How Boards can review Corporate Culture and People Risk
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne Royal Commission) has released its interim report, with the final report due in February 2019. With the Boards of APRA-regulated entities being required to implement a review of culture and governance within banks, building societies, credit unions, superannuation funds and insurance companies by 30 November, expert assistance is imperative.
Of course, the Boards role in monitoring risk at all levels of the organisation, including the risk of a misaligned culture and associated people risk, is not just restricted to the financial services sector of corporate Australia – all Boards are accountable for ensuring robust governance frameworks are in place.
Effective Governance (eG) is the expert in reviewing and advising on culture and the associated people risks, an area of risk until now neglected. As the first of its kind in the Australian market, the eG Corporate Culture and People Risk Diagnostic uses advanced analytic techniques to unearth risky behaviour patterns that are hidden from the eyes of management and the Board.
While ‘corporate culture’ means many things to many people, we define people risk as the hidden attitudes and behaviours of employees and managers that are found at the heart of all corporate scandals. A high people risk exposure can result in significant financial and reputational damage to an organisation. Effectively managing culture and the underlying people risk, is the key to keeping your Board out of the headlines.
In a complete shift away from the more traditional human resources tactics including culture programs and employee engagement surveys, we dive deep into the six core components of people risk including:
- Ethical or Appropriate Behaviour
- Capability or Talent
- Quality of Decision Making
- Recruitment or Staffing Levels
- Role Competence
- Morale or Staff Engagement
The result is an immediate, independent and objective assessment of an organisation’s exposure to people risk along with targeted remedial strategies that Boards and management can action to address areas of concern.
Our Corporate Culture and People Risk Diagnostic assists Boards to implement a more robust governance system that not only provides oversight for financial, regulatory and strategic risks, but also monitors the less visible risks within our people and social systems.
Benefits to the organisation
The benefits of applying Effective Governance’s Corporate Culture and People Risk Diagnostic include:
- Identifying any misalignment of the Board’s expectations of the organisational culture and the staff culture in the workplace;
- Establishing a clear and consistent reporting dashboard on people governance for the Board;
- Promoting transparent reporting relationships between management and the Board;
- Providing tailored information and guidance on mitigation of People Risk; and
- A demonstration of the Board’s proactive oversight of culture/risk.
Our Approach to People Risk
The eG Corporate Culture and People Risk Diagnostic is a four-stage process delivered over approximately two months.
Throughout the process, our advisors identify the behavioural markers of a dysfunctional culture and where these risks are likely to reside within the organisation’s systems of leadership, procedures, performance and capability. We then report back to the Board with a series of recommended remedial strategies and ongoing monitoring mechanisms to better align and manage the organisation’s culture and associated people risks.