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3 Ways for a Company Board to Better Understand and Measure Culture

Culture has always been important to organizational success, but the emphasis on culture — by boards as well as by management teams — has grown at an incredible pace over the last decade.

For management teams, this has increased the need to be intentional about defining and driving culture. For boards, it has increased the need to be involved when it comes to culture.

The culture we created when I was the CEO of Prologis helped the company emerge from near bankruptcy during the Great Recession. But while I can say our management team took culture seriously and did several things to support it, I can look back now and see that we weren’t nearly as intentional as we could have been. We didn’t spend time thinking about how to take it to the next level or to measure it, and we rarely talked to our board about it.

In my ongoing work as a board member for several companies and non-profits, I’ve seen how management teams can be more intentional about culture. It starts with establishing a framework that defines what leaders want their culture to be — an overall view of what they stand for as a company. I’m on the board of one company, for instance, that has a framework around being “customer obsessed to the core.” That one statement drives certain behaviors throughout their organization, not only about how they treat their customers but how they treat each other.

Once a framework is created, a management team can identify the key behaviors they want to see that support it and come up with some common language that reinforces it. These behaviors with a common language then allow the team to formulate a plan to spread it throughout the company using videos, printed materials, social media, town halls, and the like. And while all senior managers are responsible for driving the implementation of the plan, someone on the senior management team must own that plan to ensure that it’s continually reinforced throughout the organization.

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Finally, the plan must be measurable. When I was a CEO, this happened with an annual survey, but that’s no longer enough. Now it’s important that companies establish continuous feedback loops — surveys and other interactions that happen at different times throughout the year to identify what’s working. A management team should always be asking, always be encouraging, always be responding to what they hear, and always be tweaking the plan based on what they learn. When a company genuinely asks and tries to follow up, people notice.

Boards, meanwhile, provide governance and oversight. So while it’s up to management, not boards, to drive culture, boards can create an environment of accountability that makes culture a priority for management. I’ve found boards can address culture in at least three ways.

  1. Through questions

Boards can stress the importance of culture simply by asking the management team about it. When the team knows it will be a topic of conversations at board meetings, you can bet they will make it a priority outside of those meetings.

In some form, here are a few questions that should regularly be asked: How are we being intentional about developing culture? How can we get a better feel for what our culture really is versus what we want it to become? How does it get driven throughout the organization? What is important to us and how do we make sure people in the company are recognizing what’s important?

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  1. Through observations

There are several ways board members can observe culture. For instance, they can observe the CEO and other key leaders of the management team to see if they are leading by example. They can ask for and review 360-degree evaluations of the management team so the board, and especially the compensation committee, can see what subordinates and peers are saying about how leaders are practicing what they preach about culture. And they should regularly hear reports on what the organization is doing to foster a better culture and on those feedback loops that are in place to measure the success of initiatives related to culture.

  1. Through interactions

Finally, board members need to interact with employees in unfiltered ways so they can hear directly from the people who ultimately define culture by their behaviors. This can include site visits or spending part of a day with an employee, like the time I spent a day riding along with a box truck driver who picked up sensitive documents from the company’s clients.

With the rise of virtual meetings, these interactions no longer must always be in person. I’m on one board that regularly sets up Zoom meetings for board members and groups of its global employees. They even send each participant a bottle of wine so we all can kick back, relax, and talk for an hour or two with employees throughout the world.

Culture is critical to every organization. It isn’t anyone’s responsibility, it’s everyone’s responsibility. If corporate boards and management teams aren’t intentional about creating it, however, a culture will still develop – it just might not be the culture its leaders would choose. That’s a risky approach, and not one any management team should pursue or that any board should allow.

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