Culture, reputation and values: Does HR have a role?

In his latest book, Don narrows his thesis and warns us that the death of language is actually being brought about by “the new models of business organisation”– and sets his sights at human resources management in particular.

And I guess, if we’re honest, we’d have to admit that management speak is out of control. You only need to look at the groaning bookshelves in the management section of any good book store to see that.

So, to the subject of words. And three words in particular – culture, reputation and values.

SBS’Insight program recently profiled the topic of corporate social responsibility. In the midst of an interesting and quite balanced debate about this topic, the Uniting Church’s Reverend Harry Herbert said the following: “We shouldn’t treat companies, corporate entities, as our friends. We should be very suspicious of them. We should understand the wild animals that they are …”

And later in the program, he concluded: “… companies are dangerous animals. You should keep them in a strong cage, regulate them as much as you can and treat them with suspicion … The people who run companies are not evil, they’re not demons – it’s just that when they collect themselves together … they have a different purpose.”

Suspicious, wild animals, dangerous – strong words to use to describe a particular class of people whose only crime it seems is to work for “a company”. But very clear words to describe the culture of some businesses.

Reverend Herbert may be at the extreme end of the community’s views, but with the current example of James Hardie, it’s not surprising that the community at large is concerned about the behaviour of business, and big business in particular. It’s been a growing concern for the community over recent years, with plenty of failures to cite as examples.

One of the best summaries of the part culture had to play in these failures can be found in Justice Neville Owen’s report on the collapse of HIH. Employing the simplest of language, Justice Owen started his report with the comment: “The governance of a public company should be about stewardship.”

He pointed out the culture of HIH led directly to poor decision-making. He continued: “There was blind faith in a leadership that was ill-equipped for the task. There was insufficient ability and independence of mind in and associated with the organisation to see what had to be done and what had to be stopped or avoided ... Unpleasant information was hidden, filtered or sanitised. And there was a lack of sceptical questioning and analysis when and where it mattered.”

Again, in the clearest of language, Justice Owen concluded: “Problems of corporate culture and deficiencies in management extend well beyond risk identification and control. They manifest themselves in the very heart of an organisation and the way it is run.”

Justice Owen’s report into HIH should be mandatory reading for anyone trying to understand the interplay between culture, reputation and values. He was saying something very simple. An organisation’s culture is its reputation, and it should be possible to develop a strong values-based culture aligned to a core purpose, which delivers, amongst other things, sustainable returns to its shareholders.

At IAG, one of the early structural things we did was to create the Culture & Reputation division. We brought together the functions of: Corporate and Line Human Resources; Organisational Effectiveness; Corporate Affairs; Government and Regulatory Affairs; and Community Engagement, including sustainability and sponsorship.

Although there’s not a natural affinity between some of these areas, linking internal and external areas creates a rigorous approach to ensuring that everything we say and do inside and outside the company is consistent and grounded in our culture and values.

Across the company, the Culture & Reputation team’s main focus has been to foster a common culture across a diverse portfolio of businesses. A fundamental part of this has been to unite people under one set of shared values – honesty, transparency, meritocracy, teamwork and social responsibility – linked to a core purpose of managing and reducing risk in the community.

There has been a continued focus on improving engagement levels. The annual employee survey is called ‘Your Voice’, and within the survey are six key questions which provide data for a people engagement score.

For example, people are asked how much it would take to make them leave the organisation, whether they’d recommend IAG to a friend seeking employment and whether they feel inspired and motivated to do more than would normally be expected of them.

It’s important to invest significant time and energy in supporting people – all programs and processes are designed to support leaders to lead in a way that links to purpose and values, and therefore customers and the community.

We’re now working on a strategy looking at future employment challenges for IAG. The massive demographic changes occurring here in Australia and how we link those to the future needs of customers will mean a lot of changes for managers.

In the context of external activities and relationships with the media, governments and regulators, advocacy campaigns and work with community organisations, it’s been crucial for the development of our culture that these activities reflect our purpose – and not just meet some artificial notion of ‘doing good’.

We’re only three years into a long journey, with many challenges ahead – more growth, new markets, and potential international expansion. In developing our culture, we’re learning that we must keep consistently applying the basic fundamentals of great leadership and good management. We have all the programs and systems we need to support our managers and we just have to remain focused – and rigorously align our culture with our purpose. Our reputation will follow.

Sam Mostyn is group executive, Culture & Reputation, Insurance Australia Group. Email: [email protected]