10.1 The board defines and models a desired culture that aligns to the purpose
10.2 The board oversees a strategy to develop and maintain the desired culture
10.3 The board oversees mechanisms to monitor and evaluate organisational
10.4 The organisation’s values are clear, periodically reviewed and communicated
10.5 The board oversees a framework for the reward and recognition of workers
A strong culture is an invaluable asset to an organisation and
can contribute significantly to an organisation’s ability to
achieve its purpose. However, a poor culture can undermine
an organisation’s performance. The board plays an important
role in shaping an organisation’s culture, including through
leading by example.
What is culture
Culture represents the shared values, assumptions and
beliefs that shape the behaviour of the people involved in
an organisation. It is often described as the way people act
when nobody is looking. Culture can seem like a nebulous
concept, but while it may be difficult to measure or define,
it is a powerful influence on the people involved in an
organisation and their actions.
Good cultures are aligned to an organisation’s purpose and
support the achievement of its goals. For example, if your
purpose is to educate primary school children, the ability to
do this will be enhanced by a culture that prioritises the best
interests of the child and places emphasis on high standards
in teaching and child welfare.
Conversely, poor cultures can adversely impact an
organisation such as through its impact on staff morale,
absenteeism and the organisation’s ability to attract and
retain volunteers. Culture is also a significant factor in the
perception of an organisation by its funders, donors and the
community. In some circumstances, poor culture can
even result in misconduct.
It is also important to recognise that there may be multiple
cultures within an organisation. Different attitudes and
practices may emerge, and be actively cultivated within
particular teams, for example.
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There is no single metric that can be used to evaluate the
culture of an organisation. Instead, boards must consider a
range of data sources to build a picture of culture through
combining both quantitative and qualitative information.
Measuring culture does not necessarily have to involve
the development and measurement of new performance
indicators specific to culture. Most organisations already
have access to a range of data that can be used to build a
picture of their culture.
“And now here is my secret, a very
simple secret: it is only with the heart
that one can see rightly; what is
essential is invisible to the eye.”
Antoine de Saint-Exupéry, The Little Prince
According to the AICD’s 2018 NFP Governance Study the
top five ways that NFPs measure culture are:
Figure 12: Top five ways of measuring culture
(Source: AICD 2018 NFP Governance and Performance Study)
There are also other ways through which the board can
develop a sense of what the organisation’s culture is. For
example, the board might review the decisions and actions
of management to determine whether they are consistent
with the organisation’s desired culture. Many boards also
engage directly with clients, staff and volunteers to build a
picture of culture based on personal interactions. However,
care should be taken to keep the CEO informed about any
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The board’s role in culture
The board and its directors play a critical role in shaping
an organisation’s culture. Because culture can significantly
influence an organisation’s ability to achieve its purpose,
it is important that boards form a view on what kind of
culture will best support the achievement of their purpose
and take steps to develop or maintain it.
“The fish rots from the head.”
Ancient Chinese proverb
There are several different ways that boards can engage
with and practically influence an organisation’s culture.
For example, the selection of a CEO can have an enormous
impact on culture. Setting out a code of conduct for an
organisation can also influence the organisation’s culture,
as can establishing remuneration structures that incentivise
Every action of the board has potential to influence the
organisation’s culture in some way. For example, if a board
approves a budget which makes generous provision for
learning and development and requires reporting on how
much time staff spend undertaking training, over time this is
likely to contribute to creating a culture that values ongoing
education. Although such decisions might not be considered
through a cultural lens, they have the potential to influence
an organisation’s culture in small but powerful ways.
It is not only the board’s decisions that have the potential
to influence culture, but also its behaviours and attitudes.
How board members interact with one another, the
questions that they ask of management and the way they
conduct their meetings can all influence culture. In this
way, the culture of the board itself ripples through the
organisation. This is called setting the ‘tone from the top’.
Managing culture should therefore involve ongoing
reflection by directors about how their decisions and
behaviour shape their organisation’s culture. The cultural
impact of board decision-making should be a consideration
in decision-making. Boards should also consider how their
organisation’s culture might impact the certainty with which
the intended outcomes of their decisions will be achieved –
considering culture from a risk management perspective.
