Equilar identified several proxy disclosures around culture and how companies are tying executive incentives to achieving cultural goals, more than ever before. The following examples from Hyatt Hotels, Walmart and Microsoft highlight this trend.
Investors rely on us as directors to bring independent and diverse perspectives to the boardroom based on our broad experiences and sound judgments. We must be diligent about challenging long-held assumptions, while supporting the corporate actions that may unlock long-term value. If we engage in active oversight of strategy-setting and urge management to keep their eyes on certain financial metrics, we can contribute meaningfully to a company’s growth trajectory.
So, too, if we cultivate the selection and engagement of a transformational CEO, we can help to jump-start expansion in shareholder value.
Increasingly, forward-looking investors and visionary boards are also thinking about the value created and risk avoided by the pursuit of a well- defined and measure corporate culture. Culture must serve strategy and protect and preserve a company’s greatest assets, its people.
In my public company board service over the last 10 years, corporate culture has moved from being considered an intangible, “soft” topic seldom-discussed in the boardroom to now front-of-mind and core to the most robust monitoring of a company’s health and future prosperity.
In fact, a late 2018 study titled the Global Intangible Finance Tracker determined that a company’s corporate culture, and its impact on talent retention and the successful delivery of products and services, could be responsible for 52% or more of an entity’s market value, and is likely to accelerate in significance.
So, how do we as directors get our arms around this critical emerging area, and what are our responsibilities from the boardroom for corporate culture?
Culture, consistently aligned with strategy, as well as its contribution to employee satisfaction and engagement, should be a key engine for long-term growth and the acceleration of increase in shareholder value.
Wendy Webb is a Director on the boards of Wynn Resorts, ABM Industries, and American Homes.
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