Dera McLoughlin, Partner at Mazars Ireland, talks about culture in the workplace and auditing culture in our latest Guest Blog.
Spotlight on Culture
The topic of culture has attracted a lot of interest in the media and in public discourse in recent times. The financial and regulatory problems to which Ireland has been exposed, have firmly placed the issue of culture on the boardroom table.
The extent to which an organisation’s culture supports the execution of its strategy, the management of risk and the treatment of its customers are under spotlight and weaknesses in culture is now frequently blamed for failings in these areas.
Boards and executive management are under scrutiny to ensure the culture they espouse is transparent and supports the delivery of their strategy in line with their values.
What is culture?
Edgar H. Schein describes culture as, “The pattern of basic assumptions that the group has invented, discovered or developed in learning to cope with its problems of external adaptation or internal integration, and that worked well enough to be considered valid, and therefore be taught to new members as the correct way to perceive, think and feel in relation to those problems.”
The culture of an organisation can simply be expressed as ‘how we do things around here’. It is the sum of everything that an organisation stands for and how it operates; its values, its beliefs, its mission, its behaviours and its interactions with employees and customers. These powerful ingredients make up the unique character of an organisation – its culture.
Culture is complex, in an organisation it is everywhere, it is subjective and ever-changing. Some organisations have several subcultures, which is fine if they are all compatible. Culture is not how risk is managed, it is not values, it is not static, it is not conduct, it is not integrity, and there is no such thing as a ‘good’ culture, rather a strong culture – one which supports the organisation in the achievement of its objectives.
The Mazars cultural audit tool – Cultural Compass
The Mazars cultural audit – the Cultural Compass – has been developed by a combination of auditors, behavioural scientists and HR professionals to support the challenging process of auditing culture.
This audit of culture starts by assisting the board or executive management team in defining their ‘target’ or desired culture. This is a baseline for the audit and the tool is then used to determine actual culture against this base.
The Cultural Compass is based on a belief that culture is like the organisational immune system, it keeps the organisation healthy. Just like an immune system it works on triggers and responses.
Cultural triggers are choices made by the organisation and its leaders. It includes elements such as the values, office design, recruiting processes, etc. Once a trigger is activated, it creates a specific response, e.g. a company policy. Cultural triggers are the antigens of organisational culture.
Cultural responses are the reactions resulting from a trigger, such as a behaviour, a bias, an action or inaction. These responses are not necessarily based on logic but rather on how an employee feels and thinks. Cultural responses are the antibodies of organisational culture.
The Cultural Compass examines culture across six dimensions as outlined in the diagram below. These dimensions encompass the most important trigger and response elements of culture. In turn, cultural triggers and responses are examined by auditing triggers and responses across 60 variables grouped under each dimension.
Results can often be challenging with significant divergence in key dimensions or in specific areas of the organisation from the desired culture.
The benefits of conducting a cultural audit
So, what can an organisation do with the results of a cultural audit? The key is to focus on a small number of important cultural gaps and behaviours that have greatest impact on these gaps. Changing a culture purely through top-down messaging, training or development programmes seldom changes people’s beliefs or behaviours. In general, cultural change will only occur when senior leaders act as role models explicitly modelling the desired behaviours and beliefs and work collaboratively to embed the desired culture in everything the organisation does.
Mazars Ireland is a leading professional services firm specialising in audit and assurance, consultancy, corporate finance and tax. Based in Dublin, Galway and Limerick, Mazars Ireland is part of an integrated partnership.
For more information on conducting a cultural review with Mazars, contact Dera McLoughlin, Partner, Mazars.
Phone: +353 (0)1 449 4485