Seven Key Drivers of Good Corporate Culture

Culture is a critical component of any successful company, but it is also one of the more challenging things to measure and quantify.

Every risk management article on culture mentions the importance of tone from the top. This belief in cultural health coming “from the top of the house” is critical, but as firms get larger, more diverse, and increasingly complicated, it becomes harder for them to remain steadfast in applying the values that foster good corporate culture.

Tone from the top is important, but equally important is getting the culture carriers of the firm on board. If middle management is not part of establishing a positive corporate culture, then management has the potential to become a wall of inertia. In a worst-case scenario, disenfranchised middle management could adopt adverse behaviors, to the detriment of the firm.

The Australian Securities and Investment Commission (ASIC) has identified seven key drivers of good culture:

  1. Tone from the top.
  2. Cascading values to the rest of the organization.
  3. Translating values into business practices.
  4. Accountability.
  5. Effective communication and challenge.
  6. Recruitment, training, and rewards.
  7. Governance and control.

These seven drivers provide a useful point for boards and management to start thinking about culture. They are similar to the key drivers remarked upon by William C. Dudley, president of the Federal Reserve Bank of New York, at the Workshop on Reforming Culture and Behavior in the Financial Services Industry on October 20, 2014. At that event, Dudley said, “Firms must take a comprehensive approach to improving their culture that encompasses recruitment, onboarding, career development, performance reviews, pay, and promotion.”

 

The above is based on an excerpt from The RMA Journal, April 2017 article “Can Corporate Culture Be Measured?” by Joseph Iraci, head of financial risk management at TD Ameritrade. You can read the article in its entirety here.

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