Culture reporting research: Leadership

Posted in White Papers, Reporting and Engagement on 15 March 2019 By Darryl Mead, Head of Employee Communications and Engagement

Our second article in our culture reporting series looks at the role of leadership in culture.

Unsurprisingly, the impact leaders have on culture is high. Employees model the behaviours they see and hear, they will scrutinise the decisions they experience and look for clues from leaders on how to act, what’s acceptable and what’s not.

How companies report and talk about culture to external audiences also matters. For example, the Chairman’s Statement and the CEO Review in an annual report reflect how important culture is to the business and how embedded it is within practices and decisions.

Demonstrating responsible actions helps drive investment decisions, attracts talent and will help to achieve better business performance.

However, our research showed that for many companies there is still a lack of discussion in the annual report around the importance of good corporate culture to long-term sustainable business performance.

For example, we found that:

  • 9% of Chief Executive statements recognised culture as a driver of business results and performance.

  • 20% of Chairman’s statements discussed people and values.

  • 13% of companies made some connection between culture and the company’s values, ethics and purpose.

  • 4% of companies discuss culture playing a role in succession planning.

So, the gap is wide between leaders acknowledging culture as being important to business success, and then actually reporting or demonstrating it. The old adage that 'people are our greatest asset' is far from true if this is how leaders are reporting to their stakeholders.

Good practice example

We found some strong examples where culture was embedded into the strategy, business model, governance and practices.

Cairn Energy PLC is an independent, UK-based oil and gas exploration and production company. A culture of working responsibly is a core element of business model & strategy. CEO Simon Thomson said “The culture and the way we do business is just the same as it has been since the beginning. A strong culture is what keeps the business moving forward. We have a very open mindset, and one that is cooperative and collaborative, but with an eye on what we want to achieve. The philosophy of the company is deeply embedded: there is nothing we can’t do if we focus and work at it.”

Working responsibly at Cairn Energy PLC is underpinned by a Code of Ethics, bringing together the Business Principles and Code of Business Ethics in a single published format.

Top tips

  1. The board and leaders need to spend time defining culture needed for success. Work with those who create and deliver the employee experience to understand the reality.

  2. Focus on values and ethics as core ways of working.

  3. Demonstrate your work on culture and purpose with examples of how it is driving business.

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