Open corporate culture is more important for success for boards of directors than compliance and risk management

A strong and open corporate culture is one of the most important topics for boards of directors to have dealt with in the last 12 months - and will be prioritized even more in the future. This is shown by the swissVR Monitor I/2019, compiled by the swissVR association together with the consulting firm Deloitte and the Lucerne University of Applied Sciences and Arts.

Topics are constantly changing

While topics such as talent and compliance have lost importance, the topic of corporate culture, which was surveyed for the first time, makes it straight into the top 10 - displacing risk management. Strategic topics such as digitalization, competitive behavior and transactions have also gained in importance among Swiss boards of directors over the past 12 months. "The issues that boards of directors have to deal with are changing rapidly. Strategies are now being adjusted at ever shorter intervals. Such strategic changes in direction require an equally rapid alignment of corporate culture. Today, boards of directors need to place issues such as culture even higher on their agenda," said Reto Savoia, designated CEO of Deloitte Switzerland. "The swissVR Monitor shows that the role model function of management is absolutely central to the culture and thus the success of a company. I see it as one of the most urgent tasks of the board of directors to keep a close eye on culture and compliance and to take corrective action, even if the numbers are right."

Corporate culture as a competitive advantage

For almost two-thirds of the board members surveyed (64%), a good, open corporate culture is an important competitive advantage and driver of corporate success. However, more than one-third of the respondents (36%) tend not to adapt the corporate culture at all or not at all in the case of strategic realignments. This may also be due to the fact that boards of directors see the responsibility for corporate culture clearly with the CEO and management: For the vast majority (88%) of respondents, it is clear that corporate culture is predominantly shaped by management. They should do this - according to around 67% of respondents - by exemplifying the values of the company ("Tone at the Top").

"Digital transformation and innovation are a critically important competitive advantage today. For sustainable corporate success, it is important that the board of directors shapes a corporate culture that not only promotes change but also demands it from employees. In addition to shared values and an open culture of discussion, this includes empowering and motivating employees to explore new paths - and this across all levels of the company," explains Cornelia Ritz Bossicard, President swissVR.

Internal and external observations important

Board members want to assess the corporate culture. They particularly like to rely on employee surveys (74%) or on impressions gained from company visits and interactions with employees (65%). They have great confidence in being able to make a good personal assessment of the corporate culture without themselves being active in day-to-day operations. In some cases, external assessments are also consulted: The company's reputation in the media and among the general public (41%) and impressions from feedback from customers and suppliers (31%).

Economic outlook clouds over

The board members surveyed see clouds gathering in the economic sky. In the last swissVR Monitor (summer 2018), fewer respondents had already given a positive assessment of the outlook than a year ago today. This time, their share has almost halved again from 54% to 28%. At the same time, the proportion of neutral and negative assessments has increased. The significantly more pessimistic picture overall is therefore relatively close to the economic outlook in the swissVR Monitor from the beginning of 2017. The mood of uncertainty worldwide seems to have reached the boards of directors.

However, respondents are somewhat more confident about the prospects for their own industry and, above all, their own business. Still 42% instead of 46% assess their respective industry prospects positively. 14% (six months ago: 10%) believe that worse times lie ahead for their industry. Overall, therefore, there is a slight but clear negative trend. When it comes to assessing their own business, however, the picture is quite different: surveyed board members continue to be predominantly optimistic about the prospects for their business (59% compared with 60% in the last survey). This has hardly changed in the last four editions of the swissVR Monitor.

Prof. Dr. Christoph Lengwiler, lecturer at the Institute of Financial Services Zug IFZ of the Lucerne University of Applied Sciences and Arts and Vice President of swissVR: "The more pessimistic assessment of future economic development that has become apparent within six months makes one sit up and take notice. Apparently, geopolitical tensions and negative reports from companies are leading to serious concerns. An economic downturn would increase the pressure on companies and further accelerate the digital transformation. Those organizations that also take cultural aspects into account in strategic realignments would score points. Boards of directors would therefore do well to think more deeply about the current corporate culture and possible changes to be introduced for the future success of the company."

Source: Deloitte