Corporate Culture
What is Corporate Culture?
As defined in the 2016 Corporate Culture and the Role of Boards report, culture in a corporate context can be defined as a combination of the values, attitudes and behaviours manifested by a company in its operations and relations with its stakeholders.
Why is Corporate Culture important?
Sir Winfried Bischoff, FRC former Chair"A healthy culture both protects and generates value. It is therefore important to have a continuous focus on culture, rather than wait for a crisis."
The way companies create and sustain value is directly linked to the debate about the role of business in society. There needs to be a concerted effort to improve trust in the motivations and integrity of business. Rules and sanctions clearly have their place, but will not on their own deliver productive behaviours over the long-term.
Why is the FRC upholding a debate on the best practice in Corporate Culture?
Sir Jonathan Thompson, Former CEO, FRC“As a regulator, we believe that emphasising the importance of culture will lead to more open and insightful reporting, and improved access to capital and talent, boosting competitiveness and improving companies’ ability to achieve sustainable success over the long term”
Culture, integrity and diversity are central to the Corporate Governance Code. Principle B requires boards to establish a corporate purpose, values and business strategy, and ensure that these and the company’s culture are all aligned. In line with Provision 2, boards are also urged to regularly assess and monitor culture and determine how the desired culture has been embedded. In addition, Principle P states that executive remuneration should be aligned to company purpose and values, as well as being clearly inked to the successful delivery of the company’s long-term strategy.
The Guidance, published in support of the 2024 Code, gives examples of how culture assessment, monitoring and embedding could be approached, what are the elements of positive culture and what questions boards should be asking, among other themes.
To send a clear message that good governance is linked to a positive corporate culture we have issued a number of other publications . As a result, we have seen much more constructive engagement in the culture discussion. The FRC will continue to promote positive working culture in companies and monitor corporate disclosure in this area. Based on this, we consider what further action to take.
Timeline
2022
May - December 2022
Creating Positive Culture - podcast series
April 2022
Brief on Corporate Purpose and ESG
2021
December 2021
Report on Creating Positive Culture - Opportunities and Challenges
June 2021
Conference on Audit Firm Culture
2018
July 2018
UK Corporate Governance Code and FRC Guidance on Board Effectiveness
2016
July 2016
Report on Corporate Culture and the Role of Boards
Which organisations support the FRC on the Corporate Culture project?
A number of organisations have supported the FRC’s culture work throughout the years by providing expert subject knowledge, facilitating roundtables, conducing related research and issuing supportive publications. These include:
- Association of Insurance and Risk Managers in Industry and Commerce
- The Chartered Governance Institute UK & Ireland
- The Chartered Institute of Internal Auditors
- The Chartered Institute of Management Accountants
- The Chartered Institute of Personnel and Development
- City Values Forum
- Dragonfish
- Independent Audit Ltd
- The Institute of Business Ethics
Publications
In Focus: Corporate Purpose and ESG brief (2022)
This brief brings into focus Corporate Purpose and ESG, the two remaining and inherently interlinked themes that repeatedly came up during the interviews and roundtables conducted for the Culture Report published in December 2021. The Purpose Brief and Culture Report should therefore be read together.
Findings in this brief draws attention to some of the key observations, best practice and examples of application identified in our research.
Creating Positive Culture – Opportunities and Challenges report (2021)
This follow-up research was conducted in line with our commitment to continue to work with our partners to encourage debate on culture, and to identify and share good practice. In doing so it draws on the experiences and views of leading companies - from board directors, leaders, senior individuals from across different functions and workforce representatives, and showcases some of the actions they are taking to better communicate their culture as well as link it to their strategic objectives.
The report covers how companies frame their culture, how they assess, monitor, embed and assure it, and what enablers and barriers they encounter. The findings demonstrate that by recognising the relationship between culture, purpose, values and strategy companies can strengthen their business models, better manage resources and be more equipped to face future challenges.
Corporate Culture and the Role of Boards report (2016)
The FRC embarked on the culture coalition project to gain a better understanding of how boards are currently addressing culture, to encourage discussion and debate, and to identify and share good practice to help companies. We published a report on our findings in July 2016 which sought to address how boards and executive management could steer corporate behaviour to create a culture that will deliver sustainable performance.
The report covers the increasing importance which corporate culture plays in delivering long-term business and economic success and on the role of the board in shaping, monitoring and overseeing culture.
Podcasts
Strategies and reporting insights of embedding corporate culture: UK Corporate Governance Code 2024
In this In Conversation podcast episode, Adam Mohamed, Head of Communications, explores corporate culture with Rafal Budzinski, Senior Policy Associate, discussing how organisations can effectively embed and report on their cultural principles with the UK Corporate Governance Code 2024.
