ACCA (the Association of Chartered Certified Accountants), in collaboration with ESRC and Paradigm Risk, a consulting firm, has begun a review of practical steps firms can take to enhance their cultures and improve their governance, management of risk and, ultimately, their performance.
The review, called Culture in Practice, will look at organisational culture and how that affects decision-making and performance across all sectors and countries, and will produce a report about findings in early 2014.
Recent official reports and analysis of failures in sectors from banking to health, to broadcasting to nuclear power, have all indicated organisational culture as a contributory factor.
These official reports all encourage boards and executives to strengthen their cultures or embed favourable practices in their cultures to avoid such failures in future. Scratch below the surface, however, and you see that these prescriptions are not so easily to realise. While there is a lot of discussion about culture, especially academically, practical solutions are few and far between.
Launching the review, Paul Moxey, head of corporate governance at ACCA and joint project lead, commented: 'We all know culture is a vital ingredient in a firm’s governance and performance. But it is often tricky to identify what that means and what you can actually do, as a board member or executive, to improve the firm’s culture. This review aims to address that gap so senior people and ACCA members have guidance to turn to that is both practical, robust and meaningful.'
Peter Bonisch, managing director of Paradigm Risk and the other joint project lead, states: 'The link between culture and performance and risk or failure seems obvious, but the real questions are: How does it work and what can you do about it?
'A 'strong' culture may cause as many or more headaches than a 'weak' culture and firms will, in any event, have multiple cultures to deal with. And there are no simple levers to pull to improve culture; that idea is illusory. We need greater insight about the relationship between managerial actions and routines and behaviour and the complex processes through which culture emerges from people’s attitudes, intentions, interactions, decisions and behaviours. That is what we aim to bring out in this review.'
Dr Paul Sanderson, deputy head, economic performance and environment, ESRC adds: 'The role of a firm’s leaders in setting forth the firm’s values and vision is recognised but not well understood. We need to get below the surface to understand how these drivers motivate people’s behaviour and how that influences a firm’s culture and how it acts in its markets.'
The Review Team
This group of experts will hold extensive interviews and roundtables in the UK and internationally to debate the key issues they identify, before reporting early in 2014.
At the roundtables, participants and sponsors will have an opportunity to voice their views, opinions and reservations about the issues outlined by the review team. But, Bonisch warns, the review team will be listening rather than projecting: 'These roundtables are a chance for us to hear what people really think. We want to avoid posturing and received wisdom: if something works, great; if it doesn’t, we want participants to say so.'
To support their approach and keep them honest, the team has assembled a powerful international review panel with representatives – present or former – from a range of academic disciplines including world-renowned scientists, economists and psychologists, as well as leading business-people and members of global think-tanks, regulators, the military, the clergy and, of course, accountants.
Paul Moxey concludes: 'We are delighted that so many eminent and informed people have agreed to support our work on culture. This is an important and focused initiative and we are grateful for their involvement.'
Culture in Practice - Background
Further information on the review; its objectives; the profiles of the review team; the review panel members; and an extensive and growing online bibliography; can be found via the 'Related Links' section, left of this article.
The review team will add to the bibliography throughout the project to create an extensive online resource for researchers and business users.