Question 1. There are three main concepts here which are good governance, leadership and management. Its wise to have a firm definition of these concepts before one can be better able to do a meaningful compare and contrast the terms in relation to good governance. Good governance is an indeterminate term used in development literature to describe how public institutions conduct public affairs and manage public resources in order to guarantee the realization of human rights. Governance describes "the process of decision-making and the process by which decisions are implemented (or not implemented)". The term governance can apply to corporate, international, national, local governance or to the interactions between other sectors of society 1 . Leadership is "organizing a group of people to achieve a common goal". The leader may or may not have any formal authority. Students of leadership have produced theories involving traits, situational interaction, function, behavior, power, vision and values, charisma, and intelligence, among others. Somebody whom people follow: somebody who guides or directs others 2 . Management is a social process entailing responsibility for the effective and economical planning and regulation of the operations of an enterprise, in fulfilment of a given purpose or task, such responsibility involving: (a) judgement and decision in determining plans and in using data to control performance, and progress against plans; and (b) the guidance, integration,
1 What is Good Governance. UNESCAP, 2009. Accessed July 10, 2009. 2 Chemers M. (1997) An integrative theory of leadership. Lawrence Erlbaum Associates, Publishers. motivation and supervision of the personnel composing the enterprise and carrying out its operations 3 . The table4 below shows the comparison of management and leadership in terms of roles, responsibilities and functions. Management Leadership R o l e s
Planning and Budgeting Establishing agendas Setting timetables Allocating resources Establishing Direction Creating a vision Clarifying the big picture Setting strategies R e s p o n s i b i l i t i e s
Organizing and Staffing Provide structure Making job placements Establishing rules and procedures Aligning People Communicating goals Seeking commitment Building teams and coalitions F u n c t i o n s
Controlling and Problem Solving Developing incentives Generating creative solutions Taking corrective action Motivating and Inspiring Inspiring and energize Empowering subordinates Satisfying unmet needs
3 Edward Franz Leopold Brech (1975) The Principle and practice of management. Longman publications 4 Northouse, P. (2007). Leadership theory and practice. Thousand Oaks, CA: Sage Publications. Question 2. A paper to the board of Bank Sedar
How to develop a corporate culture that goes beyond compliance.
By
Fashola Olayinka Nurudeen Chairman Board of Bank Sedar.
September, 2012.
1.0 Introduction Company culture is important because it can make or break your company. Companies with an adaptive culture that is aligned to their business goals routinely outperform their competitors. To achieve results like this for our organization, we have to figure out what our culture is, decide what it should be, and move everyone toward the desired culture. Company cultures evolve and they change over time. As employee leave the company and replacements are hired the company culture will change. If it is a strong culture, it may not change much. However, since each new employee brings their own values and practices to the group the culture will change, at least a little. As the company matures from a startup to a more established company, the company culture will change. As the environment in which the company operates (the laws, regulations, business climate, etc.) changes, the company culture will also change. These changes may be positive, or they may not. The changes in company culture may be intended, but often they are unintended. They may be major changes or minor ones. The company culture will change and it is important to be aware of the changes. However, it is the responsibilities of the board members to ensure that at all times the corporate culture of the company is maintained and sustained towards achieving the common objectives of ensuring that the company remains afloat. 2.0 Definition of Corporate Culture In order to measure corporate culture, we must first define it. As one studies culture it becomes clear that arriving at a common definition is not an easy task. Several definitions of culture have been offered; some of the most prominent include: Culture is the shared philosophies, ideologies, values, assumptions, beliefs, expectations, attitudes, and norms that knit a community together. All of these interrelated psychological qualities reveal a group's agreement, implicit or explicit, on how to approach decisions and problems, i.e., "the way things are done around here" 5
Culture involves how and why organisations create myths and legends, engage in rites and rituals, and are governed through shared symbols and customs 6 . Every organisation is a unique culture. It has its own special history of how the organisation has been managed, its own set ways of approaching problems and conducting activities, its own mix
5 Kilmann, Saxton, and Serpa, 1986, 'Issues in Understanding and Changing Culture',. California Management Review, vol. 28, no. 2, pp. 87-94 6 Meek, 1988, Organizational Culture: Origins and Weaknesses, p.453 of managerial personalities and styles, its own established patterns of "how we do things around here ", its own legendary set of war stories and heroes, its own experiences of how changes have been instituted-in other words, its own climate, folklore, and organisation personality 7 .
