Embedding Culture: What the new updates to the FRC’s Code of Governance mean for your Culture
What are the latest FRC Code of Governance updates?
Businesses listed on the FTSE are expected to adhere to the FRC’s Code of Governance: it sets the standard and expectation of good governance for large organisations.
Up until this month, the guidance around culture was clear, direct, but somewhat limited - tasking Boards to assess and monitor Culture, but making no mention of the equally critical need to activate it.
With the latest update in January, that now asks Boards to assess and monitor how the desired culture has been embedded, all that has changed - marking a significant shift and setting an important challenge for leaders. A need to move from strategy to action, from thinking and talking about culture to actively embedding it deep into business systems and practice and across the employee experience.
How do you begin embedding the culture?
At People Made, we believe in the power of not just defining, but truly living your culture. Because no matter how thoughtful a strategy is, it has little impact until you implement it.
That's why we work with businesses to deeply understand their current culture, assess the scale of the change needed to reach their target culture, then work together to build a culture that’s lived by everyone at every stage of the employee experience.
With the new reporting requirements taking effect in the next financial year (Jan 2025), we thought we’d share 5 areas to consider when embedding your desired culture:
Effective communication sits at the heart of cultural change, and it all starts with clearly articulating your cultural ambition. One way to do this, is by defining a compelling cultural narrative to help you bring your vision to life by painting a clear picture of where you want to go, why and how you plan to get there.
However, culture is more than just a message sent from the top; it is a dynamic lived experience contributed to by everyone in the organisation. Therefore, understanding your various audiences’ needs and communication habits is critical to ensuring your narrative reaches and resonates with everyone. Equally, establishing channels for two-way dialogue and honest feedback will help your business and culture adapt and grow over time.
Leaders are not just at the helm of business decisions; they also shape the cultural environment. They are observed and emulated, becoming role models whose actions speak as loudly as their words. For this reason, it is critical that leaders exemplify the values and behaviours they expect from their employees. Actively reinforcing the culture through their actions, and holding themselves and others accountable when they do not.
However, this comes easier for some leaders than others, so providing leaders - at all levels – with the necessary tools, training and support to champion the desired culture can go a long way to ensuring it is not only preached but also practised.
Employee Engagement
While leadership shape the cultural environment, the responsibility for building and maintaining culture sits with everyone, at every level, in the business.
Activities that deepen employees' understanding of the cultural vision are a good first step to fostering engagement. However, research People Made conducted recently found that empowering employees by giving them a sense of ownership is essential for turning employees from passive audiences to active participants.
Providing a clear behaviours framework that outlines what is expected of employees (and what is not), incentivising actions in line with behaviour, and updating employees on how their actions are contributing to the broader cultural goals will give employees the guidance and motivation they need to contribute to the collective culture in their own way.\
Systems and processes
Systems and processes are the structural backbone of any organisation. However, functional as they may be, when an organisation's policies and processes align with its values, they serve as a consistent reminder and reinforcer, guiding everyday decision-making and behaviour in line with the desired culture.
To ensure your systems and processes reflect your culture, start by reviewing your existing practices against your purpose, cultural ambition and values - looking at the touchpoint along the employee journey from hiring, benefits and perks, performance reviews and support policies – to see how well they reinforce your culture and where there is opportunity for improvement.
To actively demonstrate how you are embedding your desired culture in your annual reporting, measurement is essential. Start by getting a clear understanding of where your company's culture currently stands today, setting a baseline for measurement, then outlining goals and KPIs and measuring progress towards them.
It is important to remember that this is not just about capturing short-term gains; it's about ensuring your culture is moving in the right direction and being sustained and maintained over time as the business grows and evolves.
At People Made, we advise businesses at all stages of growth to define their company culture.
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