Board oversight of corporate culture

Given the critical role that corporate culture plays in driving a company’s performance and reputation—for better or, as evidenced by the #MeToo movement, for worse—it is not surprising that boards today are reassessing their approach to oversight of culture. The key question they are asking: How can we “up our game” and take a more proactive approach to understanding, shaping, and assessing corporate culture?

That was the focus of KPMG’s Director Roundtable Series, which gathered more than 500 directors and business leaders in cities across the country during May and June.

One director described culture as “a little like faith or gravity. You can’t see it or touch it, but it’s there and it’s a really strong force.” Another emphasized that “technology has amplified the ability of customers, employees, and investors, to scrutinize not only what products and profits a company makes, but how it makes them, and if they don’t like what they see, the network effect of social media quickly takes over.”

The roundtable discussions explored four key areas of board focus as they reassess their oversight of corporate culture:

• Understand what “culture” is and why it is critical today

• Establish clarity on the foundational elements of the company’s culture: zero-tolerance policies as well as behaviors that will help the company excel

• Clarify the board’s role in overseeing culture—recognizing that visibility is a major hurdle

• Assess where culture belongs on the board and committee agendas

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