Culture can be the social or normative glue that holds the organization together. The corporate culture expresses the values and beliefs that members of the organisation have come to share. Moreover, these values are typically manifested by symbolic devices such as myths, rituals, stories, legends, and specialised language 8 . Organisational culture refers to the unwritten, often unconscious message that fills in the gaps between what is formally decreed and what actually takes place; it involves shared philosophies, ideologies, values, beliefs, expectations, and norms 9 .
3.0 Importance of Corporate Culture. Every company must have its unique style of working which often contributes to its culture. The beliefs, ideologies, principles and values of an organization form its culture. The culture of the workplace controls the way employees behave amongst themselves as well as with people outside the organization. Below are some of the very important reasons why the company must ensure that its corporate culture is nurtured and sustained.
7 Thompson and Strickland, 1987, Strategic Management: Concepts and Cases, p. 237 8 Reimann and Wiener, 1988, Ignorance at the top: Why bad news may never reach the boss", International Journal of Management, Vol. 5 pp.170 - 179. 9 Deshpande and Parasuraman, 1986, "Practical Guidelines for Small Business Marketing Research," Journal of Small Business Management, 24(Jan), 1, 1-8. The culture decides the way employees interact at their workplace. A healthy culture encourages the employees to stay motivated and loyal towards the management. The culture of the workplace also goes a long way in promoting healthy competition at the workplace. Employees try their level best to perform better than their fellow workers and earn recognition and appreciation of the superiors. It is the culture of the workplace which actually motivates the employees to perform. The culture of an organization represents certain predefined policies which guide the employees and give them a sense of direction at the workplace. Every individual is clear about his roles and responsibilities in the organization and know how to accomplish the tasks ahead of the deadlines. The work culture goes a long way in creating the brand image of the organization. No two organizations can have the same work culture. It is the culture of an organization which makes it distinct from others. The work culture gives an identity to the organization. In other words, an organization is known by its culture. The organization culture brings all the employees on a common platform. The employees must be treated equally and no one should feel neglected or left out at the workplace. It is essential for the employees to adjust well in the organization culture for them to deliver their level best. The work culture unites the employees who are otherwise from different back grounds, families and have varied attitudes and mentalities. The culture gives the employees a sense of unity at the workplace. Every employee is clear with his roles and responsibilities and strives hard to accomplish the tasks within the desired time frame as per the set guidelines. Implementation of policies is never a problem in organizations where people follow a set culture. The new employees also try their level best to understand the work culture and make the organization a better place to work. The work culture promotes healthy relationship amongst the employees. No one treats work as a burden and moulds himself according to the culture. It is the culture of the organization which extracts the best out of each team member. In a culture where management is very particular about the reporting system, the employees however busy they are would send their reports by end of the day. No one has to force anyone to work. The culture develops a habit in the individuals which makes them successful at the workplace. 4.0 How to develop Corporate Culture To develop a corporate culture that is enduring and sustainable the follow key point must be understood and followed religiously. 1. Define your legacy The company must define its legacy, that is, what kind of company you want. You must also think about what you want people to say about your company while they work there and when they leave. 2. Hire Smartly The right people with the right attitude must be employed to work with the company. You can lay out a vision, but you need good people to take it to the next level. Most great workers already have jobs. Make sure you offer a differentiator. 3. Listen Employee-to-employer feedback is hugely underrated in companies of all sizes. In developing an enduring corporate culture you must constantly ask your employees what they like about working at your company, what they hate about it, and what they would do differently if it was their company. Thus the leadership of the company must focus on the needs that creates a positive corporate culture. 4. Engage Consider sharing company goals and financialsgood and badwith your employees. Open lines of communication will create a culture of openness in your organization, and employees may become more engaged in the success of the business. 5. Reward A pat on the back is always appreciated, especially when it comes from the management. The company should institute a robust reward system to appreciate those employees that live the companys corporate culture. 6. Prepare to change Changing a companys culture takes time, patience, and serious dedication. But the change must happen to ensure that the appropriate culture permeate all the strata of the organization. All the aforementioned must be at the fingertips of the leadership and management of the company when developing a corporate culture that will be enduring and transform the growth of the company.
