses look to differentiate themselves.
Though culture’s role in business is widely accepted, and reflected by reporting requirements such as principle 8 of the QCA Code (which requires companies to disclose how it ‘promotes a corporate culture that is based on ethical values and behaviours’), many AIM and small cap companies still fail to adequately report on it.
Our recent deep dive into the AIM 100 corporate reporting, Seeing a bigger picture, found that discussion of culture remains limited, even within the best reports. Culture is often mentioned across many sections, but companies are failing to communicate the range of elements that make up their unique culture, failing to show how they monitor culture and failing to clearly communicate its significance.
As companies look to move from compliance-focused disclosure to a holistic corporate narrative – alongside purpose and sustainability reporting – reporting on culture should be a key focus for all businesses. With this ambition in mind, here are four practical steps to help you on your way.
1. Define and align
The best reporters tell one consistent narrative across all channels and culture should be central to that. We define culture as the character and personality of your organisation, it’s the sum of your values, behaviours, beliefs and standards; the ‘how we do things around here’.
A description of your culture should be included prominently in your report and on your website, alongside your purpose and vision statements and company values. Talk about how your culture is driven by your purpose, how your values represent the most vital characteristics of your culture and how culture is crucial in achieving your vision.
2. Culture is a strength, so treat it like one
A strong culture is a key reason to invest. Your culture can supercharge your ability to deliver products and services, drive innovation and operational excellence, and ultimately increase value creation. In an increasingly competitive talent market, it also plays a key role in attracting, engaging and retaining the right people for your business.
Culture should be shown as an essential cog in your business model and central to the ability to deliver on your strategy. It can underpin your risk management and governance processes, drive your approach to managing your people and focus your considerations around your wider social impacts.
3. Show how you monitor and measure
Claims about culture should be backed up with discussion of how you monitor and measure on an ongoing basis. Key non-financial KPIs like employee engagement, retention and customer satisfaction can all show the results of your positive culture and how oversight plays a role in your understanding and fostering.
4. Demonstrate it in action
Actions speak louder than words, and just like your strategy, case studies of initiatives or progress from the year can bring your culture story to life. Examples of going above and beyond for customers and clients, developing an innovative new offering, or colleagues or management helping and supporting team members are all strong ways of showing how your culture plays a part in your day-to-day business.
The business world today is very different from the one at the start of 2020, with COVID-19 accelerating the trend of companies looking beyond financial performance to social purpose and broader long-term value creation.
However, for many businesses intangible aspects such as culture remain on the periphery of their communications. We believe they are intrinsic to the story for investors and existing and potential employees alike, and should be front and centre as a key source of competitive advantage. Through fresh and dynamic reporting, companies can capitalise on one of the fundamental yet often unheralded strengths and win the battle for talent and investment.
For more information on culture and the AIM 100's corporate reporting, download our latest research: Seeing a bigger picture. We’d love to hear your thoughts – please get in touch with Tim Marklew at [email protected] and join the conversation.
Read more in our series of AIM 100 articles:
Five top tips for companies taking action on diversity
Putting strategy at the heart of your reporting