Dive Brief:
- Most directors responding a recent PwC survey said corporate culture problems start with the tone set by the executive team. To fix culture-related problems, most said they enhanced employee training or development programs, while others focused on or improved whistleblower programs. Few added a culture/engagement component to strategic plans.
- PwC's 2018 Annual Corporate Directors Survey also reports that most directors believe diversity improves board performance. The majority of those surveyed said that diversity can help improve relationships with investors, bolster overall company performance and improve strategy oversight. Still, 48% of respondents said shareholders are too concerned with diversity; a third said they thought that diversity initiatives result in boards nominating additional, unneeded candidates. The survey also found that directors tend to place less value on age diversity: Only 21% of respondents ranked age diversity as very important, even though 46% and 34% rated gender and racial diversity as such, respectively.
- Ninety percent of respondents said their board participated in some form of continuing education over the past year. Cybersecurity, implications of tax reform, impact of new accounting standards, shareholder activism and corporate governance concerns of major investors were the most common topics.
Dive Insight:
The PwC study may show that corporate culture flourishes or flounders based on the behavior of executives, but HR still plays a big role in helping culture grow and mending it when trouble arises. Corporate scandals often call for a culture overhaul that establishes business ethics for an entire organization. Directors and HR must uphold this code of moral conduct and hold violators accountable, or else risk endangering organizations' reputations and value.
When casino mogul Steve Wynn first faced and denied sexual harassment allegations, the stock of his company, Wynn Resorts, fell 10%, a $2 billion loss in shareholder value in one afternoon. More allegations against Wynn and financial losses for the company followed, but the company's directors stepped up to investigate the claims.
HR's role extends beyond that of a custodian cleaning up after executives' culture-crushing messes. The PwC report found that directors like diversity and its positive effects on business. HR leaders might understand diversity with a little more nuance. They may know, for example, that a culture valuing diversity hinges on good recruiting practices. They may be familiar, too, with the idea that truly inclusive workplaces can't bring on a diverse slate of candidates and call it done. HR and executives alike will want to ensure, experts have said, that all employees have a voice and feel supported.