Global Ethics Day 2024
Kate O’Neill, Director of Stakeholder Engagement and Corporate Affairs and Mark Babington, Executive Director of Regulatory Standards, who also chairs the International Ethics Standards Board for Accountants Sustainability Taskforce discuss why a positive ethical culture is the foundation for long-term corporate success and how the right behavioural framework can guide organisations toward optimal outcomes
Creating Positive Culture - podcast series 2
Creating Positive Culture: Disability
Published: 24 October 2022
In this first episode of the second edition of the Creating Positive Culture podcast series, Tracey Groves, the FRC’s Advisor, CEO of Intelligent Ethics and Partner at StoneTurn talks to Sara Weller CBE, NED of BT Group, Virgin Money and The Money & Pensions Service about the importance of elevating disability on to the board agenda so it becomes more of a business priority. They also discuss the challenges and enablers to embracing disability as a cultural force for good, and practical steps companies can take.
Creating Positive Culture: Neurodiversity
Published: 25 November 2022
In this second episode, the series host - Tracey Groves, discuses with Kirsty Rogers, the Global Head of ESG, Office Managing Partner and employment practitioner at DWS, what neurodiversity means and why should businesses pay greater attention to it. They also consider how organisations can engage, embrace and retain their neurodiverse workers and what practical steps they can take to fully leverage the neurodiverse talent.”
Creating Positive Culture: Mental Health
Published: 12 December 2022
The last episode in this culture and diversity series focusses on why companies should be concerned about mental health of their workers – another key Social consideration, this time from the perspective of an investor. Tracey Groves, the series host, talks to Amy Browne, Stewardship Lead at the CCLA’s Sustainability team, about their Global Mental Health Benchmark and the investor coalition statement on workplace mental health, why poor mental health is a business risk, and what are the practical things that directors can do to improve their engagement with investors in this area.
Creating Positive Culture - podcast series 1
Creating Positive Culture: David Styles & Vanda Murray discuss how board's promote corporate culture
Published: 3 May 2022
The 2018 UK Corporate Governance Code puts increased emphasis on corporate culture, purpose and values and. This first podcast in the series looks at the board's role in promoting those three elements, how directors can get more involved in culture assessment and monitoring, and what good practice should entail. In conversation David Styles, Director of Corporate Governance and Stewardship at the FRC with Vanda Murray, Chair at Yorkshire Water and Marshalls plc, SID at Bunzl plc and NED at the Manchester Airports Group.
Creating Positive Culture: Maureen Beresford & Anthony Kennedy discuss the role of internal audit
Published: 15 May 2022
Internal Audit function can play a key role in culture assurance. This requires going beyond the traditional approach due to intangible nature of corporate culture. In this podcast Maureen Beresford, Head of Corporate Governance and the FRC and Anthony Kennedy, Director of Internal Audit at Lloyds Banking Group discuss how can companies go about it, the challenges to joining up dots on culture across the organisation and best practice to reporting in this area.
Creating Positive Culture: Rafal Budzinski & Tracey Groves discuss corporate purpose & ESG reporting
Published: 5 June 2022
In this last podcast of the series Rafal Budzinski, Senior Policy Associate at the FRC and Tracey Groves, the FRC’s Advisor, CEO of Intelligent Ethics and a Partner at StoneTurn discuss why companies should be paying attention to corporate purpose and ESG – both inherently related to culture, reporting in this area and the use of external advisors, as well as exploring what companies could improve.
Case studies
| Case study | Year |
|---|---|
|
2021/22 |
|
|
2021/22 |
|
|
2021/22 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
|
|
2016 |
Additional resources
The table below lists further resources on corporate culture. All links are to external website.
| Resource | Format | Year |
|---|---|---|
|
|
2021 |
|
|
|
2021 |
|
|
|
2021 |
|
|
|
2016 |
|
|
|
2016 |
|
|
Webpage |
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
Webpage |
2016 |
|
|
Webpage |
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
|
2016 |
|
|
Webpage |
2015 |
|
|
|
2015 |
|
|
|
2015 |
|
|
Webpage |
2014 |
|
|
Webpage |
2014 |
|
|
|
2012 |
|
|
Collins, J. and Porras, J.I., 2011. Built to Last – successful habits of visionary companies. London: Random House Business |
Book |
2011 |
|
Institute of Business Ethics, 2006. Making business ethics work: The foundations of effective embedding |
Book |
2006 |
|
Webpage |
N/A |