Culture as a governed asset: measuring it honestly and reporting it to the board

What it means to govern culture#

Culture is governed when it is measured in ways the board can interrogate, reported with what went wrong included, owned by a named executive, and corrected when the evidence says so. Each of the four is necessary. Measurement without a report is data; a report without an owner is a reading; an owner without the power to correct is a spokesperson. Anything less than the four together is culture described, and description is what most institutions have.

The word asset is deliberate. An asset has a value the institution can lose, an owner who answers for it, and a record of its condition over time. Treating culture that way is what allows a board to oversee it rather than admire it.

Measuring it honestly#

Surveys measure what people say; culture is what they do when the pressure is on. A survey is not worthless — it tells the institution what its people believe about it, and a change in that belief is a signal. But a survey score reported alone invites the board to mistake sentiment for conduct, and the mistake is expensive because conduct is where the losses come from.

Honest measurement puts behaviour beside sentiment. It asks how speak-up cases were handled and how long they took; what happened to the people who raised them; whether investigations reached conclusions and whether the conclusions had consequences; what the institution did in its most recent restructuring, merger or bad week, and what its people concluded from watching. None of those is a score. All of them are evidence, and evidence is what a board can interrogate.

Reporting it to the board#

The board report earns trust by what it admits. A culture report that has never contained bad news is not a report; it is reassurance, and a board that has received only reassurance for a long time will not believe the report on the day it finally carries something the board needed to know. The CHRO who includes the case that was handled badly, the investigation that took too long, the leader whose behaviour was tolerated because of the numbers, is building the credibility the report will need later.

A culture report that has never contained bad news is not a report; it is reassurance, and a board that has received only reassurance for a long time will not believe the report on the day it finally carries something the board needed to know.

The report should be short and the same shape each time, so that the board can see movement. What the institution measured, what changed, what went wrong, what was done about it, and what the CHRO is worried about next. The last item is the one boards remember, and the one that distinguishes an officer from a department.

Where culture is actually tested#

Culture is made or unmade in the defining moments and in a small number of cases, and governance is judged there rather than in the survey.

• The speak-up case: whether the person who raised it was protected, whether the investigation was independent of the people it concerned, and whether the outcome was communicated in a way the rest of the institution could see.
• The case involving a top performer: whether the institution applied its stated standards to someone whose numbers argued for an exception, and what everyone else concluded from the answer.
• The restructuring: whether people were told the truth early, treated as the institution says it treats people, and whether those who stayed believed what they saw.
• The merger: whether two cultures were made one deliberately, or left to settle by attrition.
• The bad week: whether leaders behaved, under pressure and in public, the way the culture statement says they will.

The top-performer case deserves its own sentence because it is the one that decides everything else. An institution that makes an exception for the numbers has told its people, more clearly than any statement could, what its culture is. The CHRO’s job in that case is to make sure the executive committee and the board understand that they are not deciding one case; they are publishing a policy.

Who owns what#

The CHRO owns the measurement and the report; the board owns the oversight. The CHRO decides what is measured and how, ensures the evidence is honest, brings the bad news and names what needs correcting. The board asks whether the measures are the right ones, whether the report is believable, and whether the corrections happened. Neither can do the other’s job, and the asset decays when either pretends to: a board that designs the survey has stopped overseeing, and a CHRO who decides what the board may know has stopped reporting.

What to do next#

Take the last culture report the board received and ask three questions of it. Did it contain anything the board would rather not have heard? Did it put behaviour — cases, investigations, the defining moments — beside sentiment? Could a director have interrogated it, or only received it? If the answers are no, the asset is being described, and the work of governing it starts with the next report. The CHRO Agenda in The Helm works that report, and the cases behind it, with chief people officers who answer to boards.