The 5 culture questions all NEDs should ask

It’s not easy to be a decent non-executive director (NED).

You’re a member of the company’s board, contributing to key decisions around strategy, finance, risk and compliance. Yet you’re doing so whilst being a few steps removed from the day-to-day operations of the business. You might have been brought in to challenge the direction and performance of an existing leadership team. Yet often you’re reliant on other people’s analysis and information, rather than seeing it for yourself.

When it comes to matters of organisational culture, it can get even trickier. It’s particularly challenging to relay what’s happening in the corridors and meeting rooms (online and in real life) via reports and graphs. Yet, NEDs can – and should – play a crucial role in assuring organisational culture.

To help you out, here are Pecan’s top five culture questions that all NEDs should be asking, plus five extra bonus questions to help you dig even deeper:

1) Values

Key question: In what ways are the organisation’s values reflected in the day-to-day operations and decision-making processes?

An organisation’s values should be its guiding principles. By asking for specific examples of how the values are being demonstrated in the daily life of the organisation – not just when the board is talking about culture, but on any topic – it can help NEDs ensure that the company is walking its talk. NEDs can also consider how the values are demonstrated in the board discussions itself. If there’s any sign of the values being an afterthought in the boardroom, it may well reflect the experience for your employees and customers.

Bonus question: What initiatives or other activities are not happening because to do so would go against the Values?

2) Leadership

Key question: How does the leadership team model the desired culture?

Leaders set the tone and should therefore exemplify the values and behaviours they expect from their people. Asking how leaders – at different levels – embody the intended culture emphasises the importance of role-modelling. Plus, it sends a clear message that the leadership team (and the board more broadly) are accountable for taking proactive action to uphold the desired cultural norms.

Bonus question: What happens when leaders display behaviours which aren’t supportive of the target culture?

3) Employee voice

Key question: How do we know what our people are really saying about the organisational culture?

This question enables NEDs to dig into the real perceptions and experiences of their people in the workplace. A thorough culture assessment, comprising robust analysis of quantitative and qualitative information (not just the top key indicators from the people survey), conducted by external culture experts enables NEDs to assess the current state of the culture including strengths to build on, and areas for improvement.

Bonus question: And how do employees’ perspectives vary across functions / diversity groups / employee lifecycle?)

4) Ethics and compliance

Key question: What are the organisation’s biggest risks related to ethics and compliance?

Clearly, NEDs have a fiduciary duty to provide oversight and governance of the organisation’s compliance and ethics practices. By asking about the biggest risks in these areas, NEDs can encourage the leadership team to go beyond the obvious concerns. In particular, taking a risk management approach (assessing the likelihood and impact of something occurring, with corresponding mitigation plans), can help provide early warning of potential areas of organisational failure or reputational damage.

Bonus question: What would we need to do to reduce those risks by 5-10% more?

5) Cultural participation

Key question: How are we engaging and enabling our people in creating positive cultural change?

This question not only emphasises the importance of fostering a positive culture, but also reinforces that cultural change requires deliberate effort and engagement from all levels of the organisation. By asking how the organisation is involving its people, NEDs demonstrate a commitment to empowering employees, and ensuring their inclusion in creating the target culture.

Bonus question: How are we recognising cultural good practice through performance management and/or reward systems?

Get in touch

If you’re a Non-Executive Director wanting to open up a more productive conversation about organisational culture within your board, get in touch. We also run a masterclass into Governing Culture from the Boardroom, which you can find out about here. We’d love to share some ideas and see how we can help you make your board – and your organisation – a cultural superpower.