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:
from the top.
values to the rest of the organization.
values into business practices.
communication and challenge.
training, and rewards.
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
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