Pacesetter Research: Senior Leaders and Managers Now Accountable for Corporate Culture Management?

For centuries, going back to Richard Arkwright’s first factory in 1760s England, most employees worked in company offices, and corporate culture developed organically, defined only by momentary fiat or need. Much of corporate culture stemmed from impromptu brainstorming sessions, coffee breaks, lunchroom lunches, happy hour, etc. Of course, there were other business leaders who better understood the impact culture has on employees and overall business and were intentional and strategic in the corporate culture that was created. Investopedia defines company culture or corporate culture as the beliefs and behaviors that determine how a company’s employees and management should interact and perform. Regardless of the approach, corporate culture is largely recognized as a business element that business leaders, often the CEO, are responsible for implementing, diffusing, and managing throughout the organization.

However, over time, accountability for managing corporate culture began to creep into senior leaders’ and managers’ lists of roles and responsibilities. Arguably, after the 1990s recession and after a series of corporate financial scandals that ruined businesses such as WorldCom and Enron, and the millions of people who had invested in them, the implementation of the Sarbanes-Oxley Act (SOX) was a critical and necessary response to protect investors, customers, employees, and overall business livelihood. SOX imposed demands on public companies for effective internal controls over financial reporting and established penalties for corporate executives and boards that are found to mismanage or tamper with a corporation’s financial reports to mislead investors. This regulatory change aimed to enhance transparency, accountability, and ethical behavior, which in turn had a fundamental impact on corporate culture. Private companies have also adopted this growing professionalization of governance and reporting standards in the corporate world for enhanced performance management.

Leave a Comment

Your email address will not be published. Required fields are marked *