The Board's Role in Sustaining Company Culture

A version of this article first appeared in NACD Directorship. Reprinted with permission. Editor's note: The Culture Asset Index described below is now a Gallup consulting offering called Gallup Culture Asset Management. Get additional details here.

What if a dashboard enabled you to see in an instant how the culture of an organization on whose board you serve is trending?

After all, as Gallup Chairman and CEO Jim Clifton pointed out, "Boards are responsible for the long-term sustainability and viability of the organization, and yet the issues most critical to culture have been difficult to measure."

NACD underscored the value of culture as a corporate asset in a 2017 Blue Ribbon Commission (BRC) report. In it, culture was defined as the character of a company, what provides meaning to employees and the work they do. The Report of the Blue Ribbon Commission on Culture as a Corporate Asset detailed the effects of "the behaviors of employees at all levels, particularly those that result in rewards or advancement on the one hand, or punishment on the other. If values are about the 'what and why' of an organization, then culture is the 'how' -- the way in which those values are lived on a day-to-day basis."

The commission also observed that "problem-solving, over time, creates culture" and asked, "In uncertain situations, or when people are under pressure, what do they do instinctively? What decisions and tradeoffs do they make? That tells you a lot about a company's culture."

No two corporate cultures are exactly alike. And the culture of, say, an envied competitor cannot be replicated. Yet understanding what defines a culture -- whether it is healthy or infused with potential trouble spots -- has been difficult to gauge. Annual employment surveys may provide management with some useful fodder, but they are hardly prescriptive.

Spurred in part by the findings of the BRC report, Gallup Global Practice Leader Ed O'Boyle set out to develop a board-specific culture assessment tool. He drew on the research company's vast understanding of workplace habits, and consulted with a small group of directors to learn what they most needed to know about culture and how to envision a board-facing solution that would assess, present and provide them with an action plan related to the esprit de corps of the companies.

In those meetings with directors, O'Boyle said, "We were always asked how to spot trouble. There was a level of angst and frustration that they knew there should be signals but they didn't know how to recognize them."

Gallup synthesized its findings and developed a culture audit dashboard -- Gallup's Culture Asset Index -- specifically for boards.

To assure buy-in from the CEO, directors told Gallup interviewers, any culture risk assessment tool couldn't be "all negative," and it had to do more than provide a metric on employee engagement. The attitude among these directors was that creating a sustainable culture was the responsibility of the board as much as or more than the CEO, because the board owns long-term sustainability.

Gallup's three-phase report to the board shows the status and movement of the organization's key cultural initiatives. On the belief that boards are accustomed to reviewing financial information on a matrix or dashboard, the index tool combines organizational data, employee feedback and observational information into a report. The findings are synthesized into a color-coded dashboard that enables the board to identify culture trouble spots in an instant.

The first phase of Gallup's board-facing Culture Asset Index is an in-depth assessment of the state of culture at the organization. Gallup consultants conduct stakeholder interviews with leaders and employees to understand the views and perceptions of the culture. Gallup also reviews key performance indicators (KPIs) to monitor the success of each cultural pillar. (Examples of a KPI could be tracking gender pay or the number of women and minorities attending leadership programs.) The second phase is a census survey of the entire organization (see the end of this article). And the final phase is the board-level dashboard that details the findings revealed by the data so that the board and management can address where culture may be breaking down.

"When an organization is failing at compliance or inclusiveness, or committing malfeasance," Clifton said, "the executive committee and board tend not to know, but the employees always know."