John Brackett from the RSM member firm in the USA, McGladrey & Pullen LLP, has written an insightful article about the need to address corporate culture when creating strong guardrails for governance and enterprise risk management (ERM). John is the ERM practice leader in the USA and has worked with companies all across the globe, including Fortune 500 and large privately held organisations.
John argues that good corporate culture creates a framework for employee behaviour which is critical to maintaining a strong corporate governance environment.
“Controls can be overridden, overlooked or ignored. Culture creates the guardrails that make undesirable behaviour unacceptable.”
He outlines some questions that can help businesses assess their corporate culture:
1. Does your company have a formal written statement on culture and governance vision that is clearly communicated to all employees?
2. Do employees know they can report objectionable behaviour and are they rewarded for doing so?
3. Does the board have and maintain the appropriate tone at the top and is it helping to create and support the desired corporate culture?
4. Is the company’s corporate culture formally assessed on a routine basis and is it measured to ensure cultural strategy is adjusted and continuous improvement is embraced?
5. Is accountability established so individual decisions and performance is assessed and risk management is integrated into every job description?