Have new culture-focused corporate governance
reporting regulations had an impact yet?
HR magazine was given exclusive access to the people-related fi ndings within Grant Thornton’s 2019
Still some way to go…
34% 3% 39% 17% 23% 20%
4% 60%
76% of reports
referenced values or
culture in the context of
their fi rm’s approach to
investing and rewarding
the workforce
Corporate Governance Review of FTSE 350 annual reports
Number of chairs talking about
culture in their primary statements
50%
of fi rms
clearly
articulated
their
purpose
Promising signs…
FTSE 350 fi rms providing good or
detailed accounts of their
company culture
2019: 45%
2018: 33%
2019:
78%
2015:
22%
Source: Grant Thornton’s 2019 Corporate Governance Review
It’s not
just about
culture as
risk but
culture
as value
creation
Strategic HR Analysing culture
regulation won’t help but it’s heavy and
expensive. Having to tick boxes in an
annual report will change things only
slightly. If there were people on the
ground watching what was going on
eventually someone would sidle up and
say ‘you might want to look at x’. There
might be something to learn from
ethical supply chain auditing, which is
well established.”
Duducu is skeptical the Code could
have prevented the Oxfam scandal or
Carillion’s collapse. As is Baxter.
“Whatever you do, whatever rules you
have within society or governance
within companies, you’re dealing with
people and occasionally you get people
who will always do the wrong thing,”
she says, adding: “The UK has already
got some of the best corporate
governance regulations in the world.”
Brown is inclined to agree:
“Corporate governance and corporate
governance regulations quite often
get held up as being the panacea of all
evils; any time a big failing happens
we ask ‘where were the board?’
“The way that corporate
governance reform was used
politically by Theresa May off the
back of BHS was interesting… But
there’s still something in the back of my
mind that says I’m not sure a corporate
governance code would have prevented
Philip Green from doing what he did.”
Jex has a slightly more optimistic
take. “The interesting thing is to think
about the two components of strategy
and culture,” she says. “At least if you’ve
got the wrong strategy and the right
culture you’re more likely to have
feedback from senior managers so
you can make corrections. So in some
ways you’re more likely to stop a
Carillon because you can catch things
much earlier.”
24%
But to see this as the overriding
purpose of the new Code misses the
point, says Brown. The Philip
Greens and Carillon directors of
this world were perhaps never
likely to have paid much heed, beyond
ticking a box, to people-focused
corporate governance regulations
anyway. But the average well-meaning
company, interested not just in
avoiding risk but creating value, is.
“The change that’s been flagged this
year is really important because – now
that it’s moved away from just being
about financial services – it’s not just
about culture as risk but culture as
value creation,” says Brown. “The most
negative view you could have of HR is
that it’s there to protect the company
from its people, and the culture piece
has gone on the same journey.”
And there are encouraging signs that
including culture and other people
Only 17% give
any meaningful
explanation of values
or culture in the
context of their fi rm’s
approach to investing
and rewarding
the workforce
FTSE 350
fi rms
including
detail on
how culture
connects to strategy
34% of
the FTSE 350
specifi cally
discuss how
they monitor
and
measure
culture in
their annual
report...
But
18%
use only
one
indicator of
culture
Only 19 fi rms (7%) use a dashboard of metrics or a
scorecard of more than three metrics to measure culture
Only
22%
review the
alignment
of exec
reward with
culture
45%
Firms
referring
to the
above
but
providing
no detail
22 HR November 2019 hrmagazine.co.uk
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