5.0 Management of Corporate Culture. Organizational leaders manage their operations and finances. They must manage their cultures as well. In his landmark book Organizational Culture and Leadership, the noted cultural theorist Edgar H. Schein writes: "Culture not only explains many organizational phenomena it is also something that leaders can manipulate to create a more effective organization." Schein emphasizes that culture can be actively administered to advance corporate aims. Managing culture is a central responsibility of leaders today. What's more, it must be an ongoing process if they are to keep pace with ever-changing markets, customer needs, and competition.
Culture management is especially relevant when you consider a company's macro-environment and micro-environment. The macro-environment contains all the external forces (i.e., socio- economic, regulatory, geo-political) that are beyond management's control. The microenvironment includes all the internal variables that are within management's control (i.e., decisions on staffing, resource allocations, or corporate development strategies). Culture falls squarely in the realm of the microenvironment.
6.0 The Role of the Board. The roles and responsibilities of the board members of the company in the implementation and driving the corporate culture cannot be over emphasized. They are solely responsible for the conceptualization and implementation of the corporate culture of any organization. This point is further corroborated by the provisions of the King III report in the Principle 1.3: The board should ensure that the companys ethics are managed effectively below are the extracts:
33. Good corporate governance requires that the board takes responsibility for building and sustaining an ethical corporate culture in the company. Such a culture consists of both formal and informal cultural systems. Selection and reward systems, for example, are elements of formal culture, whereas living practices and language usage are elements of informal culture. A cultural approach to governing and managing the companys ethics would ensure that ethical standards infuse and align both formal and informal cultural elements.
34. Building and sustaining an ethical corporate culture requires ethical leadership. An ethical leader is a role model for the companys stakeholders by making ethics explicit, legitimising ethics discourse, encouraging ethical conduct in others, and holding others accountable for the ethics of their conduct. It is the responsibility of the board (and executive management) to provide ethical leadership in the company. The board should ensure that the companys ethical standards are clearly articulated and should be seen to support them actively by taking measures to achieve adherence to them in all aspects of the business. In this way, the board would ensure that ethics is an integral part of the way in which a company conducts its business. 35. The boards commitment to building and sustaining an ethical organisational culture should be reflected in the companys vision, mission, strategies and operations; its decisions and conduct; and the manner in which it treats its internal and external stakeholders. The boards commitment to ethics should also manifest in the com-panys responsibility towards the communities and natural environment in which it operates. An ethical culture is, therefore, about more than social philanthropy or charitable donations. Internal and external ethics performance should be aligned with the same ethical standards. 36. Building and sustaining an ethical corporate culture requires active governance of ethics. The board assumes ultimate responsibility for the companys ethics performance by delegating to executive management the task of setting up a well-designed and properly implemented ethics management process or ethics programme 10 .
8.0 Conclusion. It is very important that as board members we are expected to be the driving force for the formulation, development and implementation of the corporate culture for the bank. The leadership is critical in codifying and maintaining an organizational purpose, values, and vision. As leaders we must set the example by living the elements of culture: values, behaviors, measures, and actions.
Like anything worthwhile, culture is something in which you invest. An organization's norms and values aren't formed through speeches but through actions and team learning. Strong cultures have teeth. They are much more than slogans and empty promises. Some organizations choose to part ways with those who do not manage according to the values and behaviors that other employees embrace. Others accomplish the same objective more positively for us at Bank Sedar we shall constantly reinforce the culture by recognizing those whose actions exemplify its values, its behaviors, and its standards. Team successes are cause for frequent celebrations.
10 Culled from: King Report on Governance for South Africa, and the King Code of Governance Principles(King III).