The Tribune

By DEREK SMITH

Companies define their cultures by how they work, treat their employees and interact with their stakeholders. Corporate leadership and Boards of Directors must foster an environment of integrity, respect and trust if they wish to succeed long-term. The foundation of ethical decision-making, employee engagement and stakeholder confidence is abstract but absolutely positive.

A good culture yields a positive return on investment, and this article will briefly explain why culture matters, identify several challenges in building one, and offer some recommendations for overcoming them.

Why Culture Matters

The Harvard Business Review found that companies with strong, positive cultures outperform peers by 20 percent in revenue growth. In these companies, turnover is lower, productivity is higher and reputations are stronger. Conversely, a toxic culture can lead to regulatory breaches, reputational damage and talent drain.

Common challenges in building a positive culture

1. Misaligned Leadership: Employees disengage when leaders fail to model the desired behaviours. For example, a chief executive preaching transparency but withholding critical information erodes trust.

2. Resistance to Change: Shifting entrenched mindsets is difficult, particularly when long-standing practices conflict with new values.

3. Short-term Focus: A relentless focus on quarterly performance often overshadows the importance of long-term cultural investments.

4. Inconsistent Enforcement: When policies on integrity or respect are inconsistently applied, employees perceive favouritism or indifference, undermining trust.

Steps to Build the Desired Culture

1. Lead through being an example

Leadership sets the tone for culture. Company executives must demonstrate integrity, respect and trust throughout their daily interactions. It means prioritising transparency, acknowledging mistakes and demonstrating accountability. According to Businessinsider.com, since taking the helm in 2014, Microsoft’s Satya Nadella has reinvigorated the company’s culture by emphasising a “growth mindset” and inclusivity, which transformed employee morale and redefined its public image.

2. Define core values and operationalise them

Abstract values must translate into actionable behaviours. Clear communication channels could create trust, while policies that promote diversity of skills, gender, race and inclusion could achieve respect.

3. Invest in leadership development

Through training programmes, managers should be taught how to communicate values effectively and resolve conflicts aligned with the company’s principles. A study by the Center for Creative Leadership found that companies with structured leadership development had earnings per share that were 114 percent higher than similar entities without it.

4. Build Accountability Mechanisms

It is imperative that companies integrate cultural metrics into their performance evaluations. Culture scorecards, audits and anonymous employee surveys can track alignment.

5. Celebrate Positive Behaviours

Rewarding employees who exhibit core values reinforces these behaviours. Furthermore, it demonstrates that culture is just as important as performance to leadership.

Overcoming the Challenges

Company executives must explain how cultural shifts will improve business outcomes and overcome resistance to change. Implementing 360-degree feedback systems ensures that leaders are accountable to employees and peers when there is misalignment. Consistency can be achieved by rewarding financial performance alongside cultural alignment.

In short, developing a culture of integrity, respect and trust requires deliberate effort. Executives and board members should recognise this as a competitive advantage, not a soft skill. Addressing challenges, operationalising values and embedding accountability can help build resilient cultures driven by ethical success. Companies with robust cultures not only avoid scandals but thrive as well.

• NB: About Derek Smith Jnr

Derek Smith Jnr has been a governance, risk and compliance professional for more than 20 years with a leadership, innovation and mentorship record. He is the author of ‘The Compliance Blueprint’. Mr Smith is a certified anti-money laundering specialist (CAMS) and the assistant vice-president, compliance and money laundering reporting officer for CG Atlantic’s family of companies (member of Coralisle Group Ltd) for The Bahamas, St Vincent & The Grenadines, St Lucia and Curaçao.