- Culture is a key agenda item in 80% of the boards in India versus 50% globally
Grant Thornton recommends steps for assessing corporate culture
Mumbai: A global survey of 2,500 businesses in 36 economies conducted by Grant Thornton finds that 80 per cent of boards in India say that culture is now a standing item on their agenda as against 50 per cent globally. This was the second most cited measure in India whereas it is the third most cited one in APAC. The survey report - “Corporate Governance 2017 - Building blocks of Corporate Culture” further suggests that 85 per cent (71per cent globally) of boards in India are establishing internal controls that address culture and employee behaviour. This is in line with SEBI’s recommendations which state that Culture should be a key agenda for a Board.
“Corporate culture is the combination of values, attitudes and behaviours that a company exhibits in its operations and relations with those affected by its conduct, including employees, customers, suppliers and wider society. Others may put it differently. However, what’s undeniable is that around the world, the issue of corporate culture is gaining increasing regulatory attention as a foundation of good governance. As a result, the issue has arguably never been as high up the business agenda as it is today,” said Harish H V, Partner - India Leadership Team, Grant Thornton India LLP.
When asked about the most important factors that would impact the reputation/brand image of a business, 87 per cent Indian businesses rank treatment and relationship with employees and conduct of senior management team as the key factors affecting their reputation followed by quality of product/ services (85 per cent). India is the only major economy where treatment of and relationship with employees is the most cited factor (87 per cent) that have biggest impact on their brand. While these two factors also contribute in fostering organisational culture in a company, businesses in India have listed ‘business culture’ on the fifth position with 81 per cent finding it an important factor impacting the brand image.
Other key steps being taken by boards globally to drive corporate culture are considering a business customer’s culture (63 per cent) and considering a supplier’s culture (57 per cent). “Corporates recognise third party risks and are improving their engagement with those parties to ensure their culture is aligned with their own vision and mission. Customers and suppliers are being considered as partners,” said Bhanu Prakash Kalmath S J, Partner, Grant Thornton India LLP.
Grant Thornton recommends that boards conduct a Culture Audit to understand and document the organisation culture. Based on the Audit, boards should define code of conduct and create channels for open communication. It is important that Boards take an active role in this process to ensure that the organisation culture is in favour of the business and ethics rather than against it.