A simple way to keep this fresh in the minds of directors
is to make sure that culture is a regular agenda item for
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One of the practical ways that a board can influence
culture is through defining organisational values. Values
are an expression of the organisation’s identity and are
intended to guide the behaviours and decisions of the
people involved with the organisation.
For example, if an organisation has the value of ‘excellence
in client service’, that may mean that they do not provide
services unless they are confident they meet a certain
standard, or that they prioritise rectifying service issues
when they occur over other issues.
For values to be effective they need to provide clear guidance
about what an organisation considers to be good. At times,
holding true to an organisation’s values can be challenging,
however, it is important that boards are prepared to make
difficult decisions to stay true to their values.
Boards must approve the organisation’s values and also work
within them. They should be guided by the organisation’s
values in their own decision-making and should also
challenge decisions of management when they are not in line
with the organisation’s values. Values are not meaningful
unless they are observed and there are consequences for
failing to observe them.
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Culture and incentives
An important influence on an organisation’s culture is
the way staff and volunteers are incentivised to behave.
These incentives may be material (such as through pay
rises, bonuses or gifts) or non-material (such as increased
seniority, certificates of appreciation or public recognition).
The board should oversee a reward and recognition
framework that aligns incentives to the organisation’s
purpose. It is important that incentives are aligned to the
organisation’s purpose so that the people involved in the
organisation are working towards the same goals.
The way behaviours are incentivised or discouraged sends
an important message about what the organisation values
are and what it is trying to achieve. It is also important that
these incentives are realistic and achievable. For example,
if an employee is incentivised to do their job too quickly,
this may encourage them to rush or cut corners, and may
adversely impact the organisation’s purpose or even result
Not all incentives are rewards. Some incentives are
negative, such as the possibility of a penalty for failing
to meet defined expectations. It is important that there
are negative incentives to discourage behaviours that are
inconsistent with a desired culture or stated expectations
Boards should be prepared to make difficult decisions to
enforce culturally appropriate behaviours and empower
management to do the same. In certain circumstances, such
as where the behaviours are extreme or repeated, it may
be necessary to terminate a person’s connection with the
organisation to protect the culture.
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Questions for Directors
- What sort of culture will best support the organisation to achieve its objectives?
- What is the culture of the organisation and how is the discerned?
- How often does the board discuss culture?
- Do the behaviour of staff and volunteers align to the organisation's values?
- How does the board align its decision-making to its values?
HelpfulCare has established a policy document titled
‘Being HelpfulCare’ that articulates their desired
culture alongside their strtegic statements.
The ‘Being HelpfulCare’ policy sets out the
organisation’s values and the cultural behaviours that
staff are expected to exhibit. Anyone can access the
policy on HelpfulCare’s website.
The board has directed management to act within
the limits of this policy and to find ways to bring the
policy to life. As a result, cultural fit is assessed in the
recruitment process and positive examples are celebrated
through internal communications. The board set the
principles and practices for reward and recognition of
employees to promote alignment with culture.
The board regularly considers culture as part of
their formal decision-making process. The board also
requires that culture be considered in the context
of recruitment and the executive have authority
to manage staff who exhibit behaviours that are
inconsistent with the cultural norms.
Measuring culture is a critical focus for HelpfulCare.
The board has instructed management to undertake
annual staff engagement and client perception
surveys. The board also reviews performance
measures such as staff turnover and work health &
safety reports, and a selection of client feedback is
presented for board review at each meeting.
The Friendlies’ behavioural code called ‘The Friendly
Way’ also sets out what their culture should be. The
governing documents require the board to behave in a
way that is consistent with the code and to promote it
To assess how well the organisation is meeting its
cultural goals, the board conducts a survey of members
every two years. In the survey they ask how well the
organisation is living up to ‘The Friendly Way’ and what
steps the organisation could take to continue to improve.
‘The Friendly Way’ also sets out the organisation’s core
values. In assessing new projects, the board is required
to evaluate their alignment to the organisation’s values.
The board has required that demonstrating the
organisation’s values and adhering to ‘The Friendly Way’
are part of the employment contract of the coordinator.
The board also work to identify members who have
been exemplars of the values and reward them through
public recognition involving either commemorative
awards or letters of appreciation from the president